The E-Myth Revisited by Michael E. Gerber

The E-Myth Revisited by Michael Gerber challenges the assumption that technical skill alone makes a successful business owner. He explains how most small businesses fail because owners work in the business rather than on it, neglecting systems, strategy, and scalable processes. By emphasizing roles and workflows, he shows how entrepreneurs can create businesses that run efficiently and grow sustainably.

The Entrepreneurial Myth

• Myth: if you understand the technical work of a business, you understand a business that does technical work
  • They require different skills and mindsets
• Owners have 3 roles: Entrepreneur, Manager, and Technician
  • E → visionary, sees opportunities, craves business control
  • M → pragmatic, orderly, sees problems, craves order
  • T → “doer,” execution over ideas, craves control over workflow
• Balance is key
  • Entrepreneur drives innovation
  • Manager stabilizes operations
  • Technician executes

Stages of Business

“Without the entrepreneurial mindset early on, the business is rebuilt at every growth stage, often unsuccessfully”

• Infancy
  • Owner is the business; does all the work
  • More success → more personal workload
  • Most businesses fail due to limited time, energy, or skills
  • If business depends on you, you own a job, not a business
  • If you only want technical work, consider selling the business
• Adolescence
  • Business grows beyond owner’s personal limits
  • Owner’s role: build structure for sustainable growth
  • First step: hire technical help
  • Common mistake: management by abdication
  • Owner overwhelmed, retreats into the work, abandons leadership
• Maturity
  • Runs without owner → systems, not dependency
  • Built on entrepreneurial perspective, not technician habits
  • Focus: develop the business, not do the work

A New View of Business

• Your business is the product you sell, not the commodity
  • Ex: McDonald’s sells the experience, not just hamburgers
• Turn your business into a system
  • Design for replication and consistency
  • Build as if franchising tomorrow
  • Ask: “Could I replicate this 5,000 times and it still work?”
  • Must deliver predictable services and be operable by low-skill staff
  • Should provide E the vision, M the order, T the work to do
• Work on your business, not in it
  • Owner’s job is to innovate and create systems
  • Employee’s job is to follow the system; ensure consistency

Building A Small Business

• Primary Aim
  • What do I want my life to look like? What do I value most?
  • Live with intention – work on your life, not just in it
  • Your business must align with your personal vision
• Strategic Objective
  • Define how the business must look to fulfill your Primary Aim
  • Ex: money, time, size, business form
• Organizational Strategy
  • Design an Organizational Position Map
  • Clarifies accountability and reporting structure
  • Positions stay consistent; personnel can change
  • Position Contracts: work, expected results, performance standards
• Management Strategy
  • Create your business system
  • Create operations manual for each position
  • Hire apprentices (experts follow learned standard, not the system)
  • Start at bottom of organizational map
• People Strategy
  • Motivation: purpose, values, relationships
  • Constantly remind workers of purpose
  • Employees need clear structure
  • Must be logical and make sense
• Marketing Strategy
  • Understanding customers is key
  • Demographics: age, gender, income
  • Psychographics: values, interests, behaviors
  • Identify perceived needs and focus on fulfilling them
• Systems Strategy
  • Hard systems: tangible elements (computers, equipment)
  • Soft systems: intangible elements (sales processes, procedures)
  • Information systems: gather data on system performance