by Angie Mohr

Created on: May 01, 2008   Last Updated: May 07, 2008

Michael Gerber's The E-Myth Revisited: Why Most Small Businesses Don't Work and What To Do About It" (Harper Collins, 1995) arrived on the business book scene in 1995 and instantly became a best seller. Since its release, the E-Myth has been used by both large and small companies to train their managers and staff to develop a more functional and profitable business. The "E" refers to Entrepreneur and the E-Myth that Gerber speaks of is that just because someone is good at the technical aspect of what they do, they will be good at running that type of business. So, for example, if a hairdresser opens her own hair salon, she may be really good at cutting hair but might have no management skills, which are critical for running a successful business. Gerber contends that management and financial skills can and must be learned by every successful entrepreneur and that they must surround themselves with staff and advisors who are strong in areas where the entrepreneur is weak. Gerber separates out the various hats that all business owners and entrepreneurs wear: owner, manager, and technician. He calls doing the work that the business does (e.g. cutting hair) as working in the business, while managing and strategic planning is working on the business. Gerber states that the biggest cause of business failure is a lack of time and skill spent on working on the business. The E-Myth's purpose is to outline how to work on your business.

The E-Myth is divided into three sections. The first deals with the various stages of a small business life cycle from infancy to maturity. It also defines the various roles taken on by business owners: technician, manager, and entrepreneur and details what skills are required for each role. The second section outlines Gerber's philosophy of systematizing a small business so that it runs much like a franchise. McDonalds, for example, runs smoothly because of the processes put in place that any new high school employee can easily follow. According to Gerber, this frees up the entrepreneur's time to work on strategic planning and forecasting. Turning a small business into a turn key operation also increases the value of a business and allows the entrepreneur to sell the business for more, says Gerber. The third section discusses the different kinds of strategic planning that an entrepreneur needs to do to be successful, including building a marketing strategy, a business development model, a management strategy and a human resource strategy. Gerber gives step-by-step instructions for how to build each of these strategies.

The E-Myth Revisited is an easy-to-read primer for harried entrepreneurs who want to absorb the information quickly. The text is peppered with an ongoing story of a semi-fictional entrepreneur that illustrates each point that Gerber is trying to make. The E-Myth continues to be a relevant and important guide that every business owner should read.

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