Summary of The E-Myth Revisited by Michael Gerber

The concept of balancing your functional roles as a small business owner is not a new one.

 Having the self-discipline to take time to apply vision/innovation, effective management, and systematic execution is the magic formula for success presented in this book.  Although this seems too  simple, the elegance of the concept is both powerful and easy to understand. 

In my mind the key is the discipline to JUST DO IT.  In an increasingly complex and busy world, focus on your critical areas of performance (doing the right things), is even more important.   Focus on simplifying everything to do with your business and focus on those activities which are most productive.

Although the subject is aimed at entrepreneurs, the ideas apply to everyone working in a business environment.  This book has reaffirmed my commitment in my work with private companies to make sure that they are thinking strategically about their business, and doing cost and time effective marketing and sales.    Exceptional execution requires systems that allow very efficient operations that meet the needs and wants of customers on a consistent basis.

There is no way you can execute effectively if you have not given serious thought to fundamental business issues: what your customers are buying (not what you are selling), who your customers are (demographics, buyer behavior and your "ideal customer"), and how you can beat the competition (avoid or neutralize competitive factors by uniquely differentiating your business).

By doing these things, you assume ownership of your business, and make it work for you.  The results will be higher growth, higher profitability, and less time and stress for you.



The Little Engines That Could - We Hope.

Everone is saying that small business will create the jobs we need to pull out of the recession, that it is
"The Little Engine of the economy That Could.

The function of businesses in society is to create value for that society by innovating technology, methods, exploiting resources or facilitating commerce.  Be improving the overall efficiency of the society value is created.  Value = the excess created above the cost to create.   It seems to me that the reason that large public corporations (LPCs) are not the businesses who will pull us out of the recession is that they have become ossified: slow to react, risk averse, whose primary goal is to protect the weath of the stockholders and management.  These characteristics stiffle innovation and therefore wealth creation. 

Consequently, we see mergers and acquisitions between LPCs, and the acquitionsof more dynamic smaller corporations, public or private, or companies owned by Venture Capitalists.  The latter are typically very smart people who have figured out they can make more by aggressively managing companies according to a business model specifically aimed at value creation.  Rather than being vultures, as some consider them, buying low and selling high, these organizations seem to be filling the need of LPCs for creativeity, entrepreurism, and innovation.  Effectively, this is what Warren Buffet has done, but he does not sell them, but he holds and controls them for the long term.  I think that he figured this out a long time ago, and although he sells shares, he definitely calls the shots at Bershire.

At the other end of the spectrum are private companies who reflect the personality of their owners who are typically entrepreneurs.  As is well know, these companies are more dynamic and creative, and more importantly more responsive to changing technologies, markets, or economic conditions.  As the statistics show, these are the engines of job growth that are hoped to pull us out of the current economy.  However, these companies do not have the same access to capital as do public corporations, and often are acquired by the Venture Capital guys, who use the talents of the management to continue to grow and innovate.  Limited capital often contrains these companies ability to achieve economies of scale, putting them at a disadvantage to the LPCs.  This in turn increases the burden of regulation, fees, and taxes on smaller private companies.  S

So if we really want the small company engine to pull the train, government needs to stop burdening these companies, and then passing $30 Billion bills to "give back" some of what they have taken away from these companies.  Did anyone in Washington ask the majority of small companies what they need done to thrive, or is this just another case of the paradigm in Washington to throw money at any and all problems?  (After taking a large cut to finance the elephant that is the Federal Payroll).

The reality is that market forces will find an equilibrium, which will be suboptimal in proportion to government constraints that interfere with the free market.  So the question I as is how can we, as intelligent citizens of society, customers, investors do to counter the forces working against a free market?  We can ignore the brands that LPCs have spent $billions on to create, and who source to cheap cost countries, and purchase from small local companies where possible.  We can also seek out small companies to invest in, owned by people that we know.  These companies are run by real people for real people, typically with values such as honesty, loyalty, and a strong work ethic. 

For my part, I am dedicating myself to using my many years of business experience to help small companies thrive by being a volunteer to various organizations, and offering consulting services.  This is what I am good at.  It's what I do.  So rather than retire and complain, or vote for someone in Washington and hope that they do the right thing, I am doing what I do best.  See what we are doing at http://www.b2bplanner.com/.

So what do you think?  What are you doing to support the little engine that could?  Let me know.