The E-Myth Revisited
by Alex Ng
Michael Gerber’s revolutionary approach to building businesses that work without you through systems and processes.
The Big Idea
"Most small businesses fail because entrepreneurs are technicians suffering from an 'entrepreneurial seizure' - they're great at their craft but don't know how to build a business. Success requires working ON your business, not just IN it."
Key Insights
The Fatal Assumption
Most entrepreneurs believe that because they understand the technical work of a business, they understand a business that does technical work. This is the E-Myth - the entrepreneurial myth. Being a great baker doesn't mean you can run a bakery.
A talented hairdresser opens her own salon, then works 80 hours a week doing hair, managing staff, handling finances - and hates it. She wanted to do hair, not run a business. The technical work and the business work are completely different.
Three Personalities
Every business owner contains three personalities in conflict: The Entrepreneur (visionary, sees opportunities), The Manager (craves order and systems), and The Technician (wants to do the work). Most small business owners are 70% Technician.
The Technician wants to bake cakes. The Manager wants consistent processes. The Entrepreneur wants a cake empire. Most owners stay stuck in Technician mode, doing work instead of building business.
Work ON the Business, Not IN It
The goal is to build a business that runs without you. This requires creating systems - documented processes that allow anyone to produce consistent results. Your business should be your product, not your job.
McDonald's isn't successful because of its food - it's successful because of its systems. A teenager can run the operation because every process is documented and repeatable. That's the model for any business.
The Franchise Prototype
Build your business as if you were going to franchise it - even if you never will. This forces you to create systems, document processes, and make the business work without depending on any particular person, including you.
Create an operations manual for every position. Define exactly how to greet customers, how to handle complaints, how to close each day. The business should produce consistent results regardless of who's working.
Chapter Breakdown
The Entrepreneurial Myth
The E-Myth is the mistaken belief that most businesses are started by entrepreneurs. In reality, most are started by technicians who have an "entrepreneurial seizure" - they're good at something and assume they can run a business doing it. This is why most small businesses fail.
The Three Business Personalities
Every business owner has three conflicting personalities:
- The Entrepreneur: The visionary, sees opportunities, lives in the future
- The Manager: Wants order, systems, predictability
- The Technician: Wants to do the work, lives in the present
A balanced business needs all three, but most owners are primarily Technicians who neglect the Entrepreneur and Manager roles.
The Franchise Prototype
Gerber's solution is to build your business as if you were going to franchise it. This means creating systems so documented that anyone can achieve consistent results. Your business should be your product - a turn-key operation that works without you.
The Business Development Process
Innovation: Constantly improve how you do things. Ask what frustrates customers and fix it.
Quantification: Measure everything. You can't manage what you can't measure.
Orchestration: Eliminate discretion at the operating level. Create systems so precise that outcomes are predictable.
Working ON vs. IN
The fundamental shift is from working IN your business (doing technical work) to working ON your business (developing systems). Build a business that doesn't need you - then you're free to grow it, sell it, or simply enjoy the income while living your life.
Take Action
Practical steps you can implement today:
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Identify which percentage of your time is spent as Technician vs. Manager vs. Entrepreneur - most need to shift toward the latter two
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Start documenting your processes - how would you train a replacement for every role, including yours?
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Schedule regular time to work ON the business (strategy, systems) separate from working IN it (daily operations)
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Ask: if I had to leave for a month, would the business run without me? If not, that's your priority to fix
Summary Written By
Software Engineer & Writer
Software engineer with a passion for distilling complex ideas into actionable insights. Writes about finance, investment, entrepreneurship, and technology.
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