Business Operating System #1 – The E-Myth

The E-Myth, written by Michael Gerber, was first published in 1986 as a non-fiction book and re-released in 1995 as a business fable, titled The E-Myth Revisited.

According to Michael Gerber, the e-myth, or entrepreneur myth, is that most companies are started by heroic business visionaries. However, in reality most businesses are launched by technicians, not entrepreneurs, and often by accident, rather than by design. This is why 50 percent of American businesses fail within five years.

Gerber makes the case that to succeed, technicians must start working on their business as much as they work in it. Over time, they need to become managers and eventually entrepreneurs if they want to keep growing their business.

Another thesis of The E-Myth is to follow the “McDonald’s model,” by systematizing your business into a replicable “franchise prototype.”

Then scale your business by cloning it in multiple geographic locations, without you as its owner having to be around to run these units.

The rest of the book gives you general instructions for creating your franchise prototype, including strategies to:

  • Innovate, quantify, and orchestrate the key processes of your business
  • Determine your primary aim, and why you want to achieve it
  • Paint a vision of your business, which Gerber calls your “strategic objective”
  • Devise an organizational strategy around the key functions of the business, instead of personalities, and to set clear expectations for function owners by defining “position contracts”
  • Create a management system to find and keep customers by setting clear expectations, creating acquisition processes, and “gamifying” them to keep your employees engaged and focused
  • Articulate the demographics and psychographics of your target customers, and
  • Design and build systems for the visual appearance, processes, and management information required to build a functioning and replicable franchise prototype.

In One Sentence: Develop a “technician-operated” small service businesses into franchise effectiveness

Source: Buyable – Your Guide to Building a Self-Managing, Fast-Growing and High-Profit Business (Amershire Publishing, Glen Allen, Virginia, 2021)