The Entrepreneurial Myth

I don’t read a lot of business books. I find it hard enough to master everything I already know I should do without adding any more pressure to learn new things and master them.

However, the exception is the E-Myth by Michael Gerber which I have read a few times. Essentially, in my words, it states that people start a business because they need a job, or they become a Realtor because they need a job or become a house painter because they need a job, but just because you are an expert in the technical work of your business it doesn’t mean you are able to build and run a business.

Michael Gerber has written a number of other books, but none have had as much impact on me as the original. If you feel you might fall into the category of “starting a business or venture because you needed a job” please read on about an instant evaluation service they offer.

The book stresses the important of creating systems for your business and executing those systems effectively. Then as the business grows you hire people qualified to execute the systems you have created.

Sales FiguresThe reason most businesses fail according to the E-Myth and in my words, is that people start a business because they need a job and are good in a specific field. Revenues increase, people are added and the business grows organically with new employees implementing their own systems. After a few years the owner is walking through his business and asks someone why they are doing something a certain way and the employee says ” because we have always done it this way”. The owner is horrified and says “that’s not how we do it; let me show you the right way”. He/she then realizes everyone is doing things the wrong way, lays off everyone and starts on their own again. Actually, it is usually a case where the business has already started to fail because everyone has their own systems.

The other benefit of creating systems and hiring people to execute the system is you are creating a sustainable business that can be sold and run by someone else. How many business owners have no exit strategy because only they can run their business?

I received an email from the E-myth people today offering a Free Instant Evaluation which I could not pass up.

The questions and my answers are as follows:

  1. I spend most of my time producing the product or delivering the service. Strongly Agree
  2. I spend most of my time performing administrative/operational tasks. Disagree
  3. I spend most of my time planning and organizing projects. Agree
  4. I spend most of my time communicating with partners, contractors, and/or vendors. Strongly Disagree
  5. I spend most of my time creating long-term plans for my business. Disagree
  6. I spend most of my time evaluating and innovating the way my business operates. Agree
  7. I understand the financial side of my business. Agree
  8. I know how to create a budget. Agree
  9. I’m achieving the profits I would like. Disagree
  10. I have enough cash to pay the bills at the end of the month. Agree
  11. I understand who my target customers are. Strongly Agree
  12. My advertising is bringing in enough customers. Agree
  13. I’m making the amount of sales I would like to. Disagree
  14. I rarely have dissatisfied customers. Agree

I then submitted these results and they provided me the following analysis:

Entrepreneur/Manager/Technician (score 52)
Your responses show that your dominant role is the Manager. You are most concerned with:

  • Planning and organizing projects
  • Facilitating conversations with partners, vendors, and/or contractors
  • Developing systems to streamline your work flow and deliver a more consistent customer experience

Money (score 62)
It appears that you have some good financial management systems in place, but:

  • You may not have all of the financial management systems necessary to optimize your business’ performance
  • You may need a more in-depth understanding of how to use your financial information to make sound business decisions

As your financial management skills become more advanced, E-Myth can guide you as you learn to:

  • Quantify more areas of your business
  • Make increasingly objective and powerful management decisions
  • Shift your focus from technical to strategic

Customer/Sales (score 62)
Your responses indicate that:

  • Your business has some success at converting leads into customers
  • In general, your sales are enough to cover expenses and generate a reasonable profit
  • Your sales presentations may be inconsistent
  • It’s time to stop thinking about your need for sales and start thinking about your customers’ needs. E-Myth can teach you how to increase your customers and sales by:
  • Introducing you to a new approach, in which you position yourself in a partnership role with the customer
  • Teaching you how to systematize and document your lead conversion process to ensure success

While the analysis is superficial it is generally correct and I think it might be useful for other entrepreneurs to take the Free Instant Evaluation.

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