The E Myth — Revisited, by Michael E. Gerber — Why Most Small Businesses Fail and What to Do About It (The dog-eared book to the right is my own personal copy from 1995).

The subhead says it all! As you know if you’ve read my other posts, I’m all about overcoming the small business epidemic (a term that I coined several years ago), which gets right to the point that “most” small businesses don’t work, or fail.

Needless to say this book speaks to me. Actually, it’s been speaking to me for years and was instrumental in the development, structure and continuing success of my own business, Cazbah.

The term E Myth relates directly to the Myth that; I am an Entrepreneur, therefore I know how to start, run, manage and succeed at a small business. The data regarding small business failures in this country say otherwise. In fact, most small businesses are started by what Gerber refers to as “technicians,” people that make things or do things and start a business because they think they have a better way of making or doing things. I’ve always related the difference between leaders and managers to this point, namely – managers do things right, leaders do the right things. So simple, so relevant…

One of the characteristic pinch points for entrepreneurs is that they can never seem to get ahead. Gerber refers to this as working in the business, rather than working on the business. They are so busy making stuff that they never raise their eyes to the horizon to see what’s coming or where they are going. Like walking across a field looking at your feet. You may never get to the other side…

There are many, many small businesses (most actually) that I’ve interacted with over the years that are in a perpetual vicious cycle. They go out to their markets sell something, bring it back to the shop and build it, go out sell something, bring it back build it..(repeat). Their financial results porpoise as a result. Picture the fish (o.k., mammal), above the water – below the water – above the water – below the water, etc… It never ends and they never really grow or get ahead. They just exist like this, in some cases from one generation to the next.

Gerber offers some simple and actionable advice on how to correct the E Myth through the development of the Franchise Prototype. This is a business model that adopts the attributes of a franchise business. He goes to great lengths to give credit where it’s due (Ray Crock – McDonalds). Here’s a little tidbit to give this point some credence. “Regular” small businesses fail at a rate of 70% – 80%. Franchises succeed at a rate of 75%. Get the point? As an aside, for the entrepreneur considering a business venture, being a franchisee may represent your best choice!

Most small businesses lack structure and any repeatable process documentation, the attribute that truly defines the franchise business model. Gerber contends that the strategic systemization of your small business will reap huge returns and resolve the E Myth… and he’s right!

If you are 1) an Entrepreneur, 2) business owner or manager, 3) considering becoming an Entrepreneur, 4) may someday be in a position of business management, 5) are currently employed or, 6) are considering employment… (you get the point): You owe it to yourself to read this book!

Michael Gerber’s E Myth is what I consider to be one of the foundational texts that every small business should have on its book shelves and have in practice! Buy it and read it.

I wrote the following article over 4 years ago and it was published in Business Strategies Magazine. It came up recently in a search result and I re-read it and pondered how, the more things change the more they stay the same. It really speaks to what the “Social Medium” is all about. Read and enjoy!

Like most great principles, integrity gets a lot of lip-service, but it’s seldom a true way of life, especially on the Internet. We have tuned ourselves to distrust what we read and see because frankly, so much of it is spin or an all-out lie. If it seems too good to be true, it probably is… When we hear the word integrity it often congers up an image of a stern and sober school master whose Quaker or Puritan upbringing shows through his innate inability to smile, joke or be happy. But this isn’t what I’m talking about when I say integrity. I am talking about that character quality that doesn’t cut corners or shade the truth, no matter what.

Integrity is the key to success in everything that we do. Integrity is honesty and truth, period. Shakespeare captured the essence of this in Hamlet, when he wrote; “And this above all, to thine own self be true. And it must follow as the night the day, thou canst not then be false to any man.” If we are honest with ourselves we can’t be dishonest with anyone. If our motto is integrity, we always have what we need. We sleep soundly knowing that we don’t have to worry about what we have said or done.

Translating this principle to your efforts on the Internet is critical as you develop the contents of your website, blog or online communications. Remember that the Internet is the quintessential and ubiquitous communications medium. By design it is everywhere, all the time. The communities that define the Internet, people (all of us) coming together around common interests, have unprecedented access to information, yours and everyone else’s. Therefore, make sure what you publish is honest and true. Simple, right?

The simple truth of the matter is that all of life is governed by the principle of cause and effect. We have all heard this law repeated in various forms from scriptural to cultural; You reap what you sow – For every action there is an equal and opposite reaction – What comes around goes around. Failure to obey this law will result in certain disappointment. This is especially true of the information that you publish and communicate, or the business that you do, on the Internet.

There is a term “Internet Time,” that gets bandied about in relation to the speed with which change occurs or things happen online. I have always correlated this term, or concept, to another very familiar concept, dog years, the 7:1 ratio of the age of a dog to a human. In other words, the dog ages 7 times faster than a human. The correlation is a simple one: Change occurs and things happen 7 times faster on the Internet than they do in the dirt-world.

At a purely pragmatic level, honesty is the best policy. Frankly, it is the only policy online. With the law of cause and effect and the concept of Internet Time in mind, imagine if you will the potential impact of putting information out there that isn’t absolutely true, or doing business online that is not honest according to our previous definition. Understand that this dishonest effort will most certainly bring those “chickens home to roost.” When or how big the unfailing blow will be, nobody can tell. However, you can be sure that “the other shoe will drop.”

By comparison lets look at the upside potential of this example. If the information that you publish and the business that you conduct online is honest and true, it stands to reason that the reward that you will receive will come to you 7 times faster, right? Absolutely! Not only that but just as the punishment always seems to be greater than the crime, the rewards for our Integrity will be out of all proportion to our honest efforts. It is our choice.