Five Books to Read in Your 20's - Book 4

The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It by Michael Gerber

While this book focuses on entrepreneurs and business owners, the lessons on building a sustainable, successful business carry equal weight when applied to our lives. The E-Myth explores why so many small businesses fail and the difference for the small percentage that make it. There are many factors that Gerber addresses, but I am going to focus on two key takeaways that resonated with me and have been essential in building my business and personal life. These are my interpretations and in no way meant to summarize the book.

1. You must learn how to work on your business and not just in it. Do the right work. Focus on high ROI (Return on Investment) activities.

2. Your business is an extension of you. What you build and how you build it will directly reflect your mindsets, intentionality, visions, beliefs, and habits.

"Once you recognize that the purpose of your life is not to serve your business, but that the primary purpose of your business is to serve your life, you can then go to work on your business, rather than it, with a full understanding of why it is absolutely necessary for you to do so."

Let's unpack this a bit. What does it mean to work on your business and not in it? Tom is an excellent barber. He has worked at the same shop for ten years and is always the busiest. Tom has made the shop good money and faired okay himself. Throughout the years, his contribution has grown, but the appreciation hasn't.

A thought pops in his head, one he has had many times before, "I have a big clientele, I know everything there is to know about cutting hair, I will open my own shop." A dream he's always had. He'll be his own boss and, on his way to building his business. Maybe he can even sell it or hand it down to his kids one day. Everything starts strong. Tom is full of energy and excitement and gets to building his business. He opens his LLC, signs a lease, buys equipment, hires a couple of barbers, and is off and running.

Time goes on, a new apartment building opens next door, and the shop gets busier. Tom has continued cutting hair, of course, but quickly realizes even with him working 6-7 days a week, he can't keep up and needs to add a couple more employees. So Tom advertises, interviews, and hires two new barbers, a significant time investment. Unfortunately, one of the two new hires doesn't work out and quits after three months. It's a setback, but Tom has done it before and can work overtime to compensate for the lost employee.

Tom tries hiring another barber, but he is so busy cutting hair, ordering supplies, doing payroll, and marketing for the business that he doesn't have the time. He also got burned before and doesn't want to deal with that again. There is drama amongst some staff, a few bad customer reviews, and the reality sets in for Tom that there is more to running a barbershop than just cutting hair. He thinks, "I'm not an HR expert, accountant, marketer. I never went to business school, and what the hell is a P&L the bank is asking for to approve this loan?"

Here's the problem, or as Gerber calls it, "The Fatal Assumption." It is this, "if you understand the technical work of a business, you understand a business that does technical work." The reality is understanding the technical side of a business is only one component of running a business. You must understand how to run a business as well. If you spend all your time in the day to day aspects of your business, you will never free yourself enough to step back and work on the vision, growth, and systems that ultimately propel your business forward. For example, cutting hair may be worth $25/hr, so 100 hours spent doing it generates $2,500. What about investing that 100 hours in hiring two excellent barbers, training them, and putting together a marketing campaign to target every household within 2 miles of your barbershop? Do you think you could make more than $2,500?

Let's stop for a second and think about how maybe this concept can be applied to our lives. Do we ever get so caught up in the day to day of running errands, dropping kids off at school and practice, working, making dinner, cleaning, now it's 10 o'clock, and where did the day go? Wake up, repeat. How often are we taking time in our daily lives to step back and work on our lives rather than in them? Where is the time for self-reflection, evaluation, goal-setting, visualization when we are constantly running from one thing to the next? I believe that just as in business, where you must learn to step back and work on it from a more global perspective, you must apply this same principle to your life. We'll discuss this further in key takeaway 2.

"It is a belief that says small businesses in the United States simply do not work; the people who own them do. And what we have discovered is that the people who own small businesses in this country work far more than they should for the return they're getting. Indeed, the problem is not that the owners of small businesses in this country don't work, the problem is they are doing the wrong work."

A great example of doing the right work is Ray Kroc and his approach to building McDonald's. Kroc understood that McDonald's product wasn't the burger but McDonald's itself. As a result, Kroc was obsessed with working on the business, creating the most systems-driven, predictable, and replicable business he could build. "A systems-dependent business, not a people dependent business." As the result of Kroc's foundation, McDonald's is one of the largest fast-food chains in the world by revenue, ranked 157 in the Fortune 500 as of 2021, and has nearly 40,000 locations in over 100 countries.

To summarize this point, make sure you are doing the right work in your business and life. Focus on high ROI activities.

Key Takeaway 2: Your business is an extension of you. What you build and how you build it will directly reflect your mindsets, intentionality, visions, beliefs, and habits.

"This book is about such an idea- an idea that says your business is nothing more than a distinct reflection of who you are. If your thinking is sloppy, your business will be sloppy. If you are disorganized, your business will be disorganized. If you are greedy, your employees will be greedy, giving you less and less of themselves and always asking for more. If your information about what needs to be done in your business is limited, your business will reflect that limitation. So if your business is to change as it must to continuously thrive you must change first. If you are unwilling to change, your business will never be capable of giving you what you want."

This quote further emphasizes that life and business are interchangeable in this book. Re-read the above section, but replace the word "business" with "life." I think the above excerpt articulates key takeaway two and how important it is to ensure you are aligned personally and professionally.

I want to conclude by exploring vision and mindset, or as Gerber calls it, "Your Primary Aim." I will use another excerpt from the book to explain this concept as you will see my beliefs on this idea have been discussed at length in previous articles from this series. Your Primary Aim is the story of your life. Take a moment to think, as you lay on your deathbed, how do you want your story to read? Have you ever thought about this before? Your Primary Aim in your business and your life are where you want to end up. We discussed this previously when exploring the concept of starting with the end in mind.

"With no clear picture of how you wish your life to be, how on earth can you begin to live it?

How would you know what first step to take?

How would you measure progress?

How would you know how far you had gone?

Without your primary Aim, you wouldn't. Indeed, you couldn't. It would be virtually impossible.

Great people have a vision of their lives that they practice emulating each and every day. They go to work on their lives, not just in their lives. Their lives are spent living out the vision they have of their future, in the present. They compare what they've done with what they intended to do. And where there's a disparity between the two, they don't wait very long to make up the difference.

I believe it's true that the difference between great people and everyone else is that great people create their lives actively, while everyone else is created by their lives, passively waiting to see where life takes them next.

The difference between the two is the difference between living fully and just existing.

The difference between the two is living intentionally and living by accident."

This excerpt, to me, summarizes everything we have spoken about above. As I've said before, I can't think of a more powerful concept in our lives. Purpose, intentionality, owning our destiny, having a vision – these ideas all lives in the same world, and if there is one thing you resonate with from this article, I hope it is this.