Big Ideas

The E-Myth is a toolkit to help founders and small business owners reimagine their businesses independent of themselves as self sustaining organizations. Only once a business is understood to be a set of integrated systems, designed to achieve a strategic aim defined by the owner can the owner begin to take steps to remove themselves from the daily grind. The book helps the owner see the space between themselves and the business so that they can work on it as opposed to for/in it.

The main ideas I took away were:

• Many founders and owners have a Technician mindset, they see the thing that the business sells is the product, when they should adopt a Entrepreneurial mindset, which sees the business itself as the product.
• Your role and primary focus as the owner or leader in a business is to build repeatable systems to allow your business to function in a financially sustainable way without you.
• In order to do this you must grow and bring in other people to perform the basic functions of the business.
• For those people to thrive and succeed in running the business you must build systems that can be taught. This concept is referred to as the "Turn-Key" Model.
• The "Turn-Key" model is developed through the creation of a Prototype business in which you figure out how the business should work before systematizing it's operations.

Notes

The Four Ideas

1. The E-Myth "which says that small businesses are started by entrepreneurs risking capital to make a profit. This is simply not so. The real reasons people start businesses have little to do with entrepreneurship."
2. "There is a revolution going on today in American small business. I call it the Turn-Key Revolution."
3. "At the heart of the Turn-Key Revolution is a dynamic process ... When it is systematized and applied purposely by a small business owner, the Business Development Process has the power to transform any small business into an incredibly effective organization."
4. "The Business Development Process can be systematically applied by a small business owner in a step-by-step method that incorporates the lessons of the Turn Key Revolution into the operation of that business. This process then becomes a predictable way to produce results ..."

Part I: The E-Myth and American ...

The Entrepreneurial Myth

• Most entrepreneurs begin working for someone else until one day they have an "entrepreneurial seizure" and they realize they could do this work on their own.
• "That Fatal Assumption is: if you understand the technical work of a business, you understand a business that does that technical work."

The Entrepreneur, The Manager, and The Technician

• "The problem is that everybody who goes into business is actually three-people-in-one: The Entrepreneur, The Manager, and The Technician"
• Tension between these three roles is constant and if each is not allowed to operate correctly they will all suffer.
• The Entrepreneur
• ~"the entrepreneurial personality turns the most trivial condition into an exceptional opportunity. The Entrepreneur is the visionary in us.",
• ~"craves control"
• ~"lives in the future
• The Manager
• ~"the managerial personality is pragmatic. Without The manager there would be no planning, no order, no predicability."
• ~"Craves order"
• ~"Lives in the past"
• The Technician
• ~"the technician is the doer."
• ~"as long as the Technician is working, he is happy, but only only on one thing at a time"
• ~"Lives in the present"

Phases of Business Growth

• Infancy
• Adolescence
• Maturity

Infancy: The Technician's Phase

• "Most business are operating according to what the owner wants as opposed to what the business needs."
• "And what The Technician who runs the company wants is not growth or change but exactly the opposite. He wants a place to go to work."
• "If your business depends on you, you don't own a business - you have a job. And it's the worse job in the world because you're working for a lunatic."
• "The purpose of going into business is to get free of a job so you can create jobs for other people."

Adolescence: Getting Some Help

• "Adolescence begins at the point in the life of your business when you decide to get some help."
• "There's a critical moment in every business when the owner hires his very first employee to do the work he doesn't know how to do himself, or doesn't want to do."
• Generally this initial employee isn't managed correctly because they were just put there to supplement the work of the technician and inevitably that employee doesn't perform to the expected standards.

Beyond the Comfort Zone

• "Every Adolescent business reaches a point where it pushes beyond its owner's Comfort Zone - the boundary within which he feels secure in his ability to control his environment, and outside of which he begins to lose that control."
• "The Technicians boundary is determined by how much he can do himself."
• "The Manager's is defined by how many technicians he can supervise effectively or how many subordinate managers he can organize into a productive effort."
• "The Entrepreneur's boundary is a function of how many managers he can engage in the pursuit of his vision."
• There are three options going forward:

1. Return to infancy - eventually this fails because the owner gets burned out and stops caring and gives up
2. Go for broke - keep spinning out of control until it implodes and the business has no more money to run
3. Hang on for dear life

• "Simply put, your job is to prepare yourself and your business for growth. To educate yourself sufficiently so that, as your business grows, the business foundation and structure can carry the additional weight."
• "A mature company is founded on a broader perspective, an entrepreneurial perspective, a more intelligent point of view. About building a business that works not because of you but without you."

Maturity and Entrepreneurship

• "Most people who go into business don't have a model of business that works, but of work itself, a Technician's Perspective, which differs from the Entrepreneurial Perspective in the following ways:"
• ~"The entrepreneurial perspective asks the question: "How must the business work?" The Technician's Perspective asks: "What work has to be done?"
• ~"The entrepreneurial perspective sees the business as a system for producing outside results - for the customer - resulting in profits. The Technicians Perspective sees the business a place in which people work to produce inside results - for The Technician - producing income."
• ~"The Entrepreneurial Perspective starts with a picture of a well-defined future, and then comes back to the present with the intention of changing it to match the vision. The Technicians Perspective starts with the present, and then looks forward to an uncertain future with the hope of keeping it much like the present."
• ~"The Entrepreneurial Perspective envisions the business in its entirety, from which is derived its parts. The Technicians Perspective envisions the business in parts, from which is constructed the whole."
• ~"The Entrepreneurs perspective is an integrated vision of the world. The Technicians Perspective is a fragmented vision of the world."
• ~"To The Entrepreneur, the present-day world is modeled after his vision. To The Technician, the future is modeled after the present-day world."
• "The Entrepreneurial Model has less to do with what's done in a business and more to do with how it's done. The commodity isn't what's important - the way it's delivered is."
• "The Entrepreneurial Model does not start with a picture of the business to be created but of the customer for whom the business is to be created."
• "To the Entrepreneur, the business is the product."
• "To The Technician, the product is what he delivers to the customer."

Part 2: The Turn-Key Revolution

The Turn-Key Revolution

• "the Business Format Franchise is built on the belief that the true product of a business is not what it sells but how it sells it. The true product of a business is the business itself."

The Franchise Prototype

• "The Franchise Prototype is also the place where all assumptions are put to the test to see how well they work before becoming operational in the business."
• "The prototype acts as a buffer between hypothesis and action. Putting ideas to test in the real world rather than the world of competing ideas."
• "Because the franchisor has designed the business well, every problem has been thought through. All that's left for the franchisee to do is learn how to manage the system."
• "That's what the Franchise Prototype is all about. It's a place to conceive and perfect the system."

Working On Your Business, Not In It

• "Your business is not your life."
• "Once you recognize that the purpose of your life is not to serve your business, but that the primary purpose of your business is to serve your life, you can then go to work on your business, rather than in it."
• The rules of the Franchise Business Model

1. "The model will provide consistent value to your customers, employees, suppliers, and lenders beyond what they expect."
2. "The model will be operated by people with the lowest possible level of skill."
3. "The model will stand out as a place of impeccable order."
4. "All workin the model will be documented in Operations Manuals."
5. "The model will provide a uniformly predictable service to the customer."
6. "The model will utilize a uniform color, dress and facilities code."

‍

Part 3: Building a Small Business That Works!

The Business Development Process

• "Building the Prototype of your business is a continuous process [...] Its foundation is three distinct yet thoroughly integrated activities"
• ~Innovation - the best way to interact with the customer, whatever that means for your business
• ~Quantification - you must measure the impact or effect of your innovation on the outcomes that matter for your business
• ~Orchestration - "is the elimination of discretion, or choice, at the operating level of your business."
• The goal is to come with an innovative way of doing things, be able to measure the impact of that innovation and then set up systems such that the innovation can be delivered to the customer the same way, every time.

Your Business Development Program

• "Imagine that someone will walk through your door with the intention of buying your business - but only if it works. And only if it works without a lot of work and without you to work it."
• "Your Business Development Program is the step-by-step process through which you convert your existing business - or the one you're about to create - into a perfectly organized model for thousands more just like it."

Your Primary Aim

• "What do I value most? What kind of life do I want? What do I want my life to look like, to feel like? Who do I wish to be?"
• "Your Primary Aim is the answer to all these questions."

Your Strategic Object

• "Your Strategic Objective is a very clear statement of what your business has to ultimately do for you to achieve your Primary Aim."
• "It is the vision of the finished product that is and will be your business."
• "Your Strategic Objective is not a business plan."
• Key Standards
• ~Money - how much money does this need to make for it be worth your time and energy
• ~An Opportunity Worth Pursuing - it is reasonable to assume that the business can satisfy your Money Standard

Your Organizational Strategy

• Organizing around personalities (as opposed to around functions) - this almost always leads to chaos
• Create an org chart and define all the roles that need to exist for all the business functions, this includes the expectations and areas of accountability
• In the beginning, the owners will act in all those roles until they can be replaced by employees
• As each owner serves in each role they should document their business processes in the operational manual
• Therefore when looking for an employee to replace them there will already be in place:
• ~A job definition
• ~List of responsibilities
• ~Documented processes

Your Management Strategy

• Your management strategy doesn't depend on you finding amazing people, it can't because you don't need them and probably can't afford them
• Instead you need a "management system"
• "It is a system designed into your Prototype to produce a marketing result."
• "Management Development - the process through which you create your Management System, and teach your up-and-coming managers to use it - isn't a management tool as many people believe. It's a marketing tool."
• "An effective Prototype is a business that finds and keeps customers - profitable - better than any other."

Your People Strategy

• "'How do I get my people to do what I want?' This is the one question I hear most often from small business owners. And the answer I invariably give them is, "You can't! You can't get your people to do anything."
• "'If you want it done', I tell them, 'you're going to have to create an environment in which 'doing it' is more important to your people than not doing it. Where 'doing it' well becomes a way of life for them.'"
• People "want to work for people who have created a clearly defined structure for acting in the world. A structure through which they can test themselves and be tested."
• "It is communicated through the beliefs you have and the way you expect your Prototype to exemplify them;  through the standards you establish for the performance of accountabilities at all levels and in the sectors of your Prototype; through the words you use to describe what your business needs to become - for your customer, for your people, for yourself - if it is to be more than just a place where people go to work."
• Business as a Game
• ~"that is what the best best businesses represent to the people who create them: a game to be played in which the rules symbolize the idea you, the owner, have about the world."
• ~"and the degree to which they buy into your game doesn't depend on them but on how well you communicate the game to them - at the outset of your relationship, not after it's begun."
• ~"the game your business will play can't simply be captured on the written page.  It must be seen if it is to work, It must be experienced. It is - first, last, and always - about how you act."
• ~"The game has to be real. You have to mean it. The game is a measure of you."

Your Marketing Strategy

• "Your Marketing Strategy starts, ends, lives and dies with your customer."
• "When it comes to marketing, what you want is unimportant. It's what your customer wants that matters."
• Your customer is an irrational decision maker and is picking up on all sorts of clues that may or may not be relevant to the quality of products or services you provide
• You must deeply understand your customer, their demographics and their psychographics
• "The challenge of our age is to learn our customer's language. And then speak that language clearly and well so that your voice can be heard above the din."

Your Systems Strategy

• "A system is a set of things, actions, ideas, and information that interact with each other, and in so doing, alter other systems."
• Systems must be developed in order to orchestrate (think automate) your business.
• Three Kinds of Systems
• ~Hard Systems
• ~Soft Systems
• "The success of your Business Development Program totally depends on your appreciate of that integration [of systems]. And that your Prototype is that integration.
• ~Information Systems