Book Review: The E Myth Revisited

Title: The E Myth Revisited: Why Most Small Business Don't Word and What to Do About It
Author: Mechael E. Gerber
Publisher: HarperBusiness
Pages: 268
ISBN: 0887307280

The statistics are grim. The vast majority of businesses that are started fail within the first five years. According to Mr. Gerber, 80% of businesses fail in this time. The culling does not end here. In the next five, 80% of the businesses that have survived so far fail. The bad news does not end over here. Of the businesses that survive thus far, most provide their owners with at most a subsistence level of existence in return for insane amount of work - work that is required to just barely keep the business alive. But is this a law of nature? Are most startups doomed to failure? The author of this text thinks not.

According to the author, there are three distinct personalities inside each entrepreneur. Each of these has its own desires and needs. When they are in harmony and balance each other, the result is a business that can go on to succeed. When (as is more often the case) they are in conflict, the result is a dysfunctional business that sucks the life out of the putative entrepreneur. These three distinct personalities are identified as Technician, Manager and Entrepreneur. A new business is usually started by the Technician aspect of a person. This is because of an underlying assumption that Mr. Gerber says is a fatal one. The assumption is "if you understand the technical work of a business, you understand a business that does that technical work." The problem is that the technical work of a business and a business that does technical work are two different things. Failure to understand this leads to problems later on. These problems arise once the business is established and starts growing. The Technician is used to doing all the work himself. As the business grows, the Technician suddenly starts getting overwhelmed; at this point previously established standards start to slip. In a panic , the Technician goes out and hires a preferably experienced hand. At this point, the Manager kicks in. But now, there is a tussle going on between the Manager and the Technician for control. In the meanwhile, the Entrepreneur is also trying to gain control in order to devise a future and a strategic direction for the company. This continuous tussle means that the person who started the business starts to feel overwhelmed and trapped by the business; the very business that was supposed to liberate him from the drudgery of working for someone else. This is the basic reason why most businesses fail and most of the rest struggle indefinitely at a subsistence level.

Is there any hope? Hope lies in the fact that a small number of businesses not only prosper, they thrive. All large companies started out as small ones. There are also a number of companies that may be small in size but are thriving businesses. What do they do differently from the run of the mill small business? Mr. Gerber advocates turning a business into a franchise. More to the point, he advocates a turn-key view of business. In other words, he says that a successful business will be one which the entrepreneur (the person who started the business) can give to a total stranger and it will continue to operate in the same fashion as the original owner intended. This is an important point. It takes a business from being personality driven to being process driven. In the former case, the business owns the person while in the latter case, the person owns the business. A personality driven business will by its nature consume the life of the person who started it. By contrast, the process driven business will give all three aspects that were mentioned above - the Technician, the Manager and the Entrepreneur - full leeway to their respective capabilities and interests and allow the person to engage in his or her interests.

Mr. Gerber has written an important book that should be read by anyone who wants to or is thinking about starting his own business. Read this book before taking the plunge. It will save you a lot of grief later on.