It’s no secret that small businesses have a high failure rate. According to recent data from the U.S. Bureau of Labor Statistics, nearly one in five go under within the first year.
Small business consultant and author Michael E. Gerber wrote The E-Myth in 1985 to shed light on why this happens. The E-Myth Revisited is an updated and revised edition that applies modern insights to the challenges faced by small business owners.
Drawing years of experience, Gerber, (who was a guest in Episode 55 of our podcast, Center Stage) points out how common assumptions about entrepreneurship can get in the way of running a successful business.
The E-Myth Explained
The Entrepreneurial Myth (E-Myth) is that businesses are started by entrepreneurs wanting to make money. In reality, businesses are usually started by technicians (employees) who want to work for themselves. The problem is that they understand the technical work involved, but not the business itself.
Gerber believes that most small businesses fail because their owners aren’t entrepreneurs. They are “technicians” who have experienced what he calls an “entrepreneurial seizure” that drives them to quit their jobs and start a business. For some, it’s burnout. With others, it’s incompetent bosses. Essentially, they want to work for themselves so that they don’t have to do it for anyone else.
The problem is that the technician is only one of three personalities you need to run a successful business. The other two are:
- The entrepreneur, who is the business’s visionary and driving force. They turn a good idea into a great business.
- The manager, who solves problems and makes sure that everything gets done. They take care of the daily responsibilities that come with running a company.
Rather than exhaustively explaining everything a successful business owner must know about running a company, Gerber illustrates the fundamentals, using a hypothetical pie store as an example.
You Need More Than Talent Alone
Many people think that they can build a successful business by doing something they are good at. Gerber’s shop owner loved baking pies, but didn’t understand the business ownership skills needed—most of which are unrelated to pie baking.
Developing a brand, identifying markets, and developing a system for delivering a stellar customer experience are all part of owning a business. This can only be accomplished when you think like an entrepreneur, handle the company like a manager, and work like a technician.
Gerber’s message is clear: the path to being a successful entrepreneur does not typically involve an entrepreneurial seizure and overnight success. We need to nurture and cultivate all three personalities—entrepreneur, manager, and technician—and this can take time. If you’re thinking about starting your own firm, The E-Myth Revisited should be at the top of your reading list.
Our advice: don’t quit your day job before you read it. (And also go check out our Center Stage interview with Michael!)
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