Small Business Consulting Using “The E Myth” by Michael Gerber to understand and consult with small businesses. The E-Myth Who is Michael Gerber? Why did he write this book? http://www.premierespeakers.com/2356/index.cfm What is the E Myth?   Entrepreneur: One who organizes, manages, and assumes the risks of a business or enterprise. (Merriam-Webster Online) Gerber: the E-Myth is that Entrepreneurs are Herculean and Larger-than-Life.  Gerber: the truth is that most are tired and just hanging on. What’s “The Fatal Assumption”?  Gerber: “The Fatal Assumption is: if you understand the technical work of a business, you understand a business that does that technical work.” Who Else is Inside You?  Entrepreneur  Manager  Technician What about your client? 10% 20% 70% E Reality  What type of person generally starts a business? Entrepreneur, Manager, or Technician?  Why do Most people start a business? Small Businesses The Problem:  The business runs you. The GOAL:  Work on your business -- not in it Businesses Need     The vision The goal The management The technicians Entrepreneurial Stages  Exhilaration  Terror  Exhaustion  Despair A Successful Business   1. 2. 3. 4. Finds and keeps customers Follows rules and standards Use the people with the lowest level of skills necessary to operate the system Must stand out as a place of impeccable order Documents all work in the system Uniform color, dress, and facility code Franchising Trade Name franchise  Owner capitalizes on the name. Business Format franchise  Owner capitalizes on the name and PROCESSES. Solution: The Franchising Model Franchising Model 1. 2. 3. 4. 5. 6. Provides consistent value to all stakeholders beyond expectations. Systematized for people with the lowest possible level of skill. Stands out as having impeccable order. Model is documented in an operations manual. Provides predictable value to the customer. Standardizes the appearance of the employees & facilities. Maturity Stage-Minded Questions  How can my business work without Me?  How can my employees work without my constant supervision?  How can I be free from my business?  How can I do work I love to do rather than what I have to do? The E Myth Revisited by Michael Gerber Part II: How to fix what’s wrong! Business Development Process    Innovation – Implementing creative new ideas that help your business. Quantification – Keeping track of the numbers. Orchestration – Creating order and predictability for you and your customer. Innovation Can be:  a better product  a better package  a better production system  a better business system  a better marketing system  a better financing system Quantification  Gather data to determine the precise value of the innovation  Measure what you do so you know what works  Make only one change at a time Orchestration  The elimination of discretion or choice from the operation level of your business  Orchestration is integrity  Orchestration is consistency  Orchestration does not remove initiative of your people      let them introduce innovation try it quantify it measure results decide what to do Gerber’s Business Development Process 7 Steps 1. 2. 3. 4. 5. 6. 7. Your Primary Aim Your Strategic Objective Your Organizational Strategy Your Management Strategy Your People Strategy Your Marketing Strategy Your Systems Strategy Your Primary Aim    What do I wish my life to look like? How do I wish my life to be on a day-to-day basis? How would I like to be with other people in my life-my family, my friends, my business associates, my customers, my employees, my community? Your Primary Aim    How would I like people to think of me? What would I like to be doing 2, 5, 10 years from now? When my life comes to a close? How much money will I need to do the things I wish to do? When will I need it? Your Strategic Objectives A list of standards 1. Money Standard 2. An Opportunity Worth Pursuing? 3. When will prototype be ready? - Where is the business going to be - local, regional, national, international? - How are you going to do business – Retail, Wholesale, both? - What are your standards regarding: reporting, cleanliness, clothing, etc.? Your Organizational Strategy   Determine what has to be done…then decide who is going to do it. You fill the roll until you can “franchise” that role for someone else to do just like you did it. Your Management Strategy (is really a marketing tool!) Getting everyone in the same role to perform the same task at the same level time after time.    Increases predictability for you. Increases predictability for your customer. Allows measurability. Your People Strategy Explain WHY.  Teach your employees.  Create a “Game” with: - Clearly defined structure (rules) - Structure through which employees can test themselves.  Your Marketing Strategy  WHAT DOES YOUR CUSTOMER WANT? Don’t presume that you know what the customer wants. Learn your customer demographics  Psychographics Your Systems Strategy   Develop a Selling System that focuses on customer needs and is the same every time. Develop information systems that collect data to allow measurements against benchmarks. Wrapping it Up   Your business is a tool. Use your business to create the life you want. Wrapping it Up Systems are not bad.  They create value for the customer.  They provide structure for your employees.  They let the business be the product rather than you.  By do those things, the business is more valuable to you and most of all to a buyer! Wrapping it Up       Does every business do this? No! Do all successful businesses do this? No! Should all businesses do this? Yes! Wrapping it Up     Does it matter if the business is a start-up or a mature one or somewhere in between? No! Is this like a business plan? Yes Finally…    99% of small businesses suffer from some of the ailments in this book. YOU ARE FOREWARNED! If you come across one that is suffering, you probably can’t change everything at once…therefore, multiple engagements!