The E-Myth Revisited: Small Business Book Review

I bought The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael Gerber at a outdoor market because it was a finance “bestseller” and I’d seen it on a few reading lists. It’s been sitting on my bookshelf since (along with many others…), but once I picked it up and read a chapter, I went ahead and finished over the next two days.

Why Businesses Fail

The “E-Myth” stands for the Entrepreneurial Myth, which I’ll paraphrase as the belief that all a successful business needs is a hardworking, skilled, fearless entrepreneur. When we think successful small business, we think of Bill Gates or Richard Branson of Virgin. Is it really that simple? 40% of small business fail within one year. 80% of them fail within 5 years.

This book states that, in reality, a successful business needs three roles to be fulfilled:

  • a technician which understands the technical aspects of the business,
  • a manager which plans and organizes, and
  • a entrepreneur who provides the vision and energy.

You might think you have all of these characteristics already, but these roles are often in conflict with each other. Most businesses start out with only one role really filled – that of the technician. A plumber starts a plumbing company. A baker starts a bakery. A graphic designer starts a design shop. Usually, the motivation is that they don’t want a boss. The end up have a poorly trained boss – themselves.

When things get hard, usually the technician wins out. The perceived solution is to work harder, do everything by yourself, so that you can “do it right”. This is where many businesses start to fail. Now, if you’re really stubborn and hardworking, you can make this stretch out for a long time. You’ll also be really tired and unhappy.

I actually see this first part of the book as separate from the next part. It teaches you to look at how you are running your businesses. Are some of the roles being too strong, or being neglected? The manager tends to micromanage, and the entrepreneur tends to be the frustrated dreamer.

The Solution

Okay, so now what? How do you take your business to the next level?

Gerber says to look at the franchise model, and uses McDonald’s as an example. Don’t focus on the fact that you may hate the food there. The true power of McDonald’s is that every single aspect of the business was broken down step-by-step and laid out that a random person off the street could “read the manual” and open up their own McDonald’s restaurant. Where to locate the restaurant. The layout of the kitchen. The menu. How each hamburger is ordered, stored, cooked, assembled, and finally delivered to the customer.

What’s your system? If you were to train a reasonably smart person without any knowledge in your field, how would you break down your business to them? What is the unique value proposition that you offer, and how do you achieve it? What does each roleplayer do? As the saying goes, “Explain it to me like I’m a 10-year old.”

Recap

I view this book as “big picture” type of book that will definitely get you thinking differently about your business and business goals. Since it is also relatively short and easy to read, I would recommend it to anyone who wants to work in a small business, or is already working in one. (It’s also really easy to find at the library or used for cheap – try Amazon or Half.com.)

The book is definitely more applicable to a small business where you plan on one day being more “hands off”, like a restaurant, a store selling widgets, or a big design agency. But even for the many people out there who are perfectly happy being a one-person show, you can still apply the concepts of this book. You can break yourself down into what your special roles or tasks are. Write it down. You may not have ever thought of yourself in this way. Then you can focus on those areas, and either get rid of or outsource the tasks that you don’t need.

Now, some critics will call this book common sense from a self-appointed guru. In this way, I feel this book is a bit similar to Rich Dad, Poor Dad by Robert Kiyosaki. I didn’t really like the rest of his books, but the idea that you should buy assets that grow instead of liabilities like cars or gadgets can be helpful. But reading it was definitely a net positive for me, as was reading The E-Myth Revisited. Both are not the best writers out there, but still manage to convey their message.

Comments

  1. I read this book a number of years ago. It’s definitely a must read for anyone starting a new business or thinking of doing so.

  2. Dominicanoendeuda says:

    I’ve been willing to read it as well and haven’t had the chance yet. I better stop being lazy and get to the library to get a copy.

  3. does the E-myth revisited cover the same material as the original E-myth, or is it an entirely new book?

  4. @Maury – From reading the Amazon reviews and the publication dates, it appears that E-Myth Revisited covers the same material as the original but is “updated and revised”. The original E-Myth book was published in 1988, and is no longer being printed.

    There are a lot of other new titles like E-Myth Manager and E-Myth Mastery that are different material based on the overall same idea. Hmm… another parallel will Kiyosaki.

  5. hey i met the Author he really is very sincere and motivating

  6. urlmoderated says:

    Great article here and the tips are very comprehensive. For sure many entrepreneurs with small and big businesses are going to benefit from this. Keep it up!

  7. I’ve seen many small businesses fail. This article makes a lot of sense. I believe the “manager” is so much more important than it may seem. They’re the ones that are needed when times get hard. If a big competitor moves into town or a member of a small family business gets ill, that’s when the bills start piling up. A small plumbing or landscaping business doesn’t always know how to deal with these financial challenges and that’s where the “Manager” is desperately needed.

  8. My husband and I have both read this book and it has absolutely changed our lives. This is an absolute MUST READ for any business owner or aspiring entrepreneur. Easy to read and understand, this book provides simple, yet profound, solutions to implement into your own business (and life)

  9. The most well-written, comprehensive, clear business book I’ve read so far. Gerber both manages to make this book really entertaining (I listened to the audio version) and super informative and eye-opening. I think different business books resonate with different people; this one really resonated with me. Most other books about this subject that I’ve read all say pretty much the same thing, and fail to give many concrete steps to take.

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