For every person who starts a business of their own, or has a small business, Michael E. Gerber’s book, “The E Myth Revisited” should be a required read. I’m going to post once a week on ideas from this book. For those who have never read it, I’ll boil it down for you, although you should get a copy anyway, I’m only going to talk about the lessons, yet there is much more. Gerber is a wonderful story-teller. For those who have read it, this will be a refresher of a wonderful business-self-help classic that stands the test of time, and it is one of those few books that you find yourself reading over and over…
Systems to run the business so that low skill people can run the systems. Let’s take a look at how Gerber came to this brilliant method for small businesses to finally work. Most small businesses start out in what Gerber calls the Infancy stage, where the technician creates a business based on what he or she wants to do, which is not necessarily what the business needs. You can recognize a business in infancy because it’s named after the owner, just like I named my business, Van Cleve Payroll. We infants leave little to the imagination, you know who does what. You-work. And you work and you work and you work. You ARE the business.
After the initial freedom euphoria wears off, things begin to change, gradually. You begin dropping the ball, things are being overlooked, it’s becoming more of a pain to keep it all up. At this point, some give up, quit the self-imposed rat race and go back to a job. Others start letting go of responsibilities and hire people to fill jobs. That next stage is called Adolescence.
In Adolescence, the overwhelmed owner starts hiring people to fill roles formerly done by him/her. Naturally, what are needed are skilled people to fill the skills done by you! Gerber says this may actually be the worst thing to happen to a business. Why? Because skilled workers will be the bain of your existence. Hiring highly trained technicians is expensive and they never quite have your enthusiasm, do they? The relief is nice at first but this is no way to grow a small business into a bigger business. Some adolescent companies fall back to infancy, scaling back the chaos until it’s manageable. Others just keep growing despite the pitfalls. Keep in mind very, very few ever make it this far, to maturity. That does not by definition make them great companies. The great ones did things differently.
The third stage that an adolescent company can grow to is Maturity. A mature business is what we all think of as a really successful business, Apple, Exxon, Crispy Creme, Toyota. But here is Gerber’s brilliant insight, great companies didn’t grow into great companies, they STARTED OUT as mature companies. They built a business out of developing systems, models if you will, and figured out how to be able to duplicate the systems. A system that can be duplicated over and over again cannot be dependent on super-skilled technicians to make it work. No, a system must be able to be done by anyone, with a little training. Gerber saw that the very best and clearest example of this is McDonalds. Next time I’ll talk about this idea of a “turn-key” business, otherwise known as a franchise, and how you might apply it to your own business.