Book Review: Michael E. Gerber, The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It

The E-Myth books are highly recommended by a lot of other business authors, and by a number of business people I have met. I found The E-Myth Revisited to be very flabby – lots of good insights throughout, but woven around a series of stories and staccato imprecations that made the book a tougher read than it should be.

Gerber’s “e-myth” is about small businesses: the myth that people who start small businesses do so for an entrepreneurial impulse, whereas he proposes that most people start small businesses because they love what they do and want to do it for themselves. The problem, according to Gerber, is that people who love, say, baking, make great bakers but poor businesspeople. To be successful in business, you have to love running a business, not baking pies. I did like this point, which I’ve paraphrased: The purpose of going into business is not to do a job, but to free yourself up to create jobs for other people — if you’re the main person working in your small business, then you don’t have a business, you have a job, and your boss is a lunatic. I thought that was well stated.

Gerber’s main passion, though, is about establishing a “prototype” for a business, such as a franchise model, which organizes and establishes the systems under which the business will run. The point is that a franchise prototype or model sets up the systems that if operated correctly will help a business succeed, avoiding the “reinventing the wheel” phenomenon inherent in running small businesses.
The core argument is that businesses succeed when we set up thorough, tested systems to run them according to a blueprint designed for efficiency, automaticity, and order. Gerber makes a great point that you want to build a system-oriented business, not a people-oriented business, so that your system leverages the abilities of the people you have rather than requires you to hire more extraordinary people. It’s easier, cheaper, and more efficient to build one model and hire 100 ordinary people than build a bad model and hire 100 extraordinary ones. He also points out that a good business has to have a documented operations manual that sets out the blueprint.

Gerber also sets out fundamental advice for business:

  • Innovate by testing new strategies for increasing efficiency or sales.
  • Quantify everything. Track all your numbers, so you know what works and what doesn’t work.
  • Orchestrate a system which eliminates choice – i.e., it eliminates opportunities for decisions to be made that are inconsistent with the master blueprint.

This was the best part of the book, and the salient theme of the book: work on your business, not in your business, and set up a prototype (operations manual) that automatically runs your business to avoid becoming too reliant on yourself or personalities.

Takeaway

One of my main passions is customer service systems, the idea that a customer experience can be consistently maintained by creating systems that automate client service. I read this book years ago, and went back to re-read it for this review, and was surprised at how much Gerber’s argument about a “prototype” had seeped into my subconscious as I built my own personal philosophy about building a great business. I can’t necessarily recommend the whole book, but the Part II section on creating that prototype is a brilliant articulation of how to build a sustainable enterprise.