How to Make Your Small Business Work? (E-myth Revisited)

Do your employee’s moods affect your business?

And most of your time is spent on the business’s operations?

Then, this post can help you lead your business instead of just working at it.

If your business depends on you, you have a job. And it’s the worst job in the world because you’re working for a lunatic!  – Michael E Gerber

Michael says most people who start businesses are technicians (people who were good at an aspect of their job) and decided to start their own venture.

A hairdresser starts his beauty saloon, a doctor starts a clinic, the mechanic has a garage.

Knowing one aspect of a business does not mean that you can run that same business, the author called this an E-myth.

There’s a lot that goes on with a business that a technician will not understand.

01 Balancing your business personalities within

Everyone who goes into business is actually three people in one: the Entrepreneur, the Manager, and the Technician.

• The entrepreneur – Visionary who thinks ahead and makes plans for the future.

• The manager – Establishes the order in the workplace, trying to create consistency.

• The technician – worker, and the person who does the technical work.

If you’re only a technician you will become enslaved to your own business as you’re the only one capable of creating the work required.

Where if you decide to hire other workers you need to be able to manage them, keep them motivated, have a plan, take risks and expand your business.

To be a good business owner, you need all three in the same amount.

You need to be able to do the technical work, in the beginning, to cut costs,

be able to manage and train other employees and be able to take risks and have a plan for the future.

02 Make your business system dependent not people dependent

This means setting up systems and procedures that require people with the minimum amount of skills to keep it operating at a high level.

If you’re people-dependent instead of system-dependent your business will collapse easily.

Work on your business, not in it

To run a successful business, sometimes you’ll have to give up your main skill to someone else;

and allow yourself to control the goings-on by managing others and not so much doing all of the work on your own.

Make an organizational chart to delegate responsibilities of your business

The turn-key revolution: a way to grow any business (Franchise Model)

It is the act of setting up your business so that you have systems and processes set up for a consistent, effective, and orderly way of doing business.

The real product you’re selling is your business. Not the product your business sells to consumers.

When setting up a turn-key operation, make sure you are documenting all of the steps and processes that go into marketing, creating new products, sales, bookkeeping, everything.

Pretend that the business you own—or want to own—is the prototype, or
will be the prototype, for 5,000 more just like it.

Things to ensure while franchising :

1. The model will provide consistent value to your customers, employees,
suppliers, and lenders, beyond what they expect.
2. The model will be operated by people with the lowest possible level of
skill.
3. The model will stand out as a place of impeccable order.
4. All work in the model will be documented in Operations Manuals.
5. The model will provide a uniformly predictable service to the customer.
6. The model will utilize a uniform color, dress, and facilities code.

Your Business Development Program

The owner must handle the entrepreneurial aspect of running a business by hiring managers to follow the vision of the company and to manage the technicians who are doing the work.

You are not supposed to work in your business but work on it here.

Figuring out exactly who the customers you serve are and how you can add more value to their lives.

Go to work on your business rather than in it, and ask yourself the following questions:

  • How can I get my business to work without me?
  • How can I get my people to work, but without my constant interference?
  • How can I systematize my business in such a way that it could be replicated 5,000 times, so the 5,000th unit would run as smoothly as the first?
  • How can I own my business, and still be free of it?
  • How can I spend my time doing the work I love to do rather than the work I have to do?

Building a Small Business That Works

Building the Prototype of your business is a continuous process.

You can continue your business development process with 3 key elements – Innovation, Quantification, and Orchestration.

Through innovation, your business establishes its unique identity in the mind of its customer.

Quantification: the numbers related to the impact an Innovation makes.

Orchestration is the elimination of discretion.

Once you’ve innovated, quantified, and orchestrated something in your business, you must continue to innovate, quantify, and eliminate it further.

Your Business Development Program

Your Business Development Program is the vehicle through which you can create your Franchise Prototype.

The Program is composed of seven distinct steps:

1. Your Primary Aim

So before you start your business, or before you return to it tomorrow, ask
yourself the following questions:

  1. What do I wish my life to look like?
  2. How do I wish my life to be on a day-to-day basis?
  3. What would I like to be able to say I truly know in my life, about my
    life?
  4. How would I like to be with other people in my life—my family, my
    friends, my business associates, my customers, my employees, my
    community?
  5. How would I like people to think about me?
  6. What would I like to be doing two years from now? Ten years from
    now? Twenty years from now?
  7. What specifically would I like to learn during my life—spiritually,
    physically, financially, technically, intellectually? About relationships?
  8. How much money will I need to do the things I wish to do?
  9. By when will I need it?

2. Your Strategic Objective

It is a very clear statement of what your business has to ultimately do for you to achieve your Primary Aim.

  1. How big is your vision?
  2. How big will your company be when it’s finally done?
  3. Will it be a $300,000 company?
  4. A million-dollar company?
  5. A $500-million company?”

“At the beginning of your business, any standards are better than no standards.”

The first question you must always ask when creating standards for your Strategic Objective is:

  1. What will serve my Primary Aim?
  2. In other words, how much money do you need in order to be independent of work, to be free?”

An Opportunity Worth Pursuing is a business that can fulfill the financial standards you’ve created for your Primary Aim and your Strategic Objective.

  1. How do you know whether you have an Opportunity Worth Pursuing?
  2. Does the business I have in mind alleviate a frustration experienced by a large enough group of consumers to make it worth my while?
  3. What’s your product?
  4. What feeling will your customer walk away with?
  5. What is he really buying when he buys from you?

The product is what your customer feels as he walks out of your business.

“People buy feelings.”

3. Your Organizational Strategy

Organize your company around accountabilities or responsibilities rather than around people. 

Without an Organizational Chart, everything hinges on luck and good feelings, on the personalities of the people and the goodwill they share.

An example of an Organizational Chart:

Within the organizational Chart, you should include the positional contract.

The Position Contract describes what individuals are supposed to do, as well as what is expected of them.

4. Your Management Strategy

You may think that the successful implementation of a management strategy is
dependent on finding amazingly competent managers—people with excellent
“people skills,” with degrees from management schools.

 It isn’t.

You don’t need such people.
Nor can you afford them.

In fact, they will be the bane of your existence.

What you need, instead, is a Management System.

The System will become your solution to the problems that beset you because of the unpredictability of your people.

Using the System, you’ll transform your people’s problems into opportunities by orchestrating the decision-making process while eliminating the need for such decisions wherever possible.

5. Your People Strategy
Your people want to for a boss who’s created a clearly defined structure for acting in the world. They want a structure through which they can test themselves and be tested. This structure is called a game.
The degree to which people buy into your game depends on how well you communicate the game to them at the outset of your relationship. Your People Strategy is the way you communicate this idea.
A few rules to keep in mind:

Never figure out what you want your people to do and then try to communicate a game out of it
Never create a game for your people you’re unwilling to play yourself
Make sure there are specific ways of winning the game without ending it
Change the game from time to time—the tactic, not the strategy
Never expect the game to be self-sustaining. People need to be reminded of it constantly
The game has to make sense
The game needs to be fun from time to time
If you can’t think of a good game, steal one
6. Your Marketing Strategy
“Forget everything but your customer.”
“Demographics and psychographics are the two essential pillars supporting a successful marketing program.”
“If you know who your customer is—demographics—you can then determine why he buys—psychographics.”
“If your customer doesn’t perceive he needs something, he doesn’t, even if he actually does.”
7. Your Systems Strategy
There are three kinds of systems in your business:

Hard Systems
Soft Systems
Information Systems.
“Hard Systems are inanimate, unliving things.”
“Soft Systems are either animate—living—or ideas.”
“Information Systems are those that provide us with information about the interaction between the other two.”

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