Book Review: The E-Myth Revisited

I was fortunate enough to be given this book as a birthday present back at the end of September. The book was totally new to me, and I lapped it up. In fact, I found it a very compelling, and for that reason, quick read.

I tend to read at night, the last thing I do before going to sleep; no matter how late it is, or how early I have to be up in the morning. I alternate self-development/professional skills books, with fiction, and probably get through about 4 – 6 books a month, just more than 1 a week. With “The E-Myth” I found that I couldn’t wait to read the next chapter. In itself that’s a little unusual for a business book, but it just reads so well, and I resonated with the content so intimately.

The tagline is “Why Most Small Businesses Don’t Work and What to Do About it” and the preface mentions what we know, and what it seems everyone wants to tell us: 80% of small businesses will fail in the first year, and of the remainder, another 80% will fail within 5 years. These are US figures, but I suspect they’re not overly different from most of the western world.

Michael Gerber, the author, runs a company now, called The E-Myth, and has consulted with thousands of businesses in hundreds of countries, in dozens of industries. His observations are consistent across these wildly different businesses, started by diverse people from different ethnicities, backgrounds, personalities, languages and in different markets.

His message is simple: The E-Myth, or Entrepreneur Myth, is that great businesses are started by someone with a good technical skill, be that a baker, plumber, or programmer. They’ve reached some inflection in their life, have struck out on their own, rather than working for “the man”, and struck gold. This is a myth!

Which is why 8 out of 10 businesses will fail within a year, and 96 out of 100 within five.

It’s also why, even many successful small business owners work far longer hours, hate much of their working day, and don’t actually make that much money. In fact many of them would be happy to go back and work for “the man.”

The book is written allegorically. You follow the progress of Susan, a Pie shop owner. Although the author also uses metaphor extensively. Hence the really quick and compelling read. Most of all, what he says just makes sense, a crystallisation of what you already know.

The book does allude indirectly to Stephen Covey’s “Seven Habits” (another must read), especially around habit #1, Be Proactive.

The book postulates that there are three approaches to every business, or within every business person: The Technician (baker, plumber, programmer), the Manager, and the Entrepreneur. Every business has work for all three, and needs to be lead by the Entrepreneur, not the Technician (focussed on the content of the business) or the Manager (focussed on the processes in the business).

He illustrates a successful small businesses owner by using Ray Kroc, whom modelled McDonalds as a franchise. This way you could hire the lowest competent workers, because your business processes had been documented to a tee, which anyone could follow. Managers just need to ensure that Employees follow the processes, and you, the Entrepreneur can focus on growing your business. New products, new markets, better customer service, more innovation.

Here’s where I disagreed. But only academically, and only in my personal circumstance. I don’t want to have to create a gazillion operations manuals, covering every eventuality of my business, but would rather hire smart people with autonomy and creativity.

I do take his point, however, that the lowest competent person is industry specific, so if you’re starting a surgery, you still need doctors, but with good processes, you don’t need the smartest doctors available. I also take the point, from my recent exhausting experience, that there is just waay too much for one person to do.

The book is a must read for anyone starting a business, or running a small business. I’d recommend it as required reading for anyone in an outplacement program, or on a business course.

If you’ve read the E-Myth, or been to the site, and wondered if anyone in Australia can help you, there are a couple I’d recommend.

First is a good friend of mine, mentor, and business colleague, Janet Horton. She has extensive experience in starting, running,  and consulting to businesses of all sizes. She runs a consulting company called Handspring Consulting.

Together with a partner, she has recently started an organisation, “Two Heads Advisory Services,” to help small businesses grow. Although clearly she will be providing a lot more depth and assistance, the premise of Two Heads is based on the E-Myth. Janet recently featured on the BTalk podcast about Making Goals Work.

Another is Peter Black, who was my outplacement consultant and consults for DBM. As part of this program, he runs a Starting your Own Business Course, and a coaching company called, Peter Black Coaching.

I’d be delighted to facilitate an introduction to either/both Janet and Peter.

Enjoy the book. Also available as an Audible Audio Book. If you have an MP3 player, this is a great option