The E Myth by Michael Gerber has sold over 500,000 copies. He has helped re-engineer more than 15,000 small businesses to aid people in gaining control over and results from their businesses. He updated his book in E-Myth Mastery in 2005.
The essence of this book and the E-Myth is this: understand that your business is a system rather than a place to go to work—a system designed to give the property owners who trust you to manage their properties a way to successfully differentiate your property management business from your competitors. This principle is so important to understand if you are considering starting your own business or converting your business into a better business with proven systems.
Michael Gerber explains the E-Myth as follows:
“To understand the E-Myth and the misunderstanding at its core, let’s take a closer look at the person who goes into business. Not after he goes into business, but before.
What were you thinking before you started your business? If you’re like 99 percent of the people I’ve known, you were working for someone else.
What were you doing? Probably technical work, like almost everybody who goes into business. You were a carpenter, a mechanic, or a machinist. You were a bookkeeper or a poodleclipper; a draftsperson or a hairdresser; a barber or a computer programmer; a doctor or a technical writer; a graphics artist or an accountant; an interior designer or a plumber or a salesperson. But whatever your profession, you were doing technical work. And you were probably [really] good at it. But you were doing it for somebody else.
Then one day, for no apparent reason, something happened….It could have been anything; it doesn’t matter what. But one day, for apparently no reason, you were suddenly stricken with an Entrepreneurial Seizure. And from that day on your life was never to be the same….
In the throes of your Entrepreneurial Seizure, you fell victim to the most disastrous assumption anyone can make about going into business. It is an assumption made by all technicians who go into business for themselves…That Fatal Assumption is this: if you understand the technical work of a business, you understand a business that does that technical work.
…When the technician falls prey to the Fatal Assumption, the business that was supposed to free him from the limitations of working for somebody else actually enslaves him. Suddenly the job he knew how to do so well becomes one job he knows how to do plus a dozen others he doesn’t know how to do at all.”–Michael Gerber, The E-Myth, pp. 8-11.
The reality is that the technical work of a business and a business that does technical work are two totally different things. To the technician, the business is not a business but a place to go to work.
Why is this important to understand?
Because, we all have a split personality in business. We are three people in one: the Entrepreneur, the Manager, and the Technician.
The problem comes because in Michael Gerber’s words: “Each of these personalities wants to be the boss, but none of them wants to have a boss. So they start a business together in order to get rid of the boss.”–Michael Gerber, The E-Myth, p. 12.
He gives a great analogy to how our multiple personalities interact with his analogy of the Skinny Guy vs. The Fat Guy
He says: “The Skinny Guy and The Fat Guy are two totally different personalities, with different needs, different interests, and different lifestyles. That’s why they don’t like each other. They each want totally different things.
…Anyone who has ever experienced the conflict between The Fat Guy and The Skinny Guy knows what I mean. You can’t be both; one of them has to lose. And they both know it. Well, that’s the kind of war going on inside the owner of every small business. But it’s a three-way battle between the Entrepreneur, The Manager, and The Technician. Unfortunately, it’s a battle no one can win.” –The E-Myth, p. 15.
The three personalities can best be described by making three columns and showing what each one focuses on.
An entrepreneur is visionary, lives in the future, looks for control, thrives on change, see opportunity, and dreams big.
A manager is a planner, lives in the past (primarily), looks for order, clings to the status quo, sees problems, and worries.
A technician is a doer, lives in the present, does the work, and ruminates about how to improve the way in which they do the work.
Since most small business owners tend to gravitate back to being technicians, it’s the technician who goes to work while the other two sort things out.
As Gerber says: “To The Manager, then, The Technician becomes a problem to be managed. To The Technician, The Manager becomes a meddler to be avoided. To both of them, The Entrepreneur is the one who got them into trouble in the first place.”–The E-Myth, p. 19.
In E Myth Mastery on page 6, Michael Gerber makes this point: “The E-Myth says that all of these technicians, anyone who does technical work of any kind, make the same, fatal assumption: that because they understand how to do the technical work of the business—building a house, cutting hair, practicing law, cooking food [and I might add property management]—they understand how to build a business that does that work.
Untrue, says the E-Myth.
Untrue, untrue, untrue.
The truth is that knowing how to do the work of a business has nothing to do with building a business that works.
Failing to understand and appreciate, deeply, the difference between entrepreneurial perspective and the perspective of a technician suffering from an entrepreneurial seizure is almost sure to be catastrophic for anyone starting her own business.
…Let’s look at the difference between the two. Between the technician’s point of view and the entrepreneur’s.
The technician builds a business that depends on him, around his skills, his talent, his interest, and his predispositions. He devotes his time, his energy and his life working for a living, albeit self-employed. In the end, there is a little equity to show for the investment of his time. At the beginning, he bought a job. In the end, if he’s lucky, he sells the job to a person who acquires it for little more than break-even, but most often at a net loss. The most a technician can show for the time he spent in his business is the income he earned, the feeling he had of being ‘independent,’ and whatever few assets he may have acquired with the income he earned over the time he was in business.
The entrepreneur on the other hand, builds an enterprise that liberates her, creates endless amounts of energy, and increases her financial, emotional, and mental capital exponentially. In the end, there is significant equity to show for her investment. The enterprise runs itself in the hands of professional management. It has real value in the world. The entrepreneur is now free to invest what she’s learned in another enterprise, depending on what she wishes to do with the rest of her life. In any event, she has learned how to grow an organization, how to utilize her creativity in the real world, how to expand her reach, and how to add value to many people, all while creating income that she no longer has to ‘work’ for, not to mention an estate for herself and the people she loves.
Same amount of time invested, significantly different return on investment.
The technician goes to work in his business.
The entrepreneur goes to work on his business.”–E Myth Mastery, pp. 6-7.
This is such an important concept to understand and why this book is so important and so powerful. When you understand the systems that make up your business and focus on implementing them, you will be so much more successful than you will by just working in your business.
It is so easy to lose focus when you are working in your business. Why?
Simply put, because you have too much to do and too little time to do it in. It is difficult if not impossible to catch up. There is always more to do. It doesn’t stop. Instead, you have to choose what you will focus on. What you need to focus on is doing more on your business and less in your business.
In the foreword of The E Myth, Michael Gerber makes this observation:
“…The people who succeed in business don’t do so because of what they know, but because of their insatiable need to know more. Conversely, the problem with most failing businesses is not that the owners don’t know enough about finance, about marketing, about management, about operations….the problem is that they think they know enough. And so they spend their time defending what they know, rather than discovering what they don’t.”–The E Myth, p. xiii.
With that in mind, let’s talk about the three stages of business (Infancy, Adolescence, Maturity):
- Infancy – The Entrepreneurial Phase
Gerber says:
“It’s easy to spot a business in Infancy—the owner and the business are one and the same thing. If you removed the owner from an Infancy business, there would be no business left. It would disappear! In Infancy, you are the business….you love it!…but then it changes. Subtly, at first, but gradually it becomes obvious. You’re falling behind. There’s more work to do than can possibly get done. The customers are relentless. They want you, they need you. You’ve spoiled them for anyone else. You’re working at breakneck speed. And then the inevitable happens. You, the Master Juggler, begin to drop some of the balls!
…What do you do? You stretch. You work harder. You put in more time, more energy. If you put in twelve hours before you now put in fourteen. If you put in fourteen hours before, you now put in sixteen. If you put in sixteen hours before, you now put in twenty. But the balls keep dropping….There’s simply no way in the world you can do all of that work yourself!
…Infancy ends when the owner realizes that the business cannot continue to run the way it has been; that in order for it to survive, it will have to change. When that happens—when the reality sinks in—most business failures occur. When that happens, most of The Technicians lock their doors behind them and walk away.”–The E-Myth, pp. 22-24.
As your business grows, you may feel these emotions too. If so, you are not alone. The key is to avoid the temptation to quit and move into the next phase or stage of business.
- Adolescence (Second Phase)
As Gerber points out: “Adolescence begins at the point in the life of your business when you decide to get some help. There’s no telling how soon this will happen. But it always happens, precipitated by a crisis in the Infancy stage. Every business that lasts must grow into the Adolescent phase.”–The E-Myth, p. 25.
This stage is initially a great stage for the overwhelmed and overworked property manager. When you hire help and delegate some things and it goes well, it is a moment of great happiness since you now feel freer to do other things. The technician part of you starts to go to sleep (since someone else is doing the work) and you put on the manager hat. But, as Gerber says, here is where a new challenge begins since we aren’t used to being the manager:
“…Unaccustomed as you are to being The Manager—your newfound freedom takes on an all too common form. Management by abdication rather than by delegation. In short, you give [someone the assignment] and run.”
For a while this is great, until you walk by and see someone doing something or you get a call from a customer and you hear that someone wasn’t treated exactly like they should be treated. In short, what happens is you immediately shift from being the manager to being the technician because “if you want something done right, you have to do it yourself.”
Here is where many entrepreneurs make a big mistake. They get back into doing the technical work (like selling, accounting, marketing, etc.) instead of training and making sure that it is understood and then done correctly. When we get back into the technician role (we will quickly find ourselves stressed out, overworked, and frustrated again).
Instead, what usually happens is what Gerber illustrates:
“This is the beginning of a process which occurs in every Adolescent business, once the owner’s Management by Abdication begins to take its toll. It’s the beginning of the process of deterioration, in which the number of balls in the air not only exceeds your ability to juggle them effectively, but your people’s ability as well.
The balls begin to fall, faster and with greater confusion than they ever did when you were doing everything yourself. And as the thud of their landings becomes deafening, you begin to realize that you never should have trusted [the person you hired to help you]. You never should have trusted anyone. You should have known better.
You begin to realize that no one cares about your business the way you do. No one is willing to work as hard as you work. No one has your judgment, or your ability, or your desire, or your interest. If it’s going to get done, you’re the one who’s going to have to do it.
So, you run back into your business to become the Master Juggler again. It’s the same old story. One finds the owner of every Adolescent business doing, doing, doing—doing the work of the business—despite the fact that he [or she] now has people who are supposed to be doing it for him [or her]. And the more he [or she] does, the less they do.”–The E-Myth, pp. 29-30.
Pretty soon, you are right back where you started.
Is this where entrepreneurs are all doomed to end up in our businesses? Thankfully, the answer is no. Instead, we have to learn a new set of skills. That of being a manager and an entrepreneur.
The problem is that many times, technicians won’t stop doing the work of the business long enough to learn the skill sets of managers and entrepreneurs.
The benefit of being in a franchise is that the franchise has already developed systems to teach you how to be a manager and an entrepreneur as you grow from one level to the next.
In other words, a franchise teaches you the set of skills so you can learn faster, implement faster, and train those around you to do the right things in the right sequence with systems designed to help you grow your business.
Michael Gerber makes this important point:
“Every Adolescent business reaches a point where it pushes beyond its owner’s Comfort Zone—the boundary within which he feels secure in his ability to control his environment, and outside of which he begins to lose that control.”
Those who are not in a franchise and don’t have the ability to learn the new skill sets required, will do one of three things:
- Get small again (return to infancy) to stay in control. When this happens, you own a job, not a business.
- Quit.
- Hang on for dear life. The business survives, but eventually you become completely consumed with the business and you do everything you can to save it. Unfortunately, the business doesn’t explode, but you do. As Gerber says: “You’re like a twelve cylinder engine working on one cylinder, pumping away, trying with everything you have to produce twelve cylinder’s worth of results. Finally, there’s nothing left. There’s simply nothing more you can do, except face the fact that one cylinder can’t produce twelve cylinders of results, no matter how hard it tries. Something has to give, and that something is you.” —The E-Myth, p. 36.
Of course, the best thing to do is learn the truth about what works and do it. That is already formulated in a well organized systems that is set up within a proven franchise like Property Management Inc.
The rest of the book The E-Myth talks about setting up systems, which is the essence of why a franchise like Property Management, Inc. is set up for a new business owner to succeed. To succeed, Gerber says that a business owner must do three things:
- Create systems for every aspect of the business.
- Set up the business to be run by systems.
- Then have your team run the system.
This requires discipline, standardization, and order and requires a new set of skills that you may or may not have developed yet. This is the key to having a successful and profitable property management business.
Before we get into more detail about the systems for your property management business, let’s talk about the third phase of business.
- Maturity (Third Phase)
The third phase of the business is Maturity. This is the stage of growth that is exemplified by the best businesses in the world. The important thing to remember is that these businesses didn’t end up as mature companies. They started out that way. The original owners planned the business before it was begun. The owners saw their job as working on the business instead of working in it.
Look at great companies like Microsoft, Google, Starbucks, and IBM. These owners had a model in their minds of a business that was already working. They had vision. They saw and see the business fulfilling the needs of a specific group of customers in an innovative way.
These are the companies that Jim Collins talks about in his books Good to Great and Built to Last.
The people who started these successful businesses started out with the vision of what it would be like.
Tom Watson, the founder of IBM once said:
“IBM is what it is for three special reasons. The first reason is that, at the very beginning, I had a very clear picture of what the company would look like when it was finally done. You might say I had a model in my mind of what it would look like when the dream—my vision—was in place.
The second reason was that once I had that picture, I then asked myself how a company which looked like that would have to act. I then created a picture of how IBM would act when it was finally done.
The third reason IBM has been so successful was that once I had a picture of how IBM would look when the dream was in place and how such a company would have to act, I then realized that, unless we began to act that way from the very beginning, we would never get there.”–The E-Myth, p. 39.
The franchise model works because the prototype suits the technician because all the entrepreneurial and management factors are established by someone else. You can then be a technician and have the other two aspects of the business figured out for you.
Here are six rules for creating systems that are found in the E Myth:
- The system will provide consistent value to and exceed expectations of property owners.
- The system will be operated by people with the lowest possible level of skill.
- The system will stand out as a place of impeccable order.
- The work done in the system will be documented in operations manuals.
- The system will provide a uniformly predictable product and/or service to the customer.
- The system will use a uniform color, logo, dress and facilities code.
When you have better systems, your property management business will be more successful and you will be happier. You’ll be able to take more time off. You’ll make more money and you will be more profitable. You will be able to work on your business and not just in your business. And that will make all of the difference. For more information about how you can utilize proven systems in your property management business and to see if your market territory is available, schedule a call with one of our franchise developers here: https://calendly.com/pmifranchising
