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Are You Making These Business Mistakes?

Michael Gerber E-Myth

I’m a firm believer in and staunch defender of the freedom of entrepreneurs. The last thing we all need is more rules and regulations.

But if ever there would be a meaningful requirement for all entrepreneurs, it would be that before they could even start a business, they would have to read Michael Gerber’s “The E-Myth: Why Most Small Businesses Don’t Work And What To Do About It.”

The book’s main points hit particularly close to home during the current difficult economy, when even more small businesses than usual just flat out “don’t work.”

I first read this book years ago, AFTER I had built – and destroyed – my first multi-million dollar business. My personal experience was a textbook example of what Gerber teaches.

If only I had read it BEFORE that spectacular business failure of mine. But at least I was able to turn that into a positive by making a career out of spotting the warning signs and helping small business owners avoid the same disastrous outcome. Over the past few decades, I have helped thousands of small business owners take their business from struggling to success – in terms of both income and lifestyle for the owner him- or herself.

I often teach my students and clients that “Lifetime Learners Are Lifetime Earners.” As Michael Gerber puts it:

“My experience has proven to me that, despite common belief, the people who succeed in business don’t do so because of what they know, but because of their insatiable need to know more.”

I’ve made it my life’s goal to help as many small business owners as I can to overcome the obstacles that stand in their way so that they can enjoy the income and lifestyle that they deserve as people who provide quality goods and services, pay suppliers, employees and taxes and contribute to the betterment of their communities.

Here are Gerber’s 4 Key Principles…

I. The most-damaging entrepreneurial myth (“e-myth”) is that most businesses are started by heroic entrepreneurs who look at the big picture and love grand ideas.

On the contrary, he points out, almost all businesses are started by “technicians” (what I call “doers”), whose main goal is simply to not have to work for anyone else.

That includes plumbers, lawyers, hairdressers, computer programmers, dentists – anyone who is skilled at and enjoys doing something.

The problem is that these “doers” know little – if anything at all – about what it takes to run a successful business. Worst of all, these business owners believe that they know what it takes to run a successful business, when the truth is that they do not.

The result? 80% of businesses fail within their first five years of existence, and 80% of those that make it that far fail within their next five years.

That’s a sad state of affairs, and a massive waste of time, money, effort and skill on the part of some of our nation’s hardest-working, most dedicated and passionate workers.

II. Almost all business owners make the fatal error of believing that just because they know how to be “doers” of their business, they also know what it takes to run their business successfully.

According to Gerber, being able to personally do the technical work required in a new business is actually a liability instead of an asset. That’s because, as the new business owner learns sooner or later, people can easily be found to do the technical work – but the business-building skills (chiefly marketing and innovation) are far more important and add far more value to the enterprise. Often, business owners who discover this fact become frustrated and disillusioned, which leads to personal burn out and overall failure of the business.

III. Three completely different skill sets are needed to run a successful business, and it is extremely rare for one person to be able to do all three well:

  1. The Entrepreneur – supplying the vision
  2. The Manager – supplying organization and systems
  3. The Technician – supplying the specific deliverable of the business

The problem is that all three of these aspects of the small business owner’s professional personality are competing to be the boss of the operation – yet, by definition, none of the three wants to have a boss. This causes major problems, except in the truly exceptional instances where the business owner possesses equal parts of the three necessary traits.

IV. There are three distinct phases every business goes through:

  1. Infancy – when the technician leads the way
  2. Expansion – when management skills become necessary
  3. Maturity – when an entrepreneurial perspective is essential

When the business is run according to what the owner wants instead of what the business needs, a multitude of problems result.

In the Infancy stage (which is not merely a function of time, and can last for years or even decades), the technician IS the business, doing everything him- or herself. At some point, the technician realizes that something has to change for the business to grow. If he or she seeks help, the business will enter Expansion. If not, the business will fail.

In the Expansion stage, every business sooner or later grows to a level that extends beyond the owner’s comfort zone, where he or she starts to lose control. At that point, the business owner has to choose whether to move to the Maturity stage by being willing to learn new skills and form new priorities, or fail by

  • Reducing the size of the business and taking it back to its Infancy again, when everything was easier (this is the most common reaction of doer-owners); or
  • Continuing to grow faster and faster until the business inevitably self-destructs of its own momentum; or
  • Stubbornly refusing to give up on the business and becoming all-consumed by it, working harder and harder until he or she basically explodes and burns out.

In the Maturity stage, the business owner understands how the business got to where it is and what must be done in order to move it towards its future goals. The perspective of the business owner changes, which is the key to success.

At this point, HOW the business is done becomes far more important than WHAT business is done; in other words, the customer becomes the focus of the business instead of the product or service provided. The leaders of the business focus on the proper balance between the three areas, understand what makes businesses great and model their business on other successful enterprises.

Building a sustainable, long-term successful business is like running a marathon. Sure, everyone starts out of the gate at record pace, but after a few miles people start slowing down – and some drop out entirely. Building a successful business is not a “get-rich-quick” sprint – it takes stamina and agility.

Unfortunately, I see so many entrepreneurs get their hopes up so high on instant, push-button, easy success that even the smallest lag and they’re sent into an emotional tailspin, heading down the road to failure so overwhelmingly common in the business world.

Sooner or later, the sharp ones realize that they can’t do it all by themselves, and that they need help in the areas where they don’t have the knowledge, experience or expertise.

If you’ve come to that realization, use my FREE test drive to get the business coaching you need to avoid feeling overwhelmed and defeated and start yourself and your business on the path to success.

10 Powerful Marketing Videos specifically designed to help you make a minimum of $10,000 in 30 days

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