Why is it important to build a business by design? An operation that works without us may seem counterintuitive to some entrepreneurs—but it’s the model for a liberated life.
I’ve read many books on my entrepreneurial journey. Some have been inspirational in helping me construct my business models and live a freer, happier life. I could (and do) recommend Gino Wickman’s Traction: Get a Grip on Your Business or Simon Sinek’s Start with Why: How Great Leaders Inspire Everyone to Take Action.
But today, I’m spotlighting Michael E. Gerber’s The E-Myth: Why Most Businesses Don’t Work and What to Do About It, now retailing as The E-Myth Revisited. The “E” stands for “Entrepreneurial.” The book aims to explain why 80 percent of small businesses fail. And with that sobering statistic and the fact that 99.9 percent of all American businesses fall into the “small” category, it’s no wonder the book is still going strong.
Why do I think it’s such a worthwhile read? Well, the top reason people have for starting their own business is to become their own boss. Consider this quote by Gerber which fairly sums up his book:
“If your business depends on you, you don’t own a business—you have a job. And it’s the worst job in the world because you’re working for a lunatic!”
If you’re anything like I used to be, that first sentence will hit home. Hard. Maybe the second sentence will make you stop and realize you have gone a bit crazy. I mean, you started your business to escape working for someone else, right? To become liberated?
Look around and see if that’s how your plan worked out—or if you’re so chained to your business that you’re working ten times harder than anybody else in it.
The E-Myth in reality
A non-entrepreneur-dependent business may run contrary to your every reflex (“How can it run without me? I am the business!”) but bear with me.
Gerber’s approach can be broken down into two basic steps. The first is the sober reality that no matter how much you love what you do—be it painting, accounting, cooking, or whatever—being passionate about your talent does not translate into business success. This is something I’ve previously elaborated on from the firsthand experience. You need to blend the 3 Ps—passion, performance, and profit—to succeed.
Gerber’s second step is to systematize your whole business as if it were a franchise. Even if you only ever plan on having one location, consider it the first in a long line. Once you have the right systems in place, you, as the leader, get to step away while still generating results and maintaining growth.
The E-Myth systems are classified in three ways: hard (equipment your business will need), soft (the attitudes of both the business and its employees), and data (the information gathered from operations to create a smarter, customer-centric performance). From these, a master system that runs like clockwork can be created.
McDonald’s CEO Chris Kempczinski doesn’t have to call every restaurant at lunchtime to check-in. There’s a system in place and he doesn’t doubt that it’s being followed. But that’s an extreme example; of course, the CEO of a massive company isn’t micromanaging accountabilities at that level. But there are plenty of far more practical examples of entrepreneurs running small to medium-sized businesses just like that.
From E-Myth to EOS®
Gerber’s model has earned its respected status. At the nuts and bolts level of systems, it’s a winner. It’s not perfect, however.
Despite its success, the E-Myth has been criticized for undervaluing people and prioritizing systems. Still, it provided me with good food for thought in implementing a system in my own business—one that does more than imposing a cookie-cutter blueprint. A unique but shared vision by the right people—along with smart processes—is really the secret sauce in building a business that can run without you.
The EOS improves on the E-Myth
The Entrepreneurial Operating System® does believe in the value of processes. But it also places a ton of emphasis on people and helps craft a culture of transparency and accountability where everybody knows and owns their role. Sure, the day-to-day operations get codified. Your people will know the rules and where the line is, but those two goals are never arrived at by over-systemizing things. Your team members need to be able to think, breathe, and decide—and express their own solutions within the wider model.
EOS and the E-Myth both offer ways for entrepreneurs to streamline operations and get more time to focus on what they are good at. My own experience combined with the EOS and other resources—including E-Myth and Sinek’s Start With Why—helped clarify the three things necessary to successfully build a business by design: your purpose, your values, and hiring the right employees who share them.
A business by design means sharing some of the freedom you want to enjoy as the founder. Don’t hire “Yes”-people who will toe the line mindlessly while you step away. That’s success suicide. Leaders should never sacrifice diversity of experience and perspectives that challenge them, both for their good and that of their team.
Brainstorms should also be part of your playbook to make everybody’s voice heard and revitalize things from time to time. A team that’s free to think means they can think without you. Otherwise, you’re anchored by employees who call for guidance every time you’re gone.
The E-Myth remains one of my favorite books and it represented a milestone in my quest to learn how to be an entrepreneur. Gerber’s model gets a lot right, explaining the need for business owners to unchain themselves from their business by building something that is truly durable. But entrepreneurs should never stop learning and improving—and that means finding the best suite of books, tools, and other resources to help them find success and live a life by design.
Schedule a meeting with Cesar today to learn more about building your business, and your life, by design.