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## Highlights
In The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About it, Michael E. Gerber argues that new business owners typically fail because they focus on technical expertise rather than on developing business knowledge. ([View Highlight](https://www.shortform.com/app/highlights/13ac62f3-e427-4f36-868e-1e3ab0456b7f))
new business owners typically fail because they focus on technical expertise rather than on developing business knowledge. ([View Highlight](https://www.shortform.com/app/highlights/fc246329-7aec-45f3-82c8-46d06f15e939))
The important thing isn't the commodity — what is produced — but how it’s produced. The business itself is the product. ([View Highlight](https://www.shortform.com/app/highlights/7b2cfbe5-4f79-4b90-afc9-c7a75253868d))
Three Roles ([View Highlight](https://www.shortform.com/app/highlights/0fd704b5-f564-4ace-b312-ed457ea5190e))
The first is the technician mindset, which is where most small business owners begin and end. But this mindset by itself is insufficient ([View Highlight](https://www.shortform.com/app/highlights/e82f9093-af82-4a5c-88a0-95f8228812a1))
The entrepreneur role provides the vision, creativity, and energy that drive the business.
The manager is a pragmatist who translates the vision into reality through planning and systems.
The technician is an individualist and a doer who produces the product or service. ([View Highlight](https://www.shortform.com/app/highlights/bac7a631-f3b1-4f8f-a32b-2c275c8c8170))
- đź’ technician does it for passion
Three Phases ([View Highlight](https://www.shortform.com/app/highlights/2a24f89d-5273-4f60-8a5d-9d0fd624bfbd))
Three Phases ([View Highlight](https://www.shortform.com/app/highlights/a7685647-8e92-47d8-ac92-1b623a131e21))
- đź’ infancy - solo
adolescence - hiring and offloading
maturity
an owner must first think of his business in a new way — as though it were the prototype for thousands of others like it ([View Highlight](https://www.shortform.com/app/highlights/2874309d-906b-4cea-b4e8-cbb5488ffeb6))
imagine he’s going to franchise it, then create a model in which the parts — purpose, organization, management strategy, production systems and processes — can be replicated. In other words, he should create a model for a business that runs without him. ([View Highlight](https://www.shortform.com/app/highlights/5fbeb629-6ae4-4070-920c-c9639fac68e4))
There are seven components that you as an owner must work through:
Personal objective: Determine your primary goal in life. Your business’s purpose should dovetail with your personal goal.
Business objective: State what you want your business to look like and to accomplish. How much money does it need to make? How is it serving the need of your customers?
Organizational plan: Create an organization chart reflecting what your organization will look like when the business is fully evolved. What specific functions does your business need? Create an operations manual for each position before hiring for it.
Management plan: Create an operating philosophy that reflects why and how you do what you do. All your actions and your employees’ actions communicate this philosophy to your customers.
People plan: Create an environment in your business where doing what needs to be done is important and gratifying to the people tasked to do it. Make each person’s expectations clear, and recognize them when they’ve achieved them.
Marketing plan: Determine who your prime customers are, what they buy, and how to reach them. Research your customers through market data or customer surveys.
Systems plan: Every part of your business is a system. Integrate the systems so they strengthen each other. Your hard systems (like office design and computers) should support your soft systems (people, documentation) and information systems (reports, forecasts), and vice versa. ([View Highlight](https://www.shortform.com/app/highlights/f855505d-d41c-49b8-b2ee-00d7602d5e3f))
Ongoing Development ([View Highlight](https://www.shortform.com/app/highlights/5f63ac4e-8d1e-4652-9ca9-da26f7370c8a))
Innovation: Most business owners think innovation means coming up with new products to increase sales. However, the franchise movement increases sales by applying innovation to the process ([View Highlight](https://www.shortform.com/app/highlights/0883f695-1bc0-4131-beeb-29ce99ee05e0))
innovation, measurement of results, and execution ([View Highlight](https://www.shortform.com/app/highlights/8896167e-f34e-45b9-8659-5440de74e018))
execute changes systematically, so that people know what to do and how to do it rather than acting on their own discretion ([View Highlight](https://www.shortform.com/app/highlights/2b1454e6-120c-4004-8c4f-abe3f037a35e))
When you balance all three, the business becomes energizing and rewarding rather than draining. ([View Highlight](https://www.shortform.com/app/highlights/ecca22cc-4dc7-480b-b66b-dcda2f6d257c))
look for someone with experience doing the things you don’t like doing — for instance, bookkeeping, ordering supplies, or maintaining a schedule. In fact, if you’re like most overworked owners, if you can find an experienced person, you’re happy to give up responsibility for those areas, in effect abdicating rather than delegating. ([View Highlight](https://www.shortform.com/app/highlights/3abc6223-c600-4e06-80da-1b726e721fe7))
Chapter 4: The Adolescent Phase ([View Highlight](https://www.shortform.com/app/highlights/e9d43fe4-cfa5-46a5-b9e3-ef04b8b4c84e))
Chapter 5: Crisis Point ([View Highlight](https://www.shortform.com/app/highlights/869d609a-5f9e-4c56-b133-4b2bcbb6acfa))
In the adolescent phase, your business always reaches a point beyond your comfort zone, at which you begin to feel you’re losing control. Business owners typically go one of three directions at this point: they shrink the business in size (return to the infancy stage), keep growing willy-nilly (go all out), or go into survival mode. ([View Highlight](https://www.shortform.com/app/highlights/ed2e9a47-8e70-467c-9501-84bd40a95246))
Productive change requires leaving your comfort zone and developing new identities (manager and entrepreneur) by learning new skills. ([View Highlight](https://www.shortform.com/app/highlights/2b82a98a-d29e-44ae-a8c7-c5f55c97ab83))
Chapter 6: The Mature Phase ([View Highlight](https://www.shortform.com/app/highlights/4f845c56-6ec6-4c7a-b75c-5ea56ceb7606))
He focused on developing the business rather than “doing business.” ([View Highlight](https://www.shortform.com/app/highlights/495e1b56-0dd4-4805-903d-e01dd71b79db))
Other differences between the two perspectives are:
The entrepreneur begins with a vision of the future, then works to align the present with that vision. The technician focuses on the present and hopes the future will be much the same.
The entrepreneur is outwardly focused on meeting customer needs and making a profit. The technician is inwardly focused on the business as a place to work and earn an income.
The entrepreneur sees the business as a whole, while the technician sees separate parts.
The entrepreneur asks how the business should work, while the technician wants to know what needs to be done. ([View Highlight](https://www.shortform.com/app/highlights/edd49aca-817e-4e54-8de0-bc56e9130d04))
Part II: The Franchise Movement ([View Highlight](https://www.shortform.com/app/highlights/004cdbe6-30fd-4596-91ec-ab62f3647def))
Chapter 8: Rethinking Your Business ([View Highlight](https://www.shortform.com/app/highlights/c379af93-45cc-47f3-b686-0f578ada81b9))
1. Your model will provide a level of value to your customers and everyone else your business touches that’s consistent and exceeds expectations. ([View Highlight](https://www.shortform.com/app/highlights/d8e74889-ddfb-4e75-8fd2-5937b39c55b0))
2. Your model can be applied by people with the minimal skills necessary for each position ([View Highlight](https://www.shortform.com/app/highlights/0c47dce8-4fd9-439d-8719-bcfba003eaa3))
Make your business dependent on systems rather than people ([View Highlight](https://www.shortform.com/app/highlights/719030ab-b2b3-497d-ad70-6a343e5b0f38))
3. Your model provides organization and order ([View Highlight](https://www.shortform.com/app/highlights/38bf541f-5562-4698-b5a6-f49328ac684f))
4. Your model is documented in an operations manual ([View Highlight](https://www.shortform.com/app/highlights/3d38afc0-6e88-4cc0-b131-f72ad3fb9fa8))
Part III: Building an Effective Small Business ([View Highlight](https://www.shortform.com/app/highlights/2d995371-1f5e-4081-a533-03af6146278c))
Chapter 9: Developing Your Business ([View Highlight](https://www.shortform.com/app/highlights/1db9f1bf-c6ac-4a54-8faa-4940ef999d7c))
It has seven components:
1. Personal objective
2. Business objective
3. Organizational plan
4. Management plan
5. Personnel plan
6. Marketing plan
7. Systems plan ([View Highlight](https://www.shortform.com/app/highlights/b9fcb76e-23aa-47d1-9711-60e875cb0e2b))
8. Personal Objective ([View Highlight](https://www.shortform.com/app/highlights/8c3c09bb-d6c3-4bf2-856a-206b34549a9c))
It has seven components:
1. Personal objective
2. Business objective
3. Organizational plan
4. Management plan
5. Personnel plan
6. Marketing plan
7. Systems plan ([View Highlight](https://www.shortform.com/app/highlights/92d0fa29-6cb7-4096-b023-73a9903557cc))
determine your own primary goal by considering what you most value, what kind of life you want, and who you want to be. You need to know where you’re going in life in order for your business to contribute to that goal. ([View Highlight](https://www.shortform.com/app/highlights/f621e62d-0aba-4f3f-8b97-746f08a2f18c))
2. Business Objective ([View Highlight](https://www.shortform.com/app/highlights/95447364-764a-4772-839b-509371461860))
decide how big it will be in terms of gross revenue. Also, estimate pre- and after-tax profits. Does the amount match what you need to achieve your life goal? How much do you want to be able to ultimately sell the business for, and when do you want to sell it? ([View Highlight](https://www.shortform.com/app/highlights/9abf9f67-7b77-4112-82c0-3ee352d2e5ca))
3. Organizational Plan ([View Highlight](https://www.shortform.com/app/highlights/4b139147-fdb2-406b-a29c-9d8f86b0af15))
List every position/function that will be needed ([View Highlight](https://www.shortform.com/app/highlights/10e77e77-c5f9-4b61-816a-78dd9bf9606a))
create an organization plan reflecting what your organization will look like when the business is fully evolved. ([View Highlight](https://www.shortform.com/app/highlights/54466e55-15af-42b4-827d-dd37c5328270))
List every position/function that will be needed ([View Highlight](https://www.shortform.com/app/highlights/741966b2-2976-40bb-9a89-04e843fa26c7))
Do each job yourself to determine their respective duties, results, and standards. Then write an operations manual for each position ([View Highlight](https://www.shortform.com/app/highlights/a26a2dfb-233c-4dc4-a856-0e1b99056d06))
Write a position contract for each position. This isn’t a job description, but rather summarizes results the person in each position must deliver, the standards for evaluating the results, and the work he or she will be accountable for performing. ([View Highlight](https://www.shortform.com/app/highlights/6e1fa2a0-0a76-4c01-914e-9611b58861e0))
4. Management Plan ([View Highlight](https://www.shortform.com/app/highlights/e578884d-363f-41a4-b4b0-4a1367755558))
why and how you do what you do ([View Highlight](https://www.shortform.com/app/highlights/461403d7-142f-4bb3-8cfd-4fa1034dd345))
5. Personnel Plan ([View Highlight](https://www.shortform.com/app/highlights/762ab10f-7cef-48fa-8b2d-cab0ae4a7d23))
Your Hiring Process ([View Highlight](https://www.shortform.com/app/highlights/0149dbcc-0b39-4152-8790-68735aa126a0))
A new employee’s first day of training included:
A review of the business owner’s purpose and methods.
A summary of the system for carrying out the business’s purpose.
A tour of the facility, accompanied by an explanation of each person’s job.
A question-and-answer period.
A presentation of the uniform and operations manual.
A review of the manual, position contract, and business objectives.
A discussion of how the business does things (rules of the game). ([View Highlight](https://www.shortform.com/app/highlights/676e8cf7-f71d-42e4-a8b1-b7adffbdf695))
7. Systems Plan ([View Highlight](https://www.shortform.com/app/highlights/6b35b5d9-6edc-47d7-8ca6-db5e4a51027e))
In a business, there are three general types of systems:
Hard or inanimate — for instance, your computer system or your office design.
Soft — for instance, systems involving people and ideas. Your verbal and written communications are soft systems. Your recruiting script is a soft system, as are your advertisements.
Information — for instance, sales activity reports or cash flow forecasts. These provide data about the interaction of hard and soft systems. ([View Highlight](https://www.shortform.com/app/highlights/f8937ccd-68d9-44ab-8fed-30b9402b11dd))