Review of 'The E-Myth: Why Most Small Businesses Don't Work and What to Do About It'

A Review of “The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It”
(by Michael E. Gerber)

I read this classic book, “The E-Myth Revisited”, and these are some of the valuable strategic themes I’ve picked out of it.

The reason many small businesses stay very small and don’t fulfil their potential is that they are set up and run by a “Technician”. The Technician knows how to do the technical work but gives little thought to the equally important roles of the “Entrepreneur” and the “Manager”. These can be different people in your team or elements of our personalities. To successfully run a small business, all three roles must be present.

“You were a bookkeeper or a poodle clipper; a drafts-person or a hairdresser; a barber or a computer programmer; a doctor or a technical writer; a graphic artist or an accountant; an interior designer or a plumber or a salesperson. But whatever you were, you were doing technical work.” (Michael Gerber)

The blend of the Entrepreneur’s vision and The Manager’s pragmatism, together with the Technician’s technical skills are needed to build a successful small business.

Michael Gerber says that the Entrepreneurial Myth, which he calls the E-Myth, is that most founders of businesses may think of themselves as entrepreneurs but very often they are merely technicians.

“A mature company operates on a broad perspective, an entrepreneurial perspective, a more intelligent point of view, so that it works not because of you but without you. A business has to be able to survive and grow without you,” says the author.

The Entrepreneurial Model suggests that a new business must start with a focus on the customer, not with a picture of the business to be created: ”It understands that without a clear picture of that customer, no business can succeed.” This is what marketing is all about, placing the customer at the centre of everything.

The importance of working on the business, strategizing and planning

Successful businesses should have a plan but many small businesses do not, that’s because most business owners spend most of their time working ‘in’ the business and devote little time to working ‘on’ the business, strategizing and planning.

Michael Gerber says:

“But all the while, even while you’re guessing, the key is to plan, envision, and articulate what you see in the future both for yourself and for your employees. Because if you don’t articulate it—I mean, write it down, clearly, so others can understand it—you don’t own it! And do you know that in all the years I’ve been doing this work with small business owners, out of the thousands upon thousands we’ve met, there have only been a few who had any plan at all! Nothing written, nothing committed to paper, nothing concrete at all.”

Most of the SME clients that I engage with at Real Marketing do not have a clear marketing strategy or plan. That’s why most of my projects start by developing a strategic marketing plan which I go on to execute across multiple channels.

I always find that going through the strategy process and writing your plan down is a valuable thinking process. It helps force you to clarify your thinking and helps you work out your strategy and articulate it.

Please note: If your business is based in East Lothian, you may well qualify for up to 3 days of Free Marketing Strategy & Planning Consultancy through East Lothian Business Gateway delivered by Real Marketing!

Create a franchise to build a successful business

You have to build a business model that is clearly defined, process- and systems-driven and repeatable. In effect, you create a franchise for your business.

“The Franchise Prototype is… the balanced model that will satisfy The Entrepreneur, The Manager, and The Technician all at once.”

Michael Gerber says that you should ask these questions about your business model: “How do you create your Franchise Prototype? How do you… build a business that works predictably, effortlessly, and profitably each and every day? How do you build a business that works without you? How do you get free of your business to live a fuller life?…”

Put innovation at the heart of your organisation

Innovation must be in the heart of every exceptional business. To be innovative you must continually innovate and keep asking: “What is standing in the way of my customer getting what he wants from my business?”

The author rightly makes the point that innovation is meaningless unless it takes the customer’s point of view.

Build brands and cater for emotional needs and wants

Partly because customers make irrational purchasing decisions, I encourage most of my SME clients to build brands and try to give them the pillars to do so. These can be local or niche brands.
As Michael Gerber puts it:

“The truth is, nobody’s interested in the commodity. People buy feelings. And as the world becomes more and more complex, and the commodities more varied, the feelings we want become more urgent, less rational, more unconscious.”

All marketing strategy “starts, ends, lives, and dies with your customer”.

The author describes the irrational nature of buying decisions:

“Of his reactions, perceptions, attitudes, associations, beliefs, opinions, inferences, conclusions. An accumulation of all his experiences since the instant of his birth (and for all we know, before it) to this very moment when he stands before you. And all his expectations are nothing more or less than the means through which the sum of them all—your customer’s personality —gets fed what it needs. The food it needs comes in the form of sensory input from the Conscious Mind (the “surface”). And if the food is compatible with its expectations, the Unconscious Mind says, “Yes.” And if the food is incompatible with its expectations, the Unconscious Mind says, “No.” And that’s how buying decisions are made. Irrationally!”

Reality exists in someone’s perceptions, attitudes, beliefs and conclusions. This means that this famous dictum is wrong, “Find a need and fill it”. In fact, it should say, ““Find a perceived need and fill it.” Because if your customer doesn’t perceive he needs something, he doesn’t, even if he actually does.”

Businesses have to get to grips with their marketing strategy and embrace marketing

Many SMEs fail to really understand marketing and perhaps that isn’t surprising:

“Are you beginning to get a sense of the complexity of this business called marketing? I hope so. Because until you do, until you begin to take it seriously, until you give it the earnest attention it demands, your Prototype will continue to be the only thing it could hope to be under the circumstances—a crap shoot!”

Small businesses are less secure and less well resourced than big businesses. Michael Gerber makes a great point to support this:

“Your business is far more fragile than a big business. So if anything, you must take marketing more seriously than a big business does.”

Marketing isn’t as complicated as the author suggests: “But it’s important that you take it seriously. Because it most often is regarded by small business owners as merely ‘good common sense.’ And I have seen more often than not that the only definition of ‘good common sense’ is ‘my opinion.’…”

“…While you don’t have to go over the scientific deep end, you do have to be sensitive to the science of the marketing art. You have to be interested in it.”

Small businesses have much smaller marketing budgets which means that spending time getting the marketing strategy right, rather than simply focusing on short term tactics, is even more important.

“But you can afford to spend the time, the thought, the attention, on the same questions they ask. …And that’s why I keep on going back to the true work of the small business owner—the strategic work rather than the tactical work. Because if you’re doing tactical work all the time, if you’re working all the time devoting all your energy in your business, you won’t have any time or energy left to ask, let alone answer, all of the absolutely critical questions you need to ask. You’ll simply have no time or energy left to work on it.”

Marketing must permeate the whole company. Everyone, irrespective of their role, must ask…

“What must our business be in the mind of our customers in order for them to choose us over everyone else?”

As Michael Gerber states:

“Marketing is about the whole process of Lead Generation, Lead Conversion, and Client Fulfilment which is critical to the growth of the business. Marketing is “not just a part of it but the entire thing.”

Your customer and marketing philosophy must lie at the heart of every business.