Posted on January 12, 2009 in Book Review

"Why Most Small Businesses Don't Work and What to Do About It" is the apt subtitle for Michael E. Gerber's 2nd edition of the classic E-Myth.

This book looks at several common reasons that small and micro businesses fail to make profit or longevity.

Gerber's main premise is that many small businesses are started by technicians who work in a normal job, have the skills to perform a task and in a flash of entrepeneruship think that they'd be better off being their own boss. So they start a business doing what they know best - but discover that although they know their technical work very well (hairdressing, pie-baking, web designing etc) they have no skills or experience with the many other jobs required to run a business (for example accounting, marketing, advertising, management, staff training etc).

Thus many of them fail fairly quickly and while some such small businesses may have some success, they are always limited by the main owner's time and talent.

The solution, according to Gerber, is outlined in the second part of the book, and is called by the author the 'turn-key revolution' or a 'franchise' approach to business management. The basics of it are that you should be very organised with standardising and documenting your business, as though it were the model for a franchise of businesses all the same.

Every task and job should be systemised and written down so that when new employees are found to fill positions within your business the standards stay the same and customers receive the same product or service.

The third and final part of the book then goes through some basic business management techniques, highlighting areas like identifying your primary aims, managing people, marketing and the like.

I found this book insightful and I'm sure there are many others who will feel like they started as a 'technician' and can benefit from the lessons Gerber provides. However, I did find that there seems to be much more talk about the theory of the problem and its solution than actual useful techniques to enable this to happen.

Some of the ideas are also getting rather dated. The first edition of the E-Myth was published in the 80s, and while the 'revisited' edition was published in 1995 it's still a long time ago, especially in a time of major changes in the business world. For example, there is no mention of the internet and its power to bring a global audience within reach at a relatively small budget.

A search shows that the E-Myth franchise itself has successfully made the transition to online, with a great website and courses available online.

Overall, The E-Myth Revisited is a very useful read and the basic concepts are still true in today's hi-tech world. If you're running a small business you should read this book and understand the importance of what it's saying, and even if you don't specifically implement Gerber's action plans you'll find that being organised and systemised makes your business run better and more easily.