“Work on your business, not in your business.
This is an approach I came across in a business group a year before I read the book by the author who made this phrase the credo it has become for small business owners worldwide.
The E Myth – Why Most Small Businesses Don’t Work and What to Do About It by Michael E. Gerber is an old book, but its teachings and insights are as relevant today as they were when the book was first published in 1986.
The E Myth interrogates the entrepreneurial myth which assumes that most people who start small businesses are entrepreneurs. What Gerber does in this book is challenge the (fatal) assumption that an individual who understands the technical work of a business is capable and suited to running a business that does the technical work they are skilled in.
Having spent three years getting our business out of the starting gate, we were at the point where we knew we needed to upgrade our system. But we were so consumed doing the work (what Gerber defines as the “technical” work) that we weren’t able to spend the time working on our business, enhancing the system or making plans that would allow the business to function independently of us.
By reading the E-Myth I had hoped to encourage a paradigm shift in my thinking about my role in One Day Company. That it certainly did. In fact, the insights in the book were so enlightening – but also so obvious – that I wanted to share them here, as a means of processing and clarifying my own thinking around some of the more relevant points.
Differentiate between what the business needs and what the owners want
Despite whatever lofty ideas one might have about the reason for going into business, Gerber is very clear about the fact that the purpose of going into business is to get free of a job so you can create jobs for other people. Your business exists to serve you, not for you to serve the business.
Effectively this means that the entrepreneur needs to spend their time building a system, not doing the technical work of the business. Because, he says, when your business depends on you, you don’t own the business. The business owns you and that is the same as working for a boss.
In a business where the technician is in charge people are buying your ability to give them what they want – and that is not a model you can grow indefinitely.
Work on the business, not in the business
When you’re working in the business there is no time, or the necessary distance, or energy, to adopt a wider, more expansive view of the business and its goals. Gerber talks about the Entrepreneurial Perspective that “views the business as a network of seamlessly integrated components, each contributing to some larger pattern that comes together in such a way as to produce a specifically planned result, a systematic way of doing business” (p.72).
As such, the role of the business owner is to build the system, and then optimize the system, and then grow the system, and so on. The business owner curates the right people to run the system. The business owner doesn’t get stuck in and run the system themselves. This is the crucial difference between running a business and operating as a freelancer or consultant.
The true product of a business is the business itself
One of the things I found particularly interesting about the book is how it repeatedly references the responsibility of the entrepreneur to start with the simple, again somewhat obvious, questions: where do I wish to be, when do I wish to be there, and the like. Only once those questions are answered can the business of building a business really take shape, as the nature, size and vision of the business is an extension of the answers to these fundamental questions.
There’s a romantic notion that businesses just sort of start – in response to a market need, a great idea or an epiphany. And while those businesses certainly do exist, they also are the exception. Gerber emphasizes that key to building a business is to plan, envision and articulate what the business seeks to be. But more importantly, this plan MUST be written down so that others can understand and access it too (again, it’s about the entrepreneur freeing him or herself from the burden of ALL responsibility). A system starts with a plan, a vision, and because “in the process of defining the future the plan begins to shape itself into reality”, Gerber explains.
The short version is an understanding that business is about the combination of process and vision and that entrepreneurship has less to do with what’s done in a business and more to do with how it’s done.
Thus, the role of the entrepreneur is to build a systems-dependent business, not a people-dependent business. That is because systems run the business and people run the system, which ultimately means the only job of the business owner is to build systems.