“[Y]our business is a means rather than an end, a vehicle to enrich your life rather than one that drains the life you have.”
The E-Myth Revisited by Michael E. Gerber looks at the misconceptions people have about entrepreneurship. The biggest mistake entrepreneurs make when they start a business is thinking that all they need is a good idea and an affinity for hard work to make a success out of the business. As Gerber explains, there is a lot more to a business than just having an idea and then bootstrapping it.
Gruber uses the example of a young woman called Sarah to illustrate his philosophy. Sarah has a talent for baking and everybody tells her to start her own business, which she does eventually. Sarah hires a professional manager to take care of the business, while she does what she is truly passionate about – baking. Eventually, the manager quits for a better salary. Sarah is left her own devices and is quite devastated because, while she is a genius baker, she has no idea about how to run a business.
The point Gerber makes is, many entrepreneurs fall into the mistaken belief that if they know the technical side of a technical business – such as a software developer believing he knows everything there is to know about running a software company – they often end up losing everything over it.
80% of the startups across the world fail because of a failure to take all three things into consideration – technical, managerial and entrepreneurial. It’s not enough to be a good technologist – you should be a good manager and know how to run the business on a day-to-day basis. It’s not enough to be a manager and to have a good idea of the technology involved – you should be an entrepreneur at heart and know which venture to enter into and how to take the right risk.
These skills, according to Gerber, can be learned. A business is not about what it sells, but how it sells it. The important thing for every entrepreneur is to ensure that their business becomes a “system dependant” one, not a “people dependant” one. It should be able to succeed even without a huge personal involvement from the entrepreneur himself.
Gerber takes the example of companies such as Microsoft. Microsoft products are consistent across the spectrum. It’s no longer necessary for the founders of the company such as Bill Gates to take an active interest in it. It runs along just as fine because of the systems that have been set in place. When you make a company systems-dependant, it becomes easily scalable and capable of achieving lasting success – unlike a business that is completely dependent on the personal input of a particular individual.
A business, according to Gerber, has to be innovative, quantifiable and orchestrated. It has to operate according to certain well set guidelines, and not according to the whims and fancies of the founding entrepreneur. It’s not enough for an entrepreneur to make a hobby into a business, he or she has to develop the skills and expertise required to make a success of it as well.
If you’re a young entrepreneur, we highly recommend that you should read this book to truly understand the nuts and bolts of starting a business.