“You need to work on your business, not just in your business.”
Made popular by The E-Myth Revisited author Michael Gerber, it’s advice I’m sure you’ve heard dozens of times over the years (I certainly have). But despite being told over and over again, many small business owners still don’t seem to truly understand what it means.
Let’s look at a common scenario.
Emily loved baking cupcakes. She loved cooking class at high school, and was pretty good at it too. And while Emily has a ‘regular’ job during the week, she also does quite well selling her cupcakes at the weekend markets.
If fact, she’s been thinking about making a career of it for a while. And after a particularly bad day at work (which ends with her giving her boss some directions about “where he should go”), Emily decides to give it a go. She finds a place to set up shop, hires someone to deal with all the paperwork and other business stuff, and soon after Cupcakes & Coffee is open for business.
At last Emily is ‘living the dream’ and ‘following her passion’. She’s earning a living doing something she enjoys and gets to be her own boss, which she loves. She doesn’t have to fill out timesheets or attend boring meetings. He can just spend her days in the kitchen whilst listening to the happy chatter of her customers enjoying her creations.
It’s perfect, right?
Emily’s situation is a classic example of what Gerber calls ‘an entrepreneurial seizure’. Someone gets the urge to ‘be their own boss’ but then (to quote Gerber) “goes to work for a maniac”—themselves.
The business owner ends up spending all their time working in their business. Now in Emily’s case she gets to do what she loves. But it isn’t long before she realises there’s a lot more to business than just making and selling delicious cupcakes.
And unless Emily effectively deals with those other aspects of running a business as well, she won’t have a business for much longer.
In his classic book The E-Myth Revisited (the ‘E’ stands for ‘Entrepreneurial’), Gerber describes this type of person as the technician of the business. They’re an expert in their craft, and love doing what they do. Unfortunately, it’s often at the expense of everything else associated with running a business.
Gerber describes three archetypes when it comes to business owners:
- Technicians love doing the technical work.
- Managers manage the technicians to ensure the work gets done.
- Entrepreneurs design a business that can work without them, and then hire managers to run it, who in turn hire technicians to deliver the work.
In Emily’s Cupcakes & Coffee scenario:
- The Technician does the baking to create the cupcakes.
- The Manager does all the ‘stuff’ the technician sees as ‘necessary evils’, such as:
- ordering product
- entering orders and doing the bookkeeping
- managing staff
- handling customer payments and banking
- paying the bills
- ensuring they comply with tax and other compliance matters.
- The Entrepreneur looks at the big picture, and makes strategic decisions about things such as:
- what the business should sell
- who they should target as customers
- how they should price their goods
- what their business model should be
- how the business should be structured.
As you can see, technicians and managers work in the business and an entrepreneur works on the business.
An entrepreneur’s focus is to design a business that can work without their own personal exertion on a daily basis. Their objective is not to be ‘self-employed’, or to create a job for themselves. They think of a business as a machine that can be designed, built and eventually sold.
That doesn’t mean all entrepreneurs aim to sell their business in the short term. Some like to build and then hold onto their ‘cash cow’ businesses over the long term.
- Does your business rely on your personal daily work at the technician and/or manager level?
- Do you believe only you are capable of doing that work to the level required?
If so, you’re chained to your business. And it’s unlikely to become one you can sell when it comes time to move on or retire.
Let’s think about Emily’s Cupcakes & Coffee business. What happens if she’s sick or injured for a month or more? Sure, some insurances will replace income and pay lump sums in certain circumstances. But what about the business? Will the business grind to a halt in her asbsense and its reputation would be tarnished.
Clearly, being your business’ operational linchpin isn’t so great.
In fact, it’s the opposite of what you want. You want a business that isn’t ‘key person dependent’. You don’t want your business to rely on any one person— especially not you.
In Emily’s case, she needs to step away from the hands-on work. (She can still do some of it, but the business shouldn’t rely on her as a key technician.)
What are some of the things Emily could do?
- She could bring an apprentice on board, and get them up to speed on how everything works in the kitchen.
- She could write procedures manuals and create training videos to explain the details of how everything in the business works.
- She could document all the processes for managing the business.
- She could hire and train key employees to manage the business for her.
By doing these things, Emily could get to a point where her business operates and produces to the same high standard whether she’s there or not. And quite profitably.
Emily would be working on her business, not just in it. She’d be an entrepreneur.
Other things Emily could focus on to build her business include:
- Marketing: Researching trends, looking at what competitors are doing, attending trade shows, speaking with customers and prospective customers, exploring ideas for new markets and new products.
- Operations: Looking at ways processes could be made more efficient, negotiating deals with suppliers, researching new technology, looking at what can be eliminated, automated or further delegated.
- Leadership: Mentoring the technicians and managers within the business, attracting high-quality employees to the business, ensuring new staff members are inducted and well trained, making sure team members have career paths and incentives that retain them long term.
- Financial Control: Understanding the business’ cash cycle, knowing which are the most profitable products and areas of the business, understanding which expenses are worthwhile and produce a worthwhile return, identifying areas of waste to be reduced or eliminated, managing debtors and improving processes for collecting payments.
As you can see, the things Cupcakes & Coffee needs to do as a business go far beyond ‘making great cupcakes’ — the thing that motivated Emily to start her business in the first place.
This entrepreneurial perspective doesn’t mean Emily won’t get to enjoy the homely smell of flour. On the contrary, by learning how to build a business—and a team—to create her products, she’ll enjoy success and satisfaction on a scale far more rewarding than (to quote Gerber again) simply “doing it, doing it, doing it” as the business’ main technician.
So, what about you? Are you still ‘on the tools’? Or are you designing and creating a business that can eventually work without you so you don’t have to keep “doing it, doing it, doing it”?
If you want to build something great with your business, let’s talk. Make a time to sit down with us to map out your plan for working on your business so you don’t get trapped in it.