The Entrepreneur

The E-myth is a well known book, and one of my favourites, that explains the typical lifecycle of entrepreneurial businesses from startup through adolescence to maturity. The thinking in the book correlates with my own experience so I share a summary here for the operational business leaders that follow me.

As usual, this article is my summary and interpretation in order to share save busy business leaders the task of reading an entire book whilst also recommending you dig deeper by reading the original thoughts of Michael Gerber by buying the book yourself here: The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It’ for yourself.

The E-myth or Entrepreneur-Myth revisited

In this book, Michael Gerber challenges the idea that businesses are built by entrepreneurs that simply risk capital to make profit. The book suggests that believing this leads to business failure. It assumes that, if you understand the technical work of a business, you understand how to run a business.

The book begins by discussing the three personalities in business: the Entrepreneur, the Manager and the Technician.

Michael suggests that the successful business leader is an incredibly competent individual with a balance between all three personalities. They can do good work, build a solid operational base and still forge ahead into new areas of interest.

The book goes on to explain that businesses go through three main phases as they develop and grow.

 The infant business

Businesses start as Infants. During this phase the owner and the business are one and the same thing. The owner is the business.

The adolescent business

The business grows through painful adolescence as the founder recruits people to do things they don’t have the skills to do, or don’t want to do. This phase can be long and very painful as often the founder struggles to manage the growth. Therefore, they have to deal with an increasing volume of issues which come at them from every direction (see below:)

Michael says that one solution is to get small again. Yet, the strong-willed, stubborn and true entrepreneur uses a franchise prototype and a business development process to build a sustainable, mature business.

 The mature or adult business

He defines such a business as one that is a place of impeccable order, with all work documented and delivering a uniformly predictable service to the customer. By having a clear and defined operating model, this business can be operated by people with the lowest possible level of skill and still deliver consistent value to customers, employees, suppliers and lenders, beyond what they expect.

The view of a post-millennium English business leader

My own experience diverges slightly from the book – in a couple of ways.

Firstly, whilst I agree with the principles Gerber discusses, I see his solution as only applicable to some businesses in the modern era. The idea of an entrepreneur building a de-skilled and replicable franchise-style business operating model may be right for simply making money quickly. Many modern businesses are led by people with goals wider than simply maximising income, although clearly making a decent income is nearly always one of the goals. In today’s world where physical (and now intellectual) activity is increasingly automated, many businesses succeed by finding ways to engage and retain high quality motivated staff who think for themselves and drive the business forwards. They do this with an agility that automated and rigid, documented systems often precludes.

Secondly, although I agree with the need to move beyond adolescence, my own perspective is that this phase can go on for a long time and sometimes for the rest of the founder’s life. I meet many people facing these challenges and most can’t quite extricate themselves from these challenges long enough to be able to develop the adult business they wish for. 

* My main career as an employed Managing Director and CEO was entirely spent leading plateauing (or declining) adolescent businesses back to sustainable growth as an adult business. In the two decades since then, I have been sharing what I learned that worked – and what I learned that didn’t – to help others facing similar changes.

By the way, if you do face the challenge of leading an adolescent business and believe you can extricate yourself from fighting the fires long enough to stop them being lit, I would of course be delighted to help. Just click here!