The E-Myth Revisited: Why Most Small

Businesses Don’t Work and What to Do About

It

Author: Michael E. Gerber

Marcos Vega

ENTR 442-01

29 November 2016

Personal Evaluation of the E-Myth Revisited

What makes a small business successful is under the owners dream and control—this is

exactly what Michael Gerber talks about in his book The E-Myth. Gerber defines the E-Myth as a

tale that addresses whether or not the entrepreneur actually exist and if they exist for more than

just one exhilarating moment. I personally recommend this book as it provides great insight into

the necessary mindset and systems needed to have a successful business.

            Mostly all businesses begin with an owner who was once a technician in the field that he

is now starting the business in; Gerber explains this is why they fail. Gerber talks about the three

mindsets (or personalities) needed to start a successful business: the entrepreneur or dreamer, the

manager or organizer, and the technician or the doer. All three of these people must work

together in an integrated system in order to have a successful company. This system must be

based on three key concepts: innovation, quantification, and orchestration. Innovation is the heart

of every business and is the constant question of asking what is the best way to do this,

quantification is the numbers attached to innovation, and orchestration sets the foundation for the

future. Utilizing these three concepts cohesively is what Gerber explains as the business

development program to an extraordinary business.

As the E-Myth goes on Gerber continues to explain the business development program,

which he bases on the formula developed by the late Ray Kroc, the man who is credited for the

extraordinary success of McDonalds. It is a step-by-step process in which you convert your

existing business, or the one about to create; into a perfectly organized model for thousands more

just like it. The program consists of seven steps: Your Primary Aim, Strategic Objective,

Organizational Strategy, Management Strategy, People Strategy, Marketing Strategy, and

Systems Strategy.

Executive Summary of The E-Myth Revisited

Introduction to the E-Myth and the Three Personalities:

In the competitive business society we live in every year 40% of all small businesses fail

within their first and 80% of those businesses will fail in five years. Why do all of these

businesses fail? They are started out in the wrong direction from the beginning of their existence.

Most new business are started by motivated people who are tired of working for someone when

they can do it better and finally decide that they want to be their own boss and create their own

business. In his book The E-Myth, Michael Gerber describes that this is exactly the wrong way to

start a business.

The E-Myth is what Gerber states as the myth of the entrepreneur and the question of if

there is such a thing. As Gerber explains further he introduces the idea of the mindset a

successful business owner must have and that it is made up of three different personalities. There

is the entrepreneur who is a visionary, dreamer, and one who looks to the future to establish his

present. Secondly there is the manager who has a pragmatic personality and lives in the past,

craves order, and sees problems instead of opportunities. Lastly the technician, who is the

frustrated employee who begins his or her own business in hopes to be its own boss but is a doer

and lives in the present. It is the integration of all three personalities that Gerber describes as the

ideal business owner, who displays vision, provides organization, and has a strong work ethic in

the field.

Three Life Stages of a Business:

As a newly founded business begins it sets out on a growth process that consists of three

stages infancy, adolescence, and maturity. Infancy is a time of great frustration as the business

owner and the business are one in the same. The business takes control of the owner’s life as

they spend countless hours slaving away trying to get their business off the ground and handle all

of the new responsibilities it didn’t see coming. With the decline of mental health and business

productivity as well the business transition into the adolescences stage where the owner seeks out

help. At this time things start to look up for the owner as the new found help relieves much of the

pressure once on their shoulders and after awhile the owner falls into a comfort zone and begins

to abdicate the responsibilities of being a manager. Once again business productivity is down and

help has left, the business now has two directions to go, return to infancy or die. All of this could

have been avoided if the proper planning was put in place prior to opening its doors and that is

how mature businesses start out, with an entrepreneurial mindset.

Turn-Key Revolution:

Gerber speaks of the Turn-Key Revolution era as a turning point for small businesses

around the world. The term “Turn-Key” comes from the idea that a business should be so well

created with systems in place that when replicated the new business owner should only have to

‘turn the key’ and be successful. Ray Kroc, creator of the Franchise Business Format, found that

through Innovation, Quantification, and Orchestration a business development program could be

built that would provide lasting positive results over and over again. Innovation being the “best

way skill” by constantly asking what is the best way to do a task the mindset creates the highest

level of efficiency and productivity. Quantification is paired with innovation being the numbers

associated with it, without the numbers you cant know where you are or where you are going.

Orchestration builds upon that which precedes it, becomes the foundation for that which is about

to follow, and in the process honors the past, present, and future. By using these three ideas

cohesively a business development program could be designed that would convert your business

into a perfectly organized model for thousands just like it.

Business Development Program:

Setting out on your journey to develop your own business development model consist of

seven steps that include finding your primary aim, strategic objective, organizational,

management, people, marketing, and systems strategies. As you begin, finding your primary aim

may be the most important step as it calls for visualizing the end of what you want your story to

be before you even start. Having a primary aim is the entrepreneurial vision necessary to bring

your business to life and your life to business.

As you continue to plan your business development program each step is integral to the

life of your business and should be taken as serious as possible. In one example Gerber provides

in his book is the story of a hotel experience and in that example one reason for enjoying

working there that employee gave was the type of seriousness his owner brought to the business

that was different than other places he had worked at before. If the owner is willing to provide an

idea behind the work that is more important than the work itself, than that is a successful

business.

Working on your Business, Not in it:

The most important points in the E-Myth are those that stress the importance of the

process of building a business that has structure, proper systems, and the idea of working on your

business not in it. Working in your business is not what a business owner goes into business for

it’s the idea of being free from work. In order to obtain that goal you must place yourself in

every role of your business and prepare the steps for that role to be most successful that way

when it comes time you can delegate that role and know it will be successful. What I think

Gerber wanted us to take away from his book was that the idea of a small business should be to

provide a place to bring humans and ideas together to grow and flourish.