Business Format Franchise, the Prototype, and the Turn-Key Business

To Michael Gerber, in The E-Myth Revisited; Why Small Businesses Don't Work and What to Do About It. New York: Harper Business, 1995,p. 90, quotes some figures about business success of franchised businesses non-franchised businesses to show the rampant success of the former. "The reason for that success is the Franchise Prototype," he says.

He goes on on p. 92:

To the franchisor, the Prototype becomes the working model of the dream; it is the dream in microcosm. The Prototype becomes the incubator and the nursery for all creative thought, the station where creativity is nurse by pragmatism to grow into an innovation that works.

The Franchise Prototype is also the place were all assumptions are put to the test to see how well they work before becoming operational in the business.

Without it the franchise would be an impossible dream, as chaotic and undisciplined as any business.

The Prototype acts as a buffer between the hypothesis and action. Putting ideas to the test in the real world rather than the world of competing ideas. The only criterion of value becomes the answer to the ultimate question: 'Does it work?'

Once having completed his Prototype, the franchisor then turns to the francisee and says, 'Let me show you how it works.'

And work it does. The system runs the business. The people run the system.

What do you think? I'd like to know. Share your experiences. Post to this blog.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

The Entrepreneurial Model

Here's Gerber's definition of the entrepreneurial model, from p. 73:

It's a model of a business that fulfills the perceived needs of a specific segment of customers in an innovative way. The Entrepreneurial Model looks at a business as if it were a product, sitting on a shelf and competing for the customer's attention against a whole shelf of competing products [or businesses].

There you have it: "fulfills the perceived needs of a specific segment of customers in an innovative way."

See Michael Gerber, in The E-Myth Revisited; Why Small Businesses Don't Work and What to Do About It. New York: Harper Business, 1995.

What do you think? I'd like to know. Share your experiences. Post to this blog.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

Three Stages of Growth

Gerber argues that most businesses go through three stages: infancy, adolescence, and maturity. See Michael Gerber, in The E-Myth Revisited; Why Small Businesses Don't Work and What to Do About It. New York: Harper Business, 1995, pp. 35-67.

Infancy

During infancy, you are the business. You're doing everything. You're working all the time, having a great time, "doing not only the work you know how to do, but work you don't know how to do. The technician is doing what he wants, not what the business wants. [p. 35].

I went to an entrepreneurship conference yesterday in which three "entrepreneurs" talked about their business. Each of them was in infancy. They didn't want to grow a business, they wanted to own the place they went to work.

Adolescence

Gerber says, "Adolescence begins at the point in the life or your business when the technician decides to get some help." [p. 44] Business has grown and the Technician can't do it all. But the Technician hires someone else like him, but he won't give up what he does, and he gives his new employee everything he doesn't like to do. But business grows and the Technician has all he can handle. Pretty soon the employee quits and the technician's left working for a maniac--himself.

I used to use a print shop here in Philadelphia. It was run by a rather obese women whose employees were standing around while she did everything. I watched for a while, and I saw that every time one of them tried to do something, she came over and did it for him. So, they went back to standing around. I bet if I went in there today, none of them would have been working there.

Maturity

When the Technician is passed out of his comfort zone, he has three options open to him: (1) Get rid of everybody and go back to being an infant; (2) "Going for broke", continuing to grow and grow until he self-destructs; or (3) adopting The Entrepreneurial Perspective.

"A Mature business knows how it got to be where it is, and what it must do to get where it wants to go." [p. 68] Pretty soon the business has grown out of the Technician's comfort Zone, "the boundary within which he feels secure in his ability to control his environment, and outside of which he begins to lose control. [p. 51] The technician's comfort zone is those things he knows how to do.

A friend of mine ran a strategic planning company who worked for hospitals. He did well and his business grew. But it exceeded his comfort zone, and he terminated everybody and went back to doing everything himself. That was probably the best decision for him.

We shouldn't be bamboozled into what we don't want to do. We shouldn't just do things because Michael Gerber says so. We need to filter his advice through our own experience, but where what he says rings true for us, we have to consider it.
Does this sound like you? What do you think? I'd like to know. Share your experiences. Post to this blog.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

The Entrepreneurial Seizure Revisited

Michael Gerber, on p. 17 of The E-Myth Revisited; Why Small Businesses Don't Work and What to Do About It. (New York: Harper Business, 1995)expands on what this does to the person who gets "afflicted" by an entrepreneurial seizure:

The technician suffering from an Entrepreneurial Seizure takes the work he loves to do and turns it into a job. The work that was born out of love becomes a chore, among a welter of other less familiar and less pleasant chores. Rather than maintaining its specialness, representing the unique skill the technician possesses and upon which he started the business, the work becomes trivialize, something to get through in order to make room for everything else that must be done.

I interviewed a representative of a small manufacturing firm south of Madison, Wisconsin, in 2003, in conjunction with a consulting firm I was designing. They said none of them was making any money. They had to pay ever higher wages to their employees. To conserve funds they were manning the phones and doing all the office chores. They were working longer and longer hours and not seeing any benefit.

[They were suffering from one of the worst things about business, devoting their lives to support the business rather than running a business that supported their lives.]

I was asking them about what price to charge, and they said the problem wasn't money it was time. It was just two difficult for any of them to take time away from what they absolutely had to do.

Does this sound like you? What do you think? I'd like to know. Share your experiences. Post to this blog.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

The Fatal Assumption

Michael Gerber gives the fatal assumption as:

if you understand the technical work of a business, you can understand a business that does that technical work. [The E-Myth Revisited; Why Small Businesses Don't Work and What to Do About It. New York: Harper Business, 1995, p. 13.]

Gerber goes on to say,

And the reason it's fatal is that is just isn't true

In fact, it's the root cause of most small business failures!

The technical work of a business and a business that does that technical work are two totally different things!

But the technician who starts a business fails to see this.

This is key insight of Gerber's: Don't presume because you are great at putting on roofs that you'll be great running a company that installs roofs.

When I started my own business, I first just wanted to do what I knew I could do well and get paid for it. I succeeded at that. Then, later when I decided I wanted to run a business, I knew I didn't know what I was doing. So I learned my way out of it by reading books like this. And I think the next one I start will be a better one.

What do you think? I'd like to know. Share your experiences. Post to this blog.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

The Entrepreneurial Seizure

Michael Gerber forcefully argues that the vast majority of businesses are not started by entrepreneurs, they're started by technicians who were stricken by an "entrepreneurial seizure." (The E-Myth Revisited; Why Small Businesses Don't Work and What to Do About It. New York: Harper Business, 1995, pp. 11-12.) Further on p. 12, he goes on to say, "Inside your mind it sounded something like this:

'What am I doing this for? Why am I working for this guy? Hell, I know as much about the business as he does. If it weren't for me, he wouldn't have a business. Any dummy can run a business. I'm working for one.' And the moment you paid attention to what you were saying and really took it to heart, your fate was sealed.

The thought of independence followed you everywhere.

The idea of being your own boss, doing your own thing, singing your own song, became obsessively irresistible.

Once you were stricken with an Entrepreneurial Seizure, there was no relief.

You couldn't get rid of it.

You had to start your own business.

This is right on. I have to go back to my programmer guy who had been working for somebody for 7 years with no raise. Then the boss hired somebody else at a higher salary. The guy said exactly what Gerber said he said, and went out on his own.

My first business I started not because I hated my boss. I didn't hate her, but I didn't like working for somebody who was a monster one day and your best pal the next. Still, I thought it was the best option for me.

Did you do the same? Were you ever tempted to tell your boss to shove it and go it alone? I'd like to know. Share your experiences.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

Michael Gerber's "Profound Idea #4"

On page 4, Michael Gerber offers his fourth profound idea:

"The Business Development Process can be systematically applied by any small business owner in a step-by-step method that incorporates the lessons of the turn-Key Revolution in the the operation of the business. This process ten becomes a predictable way to produce results and vitality in any small business whose owner is willinng to give it the time and attention it requires to flourish. [See Michael Gerber, The E-Myth Revisited; Why Small Businesses Don't Work and What to Do About It. New York: Harper Business, 1995]

I am convinced that is this correct, and I wholeheartedly endorse it. But let's see what else he says that we can learn from.

Are you interested in this? I'd like to know. Post a comment.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

Michael Gerber's "Profound Idea #3"

Michael Gerber unleashes his third idea on p. 3:

At the heart of the Turn-Key Revolution is a dynamic process we at the E-Myth Worldwide call the Business Development Process. When it is systematized and applied purposely by a small business owner, the business Development Process had the power to transform any small business into an incredibly effective organization. Our experience has shown us that when a small business incorporates this process into its every activity and uses it to control its destiny, that company stays young and thrives. When a small business ignores the the is process--as most unfortunately do--it commits itself to Management by Luck, stagnation, and, ultimately failure. The consequences are inevitable. [See Michael Gerber, The E-Myth Revisited; Why Small Businesses Don't Work and What to Do About It. New York: Harper Business, 1995]

I am convinced that is this correct, and I wholeheartedly endorse it. But everyone should appreciate what he says about turn-key business.

Are you interested in this? I'd like to know. Post a comment.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

Michael Gerber's "Profound Idea #2

Michael Gerber's book is for me the bible on starting businesses. On p. 3 he offers the second of what he calls four profound ideas:

There's a revolution going on today in American small business. I all it the Turn-key Revolution. Not only is it changing the way we do business in this country and throughout the world but it is changing who goes into business, how they do it, and the likelihood of their survival.

I'm not sure whether this is true anymore or not. It certainly should be. The people I see coming into business today have never heard of Gerber's work, and the notion of turn-key businesses is foreign to them. I recommend the book to everyone, but I'm not there when they buy it, if they do. I certainly spread the word though whenever possible.

But everyone should appreciate what he says about turn-key business.

Are you interested in this? I'd like to know. Post a comment.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

Michael Gerber: Business Failure

Michael Gerber, The E-Myth Revisited; Why most Small Business Don't Work and What to Do About It(New York: Harper Collins, 1995),pp. 2-3, argues that

Small businesses in the United States do not work; the people in them do...

What we have also discovered is that the people who own small businesses in this country work far more than they should for the return they're getting.

Indeed, the problem is not that the owners of small businesses in this country don't work; the problem is that they're doing the wrong work.

As a result, most of their businesses end up in chaos--unmanageable, unpredictable, and unrewarding.

Just look at the numbers.

Businesses start and fail in the United States at an increasingly staggering rate. Every year, over a million people in this country start a business of some sort. Statistics tell us that by the end of the first year at least 40 percent of them will be out of business.

Within five years, more than 80 percent of them--800,000--will have failed.

Gerber follows this up with what he calls four big ideas. I'll put those out there in the next four days and discuss them a little bit.

Are you interested in this? I'd like to know. Post a comment.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com

The E-Myth

Michael Gerber's The E-Myth Revisited; Why most Small Business Don't Work and What to Do About It (New York: Harper Collins, 1995) is for me basic reading on entrepreneurship and starting businesses. I recommend it to all my mentees.

I'm going to lay out Gerber's ideas for the next few posts because I believe that it is helpful to the entrepreneur in developing business and winning sales. In the Foreward (p. xi), Gerber quote Carlos Castenada:

Don Juan said in Tales of Power that 'The basic difference between an ordinary man and a warrior is that a warrior takes everything as a challenge while an ordinary may takes everything either as a blessing or a curse.'

Be a warrior. Go out and get Gerber's book. It's probably on the business shelf of your local bookstore or you can order it through Amazon.com. You can probably get a used copy now for not much through an aggregator. But get this book. Don't get some of the spin-offs which are titled the E-Myth for... They're not what you should read. They're just more of the same.

Are you interested in this? I'd like to know. Post a comment.

Entrepreneurship informs all of my professional activities. Entrepreneurial ideas are their life's blood. For my ideas on entrepreneurial real estate go to www.yourstopforrealestate.com/blog and for my ideas on writing and publishing, go to www.kearneymusicschoolmurders.blogspot.com