When you become an entrepreneur, you'll face some typical frustrations:
- Not earning enough money
- Insufficient personal income
- There are not enough customers
- Can't seem to locate excellent folks
- There isn't enough time
- The company is overly reliant on you.
The list goes on and on. Without a system that consistently creates the opposite of those concerns, getting out of those foreseeable problems is difficult, if not impossible.
That's where The E-Myth comes in, as well as the Entrepreneurial Model it advocates.
According to Michael Gerber, the solution is to conceive your company as a franchise, a unique style of conducting business that effectively distinguishes every exceptional company from its competitors.
This is the age-old advice from business experts to "focus on your business rather than in it." The difference is that Gerber has developed detailed directions for getting there.
You'll find the answers to the following questions in this book and summary:
- How can I make my company run without me?
- How can I get my workers to work without interfering all the time?
- How can I organize my company so that it can be reproduced 5000 times and function just as smoothly as the first?
- How can I own a business while being debt-free?
- How can I spend my time doing work that I enjoy rather than the job required to do?
Understanding the Rules
Here are the principles to follow if you want your firm to perform like a franchise and provide predictable results:
- Customers, workers, suppliers, and lenders will receive the constant value that goes above and beyond what they anticipate from the model.
- The model will be controlled by those with the utmost inexperience.
- The model will stand out as a spot where everything is in perfect order.
- Operations Manuals will be used to document all of the model's work.
- The consumer will receive a consistent and predictable service due to the approach.
- The model will follow a color, dress, and facility code that is consistent.
There are seven separate steps that we'll go over one by one to get there.
Your Primary Aim
Every entrepreneur launches their own company. However, we are sometimes so engrossed in the business that we forget that the business's ultimate goal is to serve ourselves.
If you want your business to serve you rather than the other way around, here are the questions you must answer with complete clarity.
- What kind of life do I want to live?
- On a daily level, how do I want my life to be?
- What would it mean to me to be able to claim I genuinely understand about my life?
- How would I like to interact with the people in my life — my family, friends, coworkers, customers, and neighbors?
- What do I want others to think of me?
- In two years, what would I hope to be doing? What's ten years? How about twenty years? When my life comes to an end, what will I do?
- What do I want to learn spiritually, physically, financially, technically, and intellectually during my life? What about romantic relationships?
- How much money will I need to accomplish my goals? When will I need to have it?
Your Strategic Objective
Your Strategic Objective is a concise summary of what your company must do to attain its Primary Goal.
It's a set of criteria by which you may track your progress toward your ultimate aim.
You might mention numerous standards, but according to Gerber, the first two should be the following.
First and foremost, you must determine how much money your firm will produce after it is "completed." Will it be a $1 million a year business? A $500 million-a-year business? Is there anything else? How much profit will it earn after taxes? That is the money you will utilize to create the life you desire through your Primary Aim.
Second, you must create a company that can meet the financial goals you established in the previous step. It identifies the type of business you're starting and who your target market will be.
There is no set number of standards that must be produced after that. However, answering some of the following questions will be beneficial:
- When will the final version of your firm (which Gerber refers to as the prototype) be completed?
- In terms of business, where are you going to be? Locally? Regionally? Worldwide?
- What kind of company are you intending to start? Retail? Wholesale? Is there anything else?
The standards you set for your company will eventually become the company you want to build. Many entrepreneurs neglect this phase when they first start their firm and never make it out of the day-to-day activities.
Your Organizational Strategy
Most firms, according to Gerber, are organized on people rather than functions. And, he claims, the end effect is nearly invariably mayhem.
The next logical step in developing your company prototype is to figure out what kind of organizational structure you'll need to achieve your strategic goal.
Here's how you're going to accomplish it.
- Create an organizational chart to show how your company will eventually operate. For example, you may require a CEO (who may or may not be you), a COO, a VP of Sales, account managers, and other personnel.
- Fill in the blanks for all of the positions you now hold. This will most likely be all of them when you first start off.
- Create Position Contracts, which are highly specific descriptions of each role. This is a description of the outcomes that each position in the organization is accountable for, the work that the person is responsible for, a list of criteria against which the results will be assessed, and a line for the signature of the individual who agrees to fulfill those duties.
- Sign your name to every deal you're presently working on. The key takeaway here is: you should build your own system within your company based on the standards you wish to establish. Do that rather than relying on others to do it for you.
You must be at ease knowing that the tactical aspects of the business are being taken care of to free yourself up to focus on the strategic elements of the firm.
For example, you don't advertise for a salesman until you've completed the company's Sales Operations Manual.
You'll know exactly which criteria you need to be hiring against once you've developed position contracts for each of the company's jobs.
Your Management Strategy
You may now go to your management plan when you've completed your organizational strategy.
Our management plan, according to Gerber, is the system we build for the company. It cannot and should not rely on pricey and brilliant individuals. Your system will be more effective if it is more automated and specialized.
It's essentially a set of checklists for everything that has to be done within the company.
A hotel, for example, might have a set of checklists for the cleaning staff. There's also a set of lists for the personnel in charge of checking guests in. And so forth.
Finally, you should have a mechanism in place in your system to ensure that the work on the checklists is completed correctly.
For example, you may have your employees sign a checklist after each job, indicating that the work was performed according to the instructions specified. Then make signing off on work that hasn't been done a punishable offense.
The advantages of such a system are obvious. You'll be able to hire and train new employees so that they can swiftly complete duties and provide the same outcomes as those who have done them for a long period.
Your People Strategy
Creating an atmosphere where "doing it" is more essential to them than "not doing it" is at the heart of your people strategy.
One of the most important aspects of making this happen is ensuring the individuals you recruit understand why they're being asked to do their task.
As Gerber points out, individuals do not only desire to work for fascinating people. They want to work with individuals who have established a well-defined framework for interacting with the rest of the world. They need a framework in which they can test themselves and be tested.
In a nutshell, it's a game. Of course, the most important thing is to develop a game that people want to play.
Gerber described a hotel owner's "game," in which his hotel became a universe in which his customers' sensory sensations were met by a profound commitment to cleanliness, beauty, and order.
This moved beyond the business explanation and into the proprietor of the hotel's mindset. It was then verbally and physically stated to his staff.
His notion was expressed through the methods they detailed for running the firm and his kind, caring demeanor.
He established the tone for this game from the start of his connection with his staff - even before they were employed.
The recruiting procedure consisted of five unique steps:
- In a group meeting, a rehearsed presentation conveys the Boss' concept to all applicants simultaneously. It outlined his vision and the history of the company and their success in putting it into action, as well as what the successful applicant for the role would need.
- Then he met with each candidate one-on-one to talk about their reactions to his concept and why they believed they'd be a good match to carry it out.
- He called the chosen applicant and gave a rehearsed presentation.
- He informed the failed candidates and expressed gratitude for their interest.
- The boss performed the following on the first day of training:
- Examined the boss's suggestion;
- Described the mechanism via which the entire company brings that concept to life;
- Gave the new employee a tour of the facilities, emphasizing the people and processes that make the vision a reality;
- Clearly and completely answered the employee's queries;
- Went over the Operations Manual with the employee, which included the Strategic Objective, Organization Strategy, and Role Contract for the employee's position.
- Finished the paperwork for my new job.
This is how you put your company's fundamental principles to life.
Your Marketing Strategy
What your consumer wants and how you give it are the life and death of any marketing plan.
Understanding your clients' desires is contingent on your grasping the two foundations of a successful marketing strategy: your customers' demographics and psychographics.
You'll have previously determined the demographics of your clients when you initially started your firm. Your next task is to learn as much as you can about that market segment's psychographics.
What brands do they buy in addition to these? How are those businesses currently selling to those customers marketing to them? What are the colors that they use? What are the messages they're sending? What are the ideals that they appear to be promoting?
Then you'll take all of that data and figure out what your company needs to be in those consumers' minds for them to select you over the competition.
Finally, you'll develop a promise that your customers want to hear and then organize your whole business around delivering on that promise better than anybody else.
Of course, as your business grows, you'll have a better understanding of your consumers' demographics and psychographics, and you'll refine your marketing plan over time.
Your systems strategy is the final jigsaw piece in constructing your company. There are three different types of systems.
Hard systems are non-living, lifeless objects. Living creatures or thoughts are both examples of soft systems. So far, the book's core and summary have been a mix of the two approaches.
The information system is the third system, and it supplies us with knowledge on how the other two interact.
For instance, if you had a sales system that records the sales process from start to finish (which you should), you would be tracking any or all of the following items:
- What was the total number of calls made?
- How many people were contacted?
- What was the total number of planned appointments?
- What was the total number of confirmed appointments?
- What was the total number of meetings held?
- What was the total number of Needs Analysis Presentations scheduled?
- How many Needs Analyses were found to be accurate?
- How many Needs Analyses have you performed thus far?
- What was the total number of Solution Presentations scheduled?
- What is the total number of Solutions Presentations that have been confirmed?
- What was the total number of Solutions Presentations that were completed?
- What was the total number of solutions sold?
- How much did the typical dollar cost?
In brief, the information system should provide you with all of the information you require on how your employees are performing to fulfill your strategic objectives and primary goal.