The E Myth
“40 percent of all startups fail in the first year of business.
Within five years, more than 80 percent of small businesses will have failed.
And the rest of the bad news is, if you own a small business that has managed to survive for five years or more, don't breathe a sigh of relief. Because more that 80 percent of small businesses that survive the first five years fail in the second five."
~ Michael Gerber
The opening of Michael Gerber's book, The E Myth, clearly illustrates the incredible challenges of starting, growing and maintaining a small business. What surprised me most after rereading The E Myth, 20 years later, was the lack of improvement in the failure rate of small business startups. These are pretty sobering statistics and they made me wonder why would anyone go into business knowing the chance of succeeding. The second question is—why do so many small business startups fail?
The E Myth covers many of the issues that keep small businesses from succeeding. It's a quick and highly informative read and well worth the time of anyone starting or running a small business. You'll discover how to avoid some of the biggest mistakes most small business owners make and how to make your business work for you instead of the other way around.
The E Myth introduced me to how I perceived and ran my own business as well as how I advised clients. It was an epiphany that exposed all my struggles, failures, and misperceptions regarding my personal concept of what my business should be. I learned very quickly that I was the epitome of what Michael Gerber describes as "the technician".
It dawned on me, while I was reading the book for the second time, I wasn't reading just any business book; I was reading an outline of a process that has come to be known as brand development. The term just hadn't been defined or coined yet. Michael Gerber introduces us to the most important elements of the branding process and applies these strategies to the small business.
Brand development is an all-encompassing process of business development. A good brand strategy reviews every aspect of a business and exposes what’s being done right and what needs to be adjusted. However, when it comes to the majority of small businesses the owner is the primary obstacle to the success of their business. I believe this book helped to spark a new perception of starting and running a small business by establishing the core purpose of why anyone starts their business.
Twenty years ago, after reading this book for the first time, I realized many of my small business clients had become statistics shortly after opening their business. It seemed the sign company was removing the signs as soon as they had installed them. As a young graphic designer I wondered, "Did I do something wrong?" Did I misunderstand their demographics, their mission? Did I use the wrong color, the wrong font in the logo and communications? Was it my work?
Over time, I started to monitor and understand the issues that caused the downfall of so many of these small business startups. I found that most of them were skipping on the basics—like bypassing the proper licenses and permits. To this day, many of the small businesses I work with have not taken the important steps first. For example, meeting with an attorney and accountant.
My own professional experience has shown that businesses that understand the entire scope of their business and their core purpose for being in business are generally the ones that succeed and are still around. They understand the purpose of their business on every level and understand that the business exists to serve them not the other way around. Still so many small business owners refuse to understand and adapt these basic principles because of their own fears and misperceptions.
The E Myth is a great starting point for any small business owner. If you’re interested in discovering what’s standing in your way to a great business and great life I highly recommend you start by reading this book.
