Why Most Small Businesses Don't Work And What To Do About It

American author and consultant Michael Gerber wrote the E-myth for everyone who has ever wondered“how do I take my business from this struggling, one-man phase to the next level?”

                   

If you are a small business owner looking to inject some life back into yourself and your business, keep reading. In 265 pages, he tells us why 50-95 percent of small businesses fail within the first five years and what you can do to avoid being a statistic!

There are 3 basic principles in the E-myth:

 The E-myth, or the idea of the true entrepreneur really is a myth!

Your business is an extension of who you are

To be successful in the long run, small businesses must begin to think like global franchises

If you have ever read the biography of say, Sir Richard Branson, CEO of Virgin Group for inspiration, you may be a victim of the e-myth – the myth that tells us that the greatest businesses (McDonalds, Disney, Virgin Group, IBM etc.) were all started by a special group of individuals, the true entrepreneurs. If you were unfortunate enough to be born outside this elite circle, your chances of building a wildly successful business are slim to none. True or false? False!

 Successful global businesses are built by relatively normal men and women – including you. According to Gerber, what separates them from the entrepreneurs that fail is how they build their businesses. While many leave jobs to start a business and end up becoming employees of their business, only a few learn how to build a business that works for them, one that is self-sustaining and self-developing and does not depend on your presence 24-7 to be effective. How? This brings us to principle number 2: Your business is an extension of who you are.

At the risk of sounding philosophical and‘fuzzy', Gerber introduces a concept that is both deeply revealing and potentially painful for most business owners – if your business is disorganised, stagnated or losing money, it isn't because the market isn't big enough or you don't have enough office space or capital (though those may be part of it). It's simply because you don't have enough of the skill that it takes to own and manage a business. Gerber illustrates his principles through the eyes of Sarah, the owner of a Pie shop who, though an excellent pastry chef, is permanently overwhelmed and frustrated by her struggling shop.

Sarah's problem wasn't capital – she already had a wonderful shop with all the state-of-the-art equipment she needed, and it wasn't the customers – her pies were well known in the city. It wasn't even her staff – some of whom had been very loyal and dedicated. The only problem Sarah's business had was its owner, Sarah. You see, while Sarah was a great baker – a technician who knew how to make excellent pies and products, she was not a very good shop administrator – a Manager, who makes sure the all tools and personnel are in good condition for the business to run smoothly. And she was certainly not a good leader – the Entrepreneur who provides the vision and strategic direction for the business, who identifies and exploits new opportunities and who creates the boundaries within which the technician and manager work. So the pies at her shop were very good, but Sarah was tired, in debt and nearly out of ideas. Until Sarah could learn how to delegate her knowledge and skills as technician, manage a manager and assume responsibility as an entrepreneur effectively, her pie shop suffered.

 The difference between Sarah's pie shop and a global business like McDonalds was that the founders of McDonalds (and every other successful global business) discovered how to tap into the three personalities required for business – the technician, the manager and the entrepreneur – and to equip other people to carry out these tasks effectively. Gerber takes this idea of equipping a step further with his third principle: to be successful in the long run, small businesses must begin to think like global franchises.

 The E-myth challenges small business owners to stop thinking of their businesses as local businesses but as the franchise prototype for a future network of 1,000 franchises. If you have a hard time envisioning this, ask yourself, if my business was to be multiplied, could someone buy my present business model and have it work for anyone anywhere? If the answer is no, what would it take for your business model to work no matter who was in charge of it? By assuming this mind-set, an entrepreneur stops working in his or her business and starts working on it, building it.

 What is your goal? A successful business that is profitable, growing and ultimately sellable? A business that frees you to pursue other interests while generating income? Or an expression of your creativity and passion? Whatever your goal is in business, failure is not one of them. The surest way to guarantee success in business is to create a business that works, with or without you. If this sounds like the remedy to your business situation, read Michael Gerber's E-myth and share your how you think it will help you.

From Ventures Africa