What is Michael Gerber’s book ‘The E-Myth Revisited – Why Most Small Businesses Don’t Work and What to Do About It’ about? Read the book review and summary of Gerber’s book ‘The E-Myth Revisited’ on GreatBooks&Coffee!
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Book Review & Summary:
‘The E-Myth Revisited – Why Most Small Businesses Don’t Work and What to Do About It’ – Michael E. Gerber.
So! In short, ‘The E-Myth Revisited – Why Most Small Businesses Don’t Work and What to Do About It’ by Michael Gerber is a great book. A must-read book, actually. In my opinion and as you will see in my book review, it ought to be read by every new entrepreneur, small business owner, and by everyone who considers quitting their job to start their own business… Don’t miss it!
I had never heard of “The E-Myth Revisited” before a friend of mine put the book inside my hands.
I was working on a new project at the time and my friend Philippe who happens to be a professional business coach spent a day helping me to set things up in my head. We talked about customer experience, about motivations, priorities and it was all great. At the end of the working session, Philippe gave me a book that he thought would interest me and help me. “The E-Myth Revisited“.
I wasn’t very convinced, to be honest (Philipe, if you read me, wait, keep reading) but I hadn’t understood at the time that “E” stood for “entrepreneur”! I’m always curious about a good book though, so I took it with me on my way to work the day after.
The truth is, I got so hooked with this book that I missed my station and ended up being late at work. Thanks, Philippe…
In retrospect, I’d say that this 270 pages (Paperback) book was one of the most relevant and interesting business books I’ve read.
[ Edit Nov 2017: I’m also adding my book review of Chris Guillebeau’s ‘The $100 Startup’ and my book review of Adam Grant’s ‘Originals’ to that shortlist. ]
Michael E. Gerber is a big name in the field of business development books. He’s an American author and business expert, founder of the Michael E. Gerber Companies, a business skills training company based in California. He was named the World’s Number One Small Business Guru by Inc. Magazine and has written tens of books on the E-Myth topic. Having said that, ‘The E-Myth Revisited – Why Most Small Businesses Don’t Work and What to Do About It’ has remained his bestseller and still sells impressively and on a daily basis on Amazon.
Sounds like an authority proof to me!
What you get in this book review:
- An introduction to Michael Gerber’s book ‘The E-Myth Revisited’.
- A book review which includes in-depth comments on the main themes, questions and conclusions.
- Insights to help you put the book in context.
- My take on the book and why it could be worth your time and money!
A brief book review, for starters…
So, let’s move on with the book review!
‘The E-Myth Revisited – Why Most Small Businesses Don’t Work and What to Do About It’, by Michael Gerber, is an insightful book for those interested in learning about entrepreneurship and business development.
The book focuses on an important issue that Gerber calls “The Entrepreneurial Myth”.
Simply put? While every small business needs to develop, they all face challenges in doing so. And there is one reason for this: new entrepreneurs rarely have an entrepreneurial mindset. Interestingly, the book will also be of interest to those interested in “quit your job” types of books.
Note: E-Myth here stands for “Entrepreneurial Myth” but has nothing to do with online businesses. Just saying…
The book discusses the most common issue faced by small business owners in the United States (and everywhere else): mindset. It provides many tips to solve this challenge, in a very practical and sensible way.
The style is extremely accessible. The author does not merely list a series of issues and answers. He actually tells a story to which every single reader can relate. Sarah is a bakery shop owner who struggles with her business and the author discusses business development issues with her.
‘The E-Myth Revisited’ is thus a very serious business and entrepreneurship book, in the form of an easy to read, down-to-earth and practical story.
About the Author
Michael E. Gerber is an American author and business expert, founder of the Michael E. Gerber Companies, a business skills training company based in California.
He was named the World’s Number One Small Business Guru by Inc. Magazine and has written tens of books on the E-Myth topic.
Having said that, ‘The E-Myth Revisited – Why Most Small Businesses Don’t Work and What to Do About It’ has remained his bestseller and still sells on a daily basis on Amazon.
The book in bullet points
Gerber explores these major themes:
- How small business owners think.
- The importance of business development planning.
- What mindset should they adopt instead.
- Ways to progress and develop so as to achieve the target.
He also asks a variety of questions, including:
- How does a new entrepreneur think?
- Why this way of thinking is fundamentally incompatible with the business dream of every new entrepreneur and why the cycle creates an entrepreneurial myth.
- How can you shift from a mindset to another and become an entrepreneur instead of remaining a technician?
- How should new entrepreneurs think about their business in the first place if their goal is not to become a work slave again.
- Is it possible to make your business a product that can be sold to other entrepreneurs (franchise method)?
- What is the interest of thinking in terms of franchise even if you don’t plan on turning your business into an actual franchise?
- To what extent can you work ON your business to make it efficient and autonomous instead of working IN your business and becoming the indispensable part without which nothing works?
- What steps can you take to do things differently?
- How to determine your goals?
- How to set up your business, organizational, marketing strategy and so on?
Now. How about a more comprehensive book review?
As the title of the book suggests very clearly, the main topic here is “why most small businesses don’t work and what to do about it”.
Having said this, the author discusses three main themes throughout the book.
One is the entrepreneurial myth, i.e. the idea that quitting your job to set up your own business is not exactly the same as becoming an entrepreneur. Another theme is the importance of working ON your business instead of working FOR it or IN it. Otherwise, you become sort of a work slave but certainly not an entrepreneur). The third main theme deals with the methods and practical steps that every small business owner and new entrepreneur should follow. This, according to Gerber, is the only way to build a business that can work without you.
The E-Myth Revisited – theme #1: The E-Myth (how surprising, right?).
The first theme discusses the entrepreneurial myth and the way it impacts the vast majority of American small businesses.
The point is made very clear from the beginning of the book. In the author’s words, the starting point is the belief that “small businesses in the US simply do not work [because] the people who own them do”.
In reality, the author continues, “exhaustion” is a common feeling amongst small business owners but the “exhilaration” that all expect when becoming entrepreneurs remains rare. Instead, new entrepreneurs commonly turn into work slaves and find themselves stuck with the routine they tried to escape, very far from their dreams of independence.
As mentioned before, Gerber makes the book extremely practical. He provides the reader with a very real case study in the shape of a discussion between him – acting as the small business expert – and a lost entrepreneur named Sarah.
As many small business owners, Sarah i) clearly suffers from this exact situation and ii) eventually comes to admit that whilst she created her bakery out of passion, she now hates baking pies! Are you selling cars or providing services? Well, the story works exactly the same…
Beyond making the story practical and easy to relate to, Gerber’s approach has three major interests.
First, the example highlights the danger of transforming something we love doing into a new business. Fun soon becomes a constraint. Freedom rapidly becomes a prison. The former employee used to be paid in exchange for his work without having to bother with problems, management and strategy. But becoming a small business owner means that he now needs to deal with every single detail on his own. Hence, the new entrepreneur tends to remain what he used to be, but without the peace of mind and without the pay. And it happens systematically.
Second, Gerber’s approach gives an opportunity to discuss the three personalities every new entrepreneur needs to work with, whether he is alone in the business or has staff to handle.
The new entrepreneur is far from being an entrepreneur, in reality. A small business owner who starts his entrepreneurial adventure is first of all a technician. A doer, someone who knows how to do things and wants to do things well without being told what to do and without being given more work to do. That is usually the reason why starts his own business, actually.
But the new entrepreneur also needs to become a manager at some point. He needs to become pragmatic and detached from technicality. He needs to learn how to plan and create order for the technician. Only then can the new entrepreneur become an entrepreneur, i.e. the one in charge of thinking in terms of opportunities, the dreamer, the visionary who needs to be in control of the future.
In a practice, however, every new entrepreneur tends to be 70%. technician and 10% visionary. This means that the technician always remains in charge. The new entrepreneur, however, usually fails to give the business some proper management. He rarely dares looking for the visionary inside because he feels more confident sticking with what he knows as long as he can… until it is too late.
Using ‘Sarah’ as an entrepreneurial example has a third interest. It allows showing that small businesses always go through various stages that, again, new entrepreneurs usually ignore.
Businesses always start at the” infancy” stage, where the technician clearly has a major role to play because things need to get done. The problem is, the technician alone will kill the new business if left in charge because to him growth means trouble and increased workload.
Yet, Gerber says, “the purpose of going into business is to get free of a job” and going on your own to remain a technician makes very little sense…
Then comes the “adolescence” stage in which a manager must appear. Becoming the manager implies acquiring a new set of skill, but it is also an intermediary position. The manager is here to do what the future entrepreneur will soon refuse to do himself when he will need to concentrate on vision and planning.
The risk here is that new business owners acting as technicians tend to refuse to become managers.
In such circumstances, businesses tend to grow through what Gerber calls “management by abdication”, that is, letting other technicians do as good as they can instead of taking responsibility.
When businesses grow, the owner therefore has to let other technicians do the technical work (baking the pies) and must accept to become the manager. He has to agree to be in charge, because his new role is to put into place a form of management by delegation – trust the technician – which implies training and developing management tools.
Here, the new entrepreneur needs to go beyond his comfort zone and push his own boundaries. Otherwise, he takes the risk of going back to being small again (and to kill the business by the same token). He must also refrain from remaining an adolescent and must prepare to accept his entrepreneur’s role and push with more development.
To Gerber, the question is therefore not about how small, it is about “how big can your business naturally become, with the operative word being naturally”.
Only then comes the last phase: maturity. Gerber takes the example of Disney, Fedex and Macdonald, and insists that an entrepreneur’s role in the business is to know “how it got where it is, and what it must do to get where it wants to go”. The technician does, the manager manages, the entrepreneur plans.
In sum, Gerber concludes that the entrepreneurial myth has one source and one solution: entrepreneurs remain technicians unless they create an “entrepreneurial model” that satisfies the technician, the manager and the entrepreneur!
The E-Myth Revisited – theme #2: Scaling-up.
The second theme in Gerber’s book focuses on the necessity to scale-up and create a “new view of business”, i.e. a “turn-key” model.
The idea here is that no entrepreneur is free until he has created a model that can be replicated without him. Or, in his words, the goal is to create a way of doing business that can “dramatically transform any small business … from a condition of chaos and disease to a condition of order, excitement and continuous growth”.
Gerber focuses on one idea: creating a franchise. To him, the next step for the small business owner consists in transforming a business into a product that can be replicated and managed by others. What is sold here is not the baked pies anymore. The product is a fully reproducible and predictable bakery business model that is precise enough to empower others while requiring minimum involvement.
His point is illustrated very thoroughly with numerous comments on how Ray Kroc transformed a well-organized burger shop into MacDonald as we know it. In the case of MacDonald, he says, this required adapting Ford-style methods of producing cars to controlled and automated food production.
The goal is mainly to create a prototype capable of acting “as a buffer between hypothesis and action” while transforming the business into a reliable machine. The model then becomes balanced, in line with the mindset issue discussed previously: the entrepreneur focuses on the vision, the managers are hired to deal with order and predictability, while the technicians get everything done.
Of course, the franchise is only an image here and the model is relevant and worth adapting to any business as long as the new entrepreneur has become aware of that organizational opportunity.
From that point, the new entrepreneur starts working ON the business and merely focuses on ensuring value consistency to the clients (and partners of all sorts, whether they are bankers or suppliers) whilst relying on low-skilled workers for the operational work.
The E-Myth Revisited – theme #2: A business that runs without you.
The third theme in Gerber’s book focuses on what steps must be implemented in order to create this “franchise mindset”.
Again, the point here is not to create a franchised business but to plan business development to make it manageable without you. The author discusses the business development process by looking at three main aspects.
One is innovation. Gerber defines innovation as creativity with results. The question here is “what is standing between my business and my customer”. Everything must start from the customer.
Then comes quantification, i.e. the idea that – even though most entrepreneurs don’t do it – everything should be recorded, assessed, quantified and analyzed to determine how the process can be improved. This relates to how many pies ought to be made, but this also implies looking at what welcoming formula generates the best sales for instance.
Orchestration is the last aspect of the mindset and consists in saying that discretion left to technicians (employees in general) can be associated with chaos and must therefore be eliminated. Simply, discretion is the enemy of order, and orchestration is key to obtaining the consistency expected by the clients.
Accordingly, Gerber goes on with some very precise guidelines as to how to create a business development program capable of enabling innovation, quantification and orchestration which includes defining aims, creating an organization strategy, a management strategy, a people management strategy, a marketing strategy and so on.
Thinking about your aim requires thinking about the life you want to live whilst your strategic objective will be about finding ways to achieve your aim. The organizational strategy is about finding ways to progressively replace yourself, etc. The purpose of this summary is only to provide you with the main ideas however, therefore those points will be left aside. If you are interested, get the book!
The main conclusions
Michael Gerber comes to the following conclusions.
- A new entrepreneur or small business owner sees himself as being free but he usually remains a technician incapable of thinking in terms of vision unless he starts to focus on mindset.
- This mindset is fundamentally incompatible with an entrepreneurial mindset which requires dissociating yourself from a doer’s routine to manage, organize chaos and ensure innovation as well as consistency when the business needs to grow and develop.
- The new entrepreneur should first determine his main goals (what is the life he wants to live) and realize his life has to be distinct from work.
- Building a business is not about selling products, it is about considering the business as the product itself.
- The franchise method helps thinking about how to make the business an automatic machine that can be handled by others, while guaranteeing consistency for the customer.
- Working ON your business (to make it efficient and autonomous) is therefore far more important than working IN or FOR your business.
- Your business, organizational, marketing strategies are key element to developing your business in a smooth and efficient way because they provide the blueprint and the roadmap every small business owner forgets to put into place.
So, let’s finish this book review with some food for thought!
‘The E-Myth Revisited’ is one of the reference books on business development in general. However, the book explores various discussions at the same time and is therefore suitable for different audiences.
First, ‘The E-Myth Revisited‘ talks about entrepreneurship and business creation, from scratch to success. The book has a clear focus on small businesses and will be relevant to those starting a business. But it is also great for anyone who already owns a business, faces difficulties and needs a little bit of help.
Second, the book also discusses the idea of working to live the life we want instead of working all the time and delaying our personal dreams.
In this regard, it is very much in line with a variety of books aimed at helping people review their work routine. Tim Ferriss’ ‘4-Hour Workweek’ in particular (Read the Book Review of Tim Ferriss ‘The 4-Hour Workweek’ here).
[ Edit November 2017: In the same vein, you might also be interested in looking at another book named ‘The $100 Startup’ by Chris Guillebeau. Guillebeau doesn’t approach business as Gerber does but focuses on how small businesses tend to start from nothing. Interested? Read my book review of Chris Guillebeau ‘The $100 Startup’ here!
Back to Gerber, ‘The E-Myth Revisited’ thus provides many opportunities to think about a variety of business-related topics. For instance, what are your basic motivations as an entrepreneur? How should you be thinking your business from scratch? Do you build a business to become free or do you build a business to become a slave to your own dream?
The questions formulated by Gerber are extremely relevant, practical and straightforward.
For instance, what does a new entrepreneur need to understand and do when shifting from a “job” routine? What is an entrepreneurial mindset and what does it require? What is your role as an entrepreneur? Why most new entrepreneurs remain stuck into a technician’s mindset and never manage to scale their business up? Etc.
It is interesting to note that while the book is mainly known by connoisseurs of the business development industry, it is very relevant to many people.
Obviously, the book is spot-on and an absolute must read for those interested in starting their business and for those who already have things ongoing. Having said this, the book also discusses the idea of working to have the life we want instead of turning our life into a work thing.
The point is relevant to many, and for this reason it seems more than fair to also classify the book as one of those motivational guides that focus on helping readers to make the most of their lives. Gerber’s book is not “just another book” however because ‘The E-myth Revisited’ remains focused on how to transform your business into a strategically designed machine, whatever your industry, when other books (like Ferriss’ for instance) mainly propose ways to live differently using internet and new technologies as leverage. In a nutshell: totally complementary.
This book is not about what you should do or about what you could do to get better results, it is about what mistakes every small business owner does and about what you have to do if you want to escape the vicious circle of the Entrepreneurial Myth.
Note: ‘The E-Myth Revisited’ was published in 1995 as an update from a book originally released in the 1980’s, but the content is perfectly pertinent to business owners in the years 2020. If you are interested in at least one of these topics, the book will be valuable to you without a doubt.
The logical next step is…
That’s it for now, but don’t stop here! The next step for you is to move on and learn something! That leaves you one choice:
Get Gerber’s book ‘The E-Myth Revisited’ and READ IT!
As always, I hope you enjoyed this book review! Please let me know what you think with the comment box down the page, especially if you read the book, if you feel like buying it, or if you read my summary!
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I am a thirty-something PhD and I read a lot. GreatBooks&Coffee is my books blog! Because nowadays most people never finish the books they buy, I am sharing my reading experiences to help you pick the right books you will want to read up to the last page!