Book Review - The E-Myth Revisited

I have never been so engaged in a book focused on business building before. I just started reading "The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It" on Monday, and I have already finished reading it for a second time. Thats right, I read the 268 page book cover to cover twice in 3 days.

The book was so interesting to me that while away on business I stayed an extra day on Vancouver Island and simply read. I couldn't put it down. It appealed to me on so many levels as an entrepreneuer I found myself so emmersed in the content that when I finished it I was in awe of how applicable it was to me as a small ISV.

The concepts in this book are quite different to what I normally read as it relates to building business. The idea is to work ON your business, and not IN it. Now this in itself isn't new; I take a complete day every month to basically update and work on my corporate strategic plan, taking ownership by then presenting my vision to my board of advisors. What is really different here is the approach Michael Gerber takes by having you treat your business as a turn-key operation, sometimes more commonly referred to as a franchise. (Even though it isn't).

Why a franchise? Well, consider this: 80% of all new startup businesses fail in the first year. Of the remaining 20% that do make it past the first year, 80% of them will fail in the next 5 years. In other words, out of every 100 companies that start up, only 4 of them will make it past 5 years. Now here is the interesting stat... 75% of all franchised businesses are successful and make it past 10 years! Why?

Well, franchises use "systems". These are business processes that the parent company has built and refined to be successful. To a point they have a known result each and every time they do something. Its a recipe for success. They have built a map, "operating procedure manuals" on how to do things right, consistently, all the time.

Think of McDonalds. When Ray Kroc created the first McDonald's he made sure that every process, from prepping the food to communicating with the customer, was documented. From colors to advertising, hiring to training... there is a system in place for everything in the business. And he can make uneducated teenagers do this successfully. You can go into any one of their restaurants worldwide and get the same hamburger, the same taste, the same expectations. Ok, so maybe you don't have the highest expectations. But you know what you are going to get. Each and every time. And that is why they make billions of dollars every year selling a hamburger for a couple of bucks.

So how does that apply to a software company? Well, I can't speak for other companies... but for me the driving force is the customer. My company's focus is on protecting our customers and their information. That was one of the core reasons I got into this business. In the last company I built we had a major failure when it came to our expectations of what we were to do with the customer pre, during and post sales. It wasn't well defined. It wasn't well documented. And we had breakdowns. And we were amazingly lucky. We benefited from having some of the most amazing customer service reps that we constantly were complimented on our service to our customers. But truth be told, it wasn't the system we had in place that was successful but a few amazing people. And we had several occasions of breakdowns when the wrong people got involved. And it didn't scale at all. And the same problems existed in fulfillment... in one case costing us tens of thousands of dollars in business on a single recall because a process wasn't followed and we shipped hardware that wasn't even programmed. We had amazing and impressive recovery, thanks to the manager of the department taking quick and decisive action when this error was found, but it should never have happened in the first place. And it wouldn't have if we had the right "system" in place for that particular function.

This book explains how to build those systems. And utilize them in a way so that everyone in the business takes ownership in their areas of their responsibility. And knows exactly what to do. Refining the process as it goes along, you truly can build a recipe for success. To know when you spend X to do Y, the result of Z will occur. Not by extraordinary people doing normal tasks, but normal people doing normal tasks extraordinarily... each and every time!

Done right, you can learn how to work ON your business... not IN it. Learning how not to be a slave to the business, but have the business serve you. And that is an important differentiator. If you know me, you know I am a workaholic... and have a passion for what I do. But I have always been serving the business, working IN it as a technician instead of working ON it as an entrepreneur. And this book opened my eyes to the difference.