In the latest part of our series on insightful business books, we’re turning our attention to starting a business, something that hundreds of thousands of people in the UK do every year.
But keeping that business running isn’t easy. According to figures from the Office for National Statistics, the one-year survival rate for UK businesses is around 89%. Move that timeframe to five years and the figure drops to 42%.
To paraphrase a line from Jeff Goldblum in The Lost World, “it starts with oohs and ahhs, but later there’s running, and screaming”. It’s a similar picture for many businesses, and while nobody wants to end up running or screaming, many do, so what’s going on?
To understand why it happens and how to put it right, let’s explore The E-Myth Revisited by Michael E. Gerber.
What makes it great, in a nutshell?
As the title suggests, the book is actually a reworking of the very successful The E-Myth from 1985, and the heading continues with ‘Why most small businesses don’t work and what to do about it’. That sounds bleaker than it is – what Gerber is getting at is that many people start a business with the best intentions, but find they can’t control it, or worse, it controls them. The answer lies in thinking about the big picture from the very beginning and embracing the need for consistency and process.
The elusive entrepreneur
These days ‘entrepreneur’ is synonymous with ‘business owner’ but Gerber argues that true entrepreneurs are rare. More common is the business owner who’s passionate about a calling, but needs help to translate that into a business that can operate without the responsibility for absolutely everything falling onto their shoulders.
He explains that while true entrepreneurs are those who thrive on starting new businesses time and again, most business owners are just looking for a way to be their own boss and do what they love. But whether it’s due to being unwilling to delegate work, failing to plan ahead or both, it’s often the case that the business stops being about doing what you love, and instead becomes all about the struggle of just keeping things going.
Manager, technician, entrepreneur?
Gerber argues business owners are frequently forced to become a triptych – part technician, part entrepreneur and, as the company begins to hire, part manager. While the business starts with the premise of being the technician (the maker of things), two additional identities inevitably muscle their way in, tying up the technician with roles they may not be qualified for, or comfortable in doing.
The initial spark comes from an ‘entrepreneurial seizure’, the assumption for example, that being a good barista makes you a great person to operate a coffee chain, but this is Gerber’s ‘fatal assumption’ and it doesn’t take long for that assumption to be unmasked. The problem is that at heart, you’re still the technician, but now you’re doing a whole lot of other stuff you’re not used to and didn’t really want to do. In effect your liberating business idea has become just a job again – a really difficult and demanding one at that.
You are what you eat
Gerber uses the example of Sarah, a genuine acquaintance and client who decided to open a pie shop, but underestimated the running a business part. Sarah begins with a love for baking and a desire to make it her job, but she seems to be working ever harder to earn a living so over time she hates the business and finally, she hates the pies too.
Sarah’s journey has a happy outcome in the end, once she revisits her business plan and restructures it, taking account of what running a business really means. But as Gerber explains, the identity of your business reflects your own characteristics, especially if they include a tendency towards being disorganised or paying insufficient attention to seeking out information and planning ahead.
The intention isn’t to have the reader leave with poor self-esteem and a deflated business balloon – the point is that running a business involves these things and the route to getting it right is to plan out how you’ll handle them. It’s a business and you want it to grow, so Gerber advocates thinking of it as a franchise right from the start.
He argues that the greatest thing McDonald’s gave the world beyond the Big Mac was the effective birth of franchising (the ‘Turn-Key Revolution’) and the habit of ‘systematising’ everything. Gerber talks about a ‘system of systems’ – an overarching view of the whole business that sets out your primary aim and strategic objectives, but also structured, repeatable strategies for organisation, management, people, marketing and systems. It’s a call to standardise and rationalise processes right across the board.
This serves two key purposes – first, it makes it feasible for you to remove yourself as a load-bearing wall for the whole business, allowing you to move freely and grow your operation without having to do everything yourself. Second, it sets up the idea of consistency of experience for your clients – after all, consistency whether of product, of service, or whatever it is that you do builds trust. Trust means people come back, and it also means they pass on the news of their great experience to others.
Whether you’re planning to start a business in future, or you’re already there and you recognise yourself in the situations Gerber describes, the book can at times feel like a slightly depressing mirror. Hindsight, as ever, is 20/20, but there’s much more to the book than that. Even if you’re already underway, Gerber’s lessons of process and systemisation are essential if your business is to advance and grow in a sustainable way.
It begins with having clear, written goals, recorded visions of how the future should look (a surprising number of businesses still don’t). But beyond that, Gerber notes that having a standardised, consistent approach to every aspect of the business means the whole thing no longer depends on you, or upon the slim chance of hiring other people just like you who promise never to leave.
With proper processes in place your business can continue to function and grow, with a consistent experience every time. Meanwhile, instead of turning your passion into a ball and chain that drags down both you and your enthusiasm, you get to live and enjoy the reality of making your passion your vocation, working on your business, not in it. You get to grow and develop your creation, perhaps even to a point where one day you can walk away and see it spread its wings without you.