Are you building a business, or are you simply self-employed? Do you understand and recognize the differences? And are you intentional about which path you're on? If you presently have a job but want to strike out on your own, do you want to be self-employed or realize the benefits of true business ownership? Asking and answering this question can make a real difference in your business development and overall strategic direction.
The E-Myth Point of View is quite clear on the advantages of creating a true business. We're all about building a systematized operation that can function successfully without you, one that can scale to multiple locations and truly support your life in a way that self-employment can't. Indeed, the very word self-employment belies the reality: self-employment depends upon you, and only you, to keep the whole enterprise going... and this quite naturally has limitations.
If your business depends on you, you don't own a business-you have a job. And it's the worst job in the world because you're working for a lunatic... You can't close it when you want to, because if it's closed you don't get paid. You can't leave it when you want to, because if you leave there's nobody there to do the work. You can't sell it when you want to, because who wants to buy a job?
—Michael Gerber
In other words, in most instances self-employment involves "doing it, doing it, doing it," until you really can't do it any more.
Many technicians begin as self-employed practitioners. This is the very premise behind the E-Myth: that technicians, suffering from an Entrepreneurial Seizure, break away from their employer and begin their journey of business ownership by creating a job for themselves. Many never make it beyond infancy. Some do, but then they fall back. Most technicians suffering from this seizure don't begin to understand the truth about business creation until it's either too late or they have such a backlog of mistakes to clear up that it takes longer than necessary to embrace a real business model.
But what if you knew from the beginning what you wanted? What if you understood the value and life sustaining possibilities that founding a real business can create and you started out with that idea in mind, even if you begin as a self-employed technician?
Intentionality is a powerful force and if you begin with the intention of true business creation rather than self-employment, you will approach nearly every aspect of its development differently. You'll ask and answer many questions concerning the ultimate objective of your business.
Do you want to sell it eventually? If so, perhaps you want to come up with another name for your business instead of Joe's Auto Supply. Do you plan on using your personal credit, or are you pursuing business credit so the business can truly exist outside of you? Do you set things up as a sole proprietor or an S-Corporation? Do you engage in a social networking strategy under your business name or your personal one? Are you prepared from the beginning to observe, analyze and document business processes so they can be easily followed by others?
You may be self-employed when you first start out but if you begin with the total intention of founding a company that can be turn-keyed, operated by another, passed down to children or sold, then you begin with that end in mind and develop the entire enterprise accordingly.
As much as the E-Myth exists, there is a similar myth about being self-employed. Maybe you have no intention of starting a true business. Perhaps you really want to be an independent consultant, a lone artisan, or a self-employed accountant. But even if you plan on staying in what we call the infancy business stage, to be successful you still must develop yourself and your business beyond the essentials of your technical discipline.
Even if you never want to hire your first employee, you'll still need to orchestrate your efforts along the model of the Seven Centers of Management Attention. For even the solo entrepreneur needs to have a mature Money, Marketing, Lead Generation, Lead Conversion and Client Fulfillment center to stay the course... to survive and flourish. But be clear: if you never intend to move from infancy (self-employment) to a mature business, then in most instances you are forgoing an eventual sale or passing on the business to other family members unless you find some way to create value outside of yourself.
Let me share a story of how this manifests. We had an HR Consultant attend one of our Leadership Intensive Seminars a few years ago. She'd struck out on her own after many years working for others. But she was burnt out. She'd been running her business as a technician. She had to do the marketing to generate leads, network three nights a week, attend conferences, meetings and interviews with potential clients, and then she had to actually deliver her services, do the invoicing, etc... It was a vicious cycle of work.
It wasn't until she attended the E-Myth seminar that she realized how many hats she was wearing in the business. She was introduced to the Seven Centers of Management Attention business model and that helped her understand that not only did she need the skills to consult with clients on their human resources strategy and organizational development practices, she also needed to grasp and understand all the work that goes into running her business.
She realized that in her effort to be self-employed, she'd created a never-ending job! Armed with new tools to organize the work of her business, she changed her approach and began to think of her consulting practice as a business. Since attending the event, she has hired her first employee. She no longer books her own appointments or sends invoices. And now she's in the process of recruiting a second consultant so that she can spend more time focused on generating new clients, freeing herself from the actual delivery of her consulting services.
The ultimate goal for most entrepreneurs is to have a business that can carry on without them. A business with real value. A business that becomes a living organism within the total economy. A business that can be sold or gifted. A business that supports you to live a truly enviable life.
In order to achieve this goal, strategic business development is required. You must master the various components of the business. You must create a synergy that makes the whole greater than the sum of its parts.
Every aspiring and current business owner should understand the difference between self-employment and building a business.
Can you relate? Is this the story of your business? Have you successfully transitioned from self-employment to true business ownership? Post a comment and tell us about it.
Mike H. says:
Boy can I relate. I was a technican with an entreprenuerial seizure 7 years ago and now I have a bear of a job! I'm in the middle of making some major changes to turn this job into a business so that I can enjoy my life again.
Submitted Jun 24, 2009 12:53 PM
Gary D. says:
The concepts, the thought-processes, the systems are a paradigm-shift for many of us who yearn to be entrepreneurs. The 7 Centers of Management Attention are key to reaching toward the vision which is developed in Step 1 (The Leadership Step).
Thank you for your leadership, E-Myth!
Submitted Jun 24, 2009 1:30 PM
bret H. says:
What a wake up call! I believe that I started out with the right intentions but lost the compass along the way. Instead of heading due North, I feel like the past 7 years I've been going East to West. Time to head north again.
Thank you for the insight, E-Myth!
Submitted Jun 24, 2009 3:59 PM
Bettina M. says:
What if the strategy you're working on allows you to invest profits into real estate fast enough to retire in 5 years, but the business is just a cashcow to achieve this....I don't consider that a job, but fast wealth creation. So my question is: isn't there may ways to grow a business and many reasons for how you may do it?
Submitted Jun 24, 2009 4:43 PM
Joel H. T. says:
Could I ask:
"a self-employed is an individual working on the 3 roles as the Enterpreneur, Manager and Technician?"
"a self-employed is working as a job instead of developing business which could eventually be sold sell or gifted"
Thanks!
Submitted Jun 25, 2009 1:15 AM
Barbara K. says:
Wow, I so need to read this sort of information. Im struggling so much in my business and want to turn it from a money sucking to a money making business.I hope one day to have a life again. Congradulations to all of you who have been successful in doing just that.
Submitted Jun 25, 2009 3:17 AM
Wendy F. says:
Years ago I read E-Myth and learned the difference between working "in" your business and working "on" your business. Many local independent retailers where I live work "in" their business. I am the chairperson for our local merchants association. We are currently working on a "merchants discount card" which would be good at participating retailers. Two retailers declined to participate saying we should be working "on" our businesses instead. But I hated to tell these two people that they spend 99% of their time working "in" their business!
When this idea was first pitched to one retailer he was washing his store windows!! Anyone can wash store windows so he was essentially working "in" his business, although he didn't realize it. Dan was essentially doing the work of a technician. Tracey who owns our local used book store was putting books on her shelves. Anyone can do that as well! So she was playing the technician.
This was a great article. Granted, I work a lot "in" my business as I am a one-man show. But I have organized my day better, and at least realize what I had been doing. Great article!!
Submitted Jun 25, 2009 7:34 AM
Pamela M. says:
I think this is a great article. It is a true testament as to what I was going through. I have now realized that, and already have made steps to improve the quality of my life.
Submitted Jun 25, 2009 9:12 AM
E-Myth Business Coach says:
In response to Bettina M:
You're absolutely right, there are many ways to grow a business and many reasons for doing it. One core principle of the E-Myth Point of View is that your business should be a way to get more from your life. We see a business as a vehicle to gain both personal and financial freedom. In this vein, it sounds as if the business you've created is designed to put you on that path of financial independence, and if it satisfies that goal than the way to grow it and the reason for its existence should be apparent.
Most often, the best way for a business to provide personal and financial freedom is to have a business with turn-key possibilities, one that scales well, one that can be managed by others or eventually sold. As Michael Gerber has said, the biggest pay day for most business owners is the day they sell their fully systemized business to a proud new owner. It sounds like you've adopted a different strategy and that's great! As long as you're intentional, create a clear objective, and make your decisions based on that plan, then your business surely shall support your life.
The key element is the creation of a strategic objective that you can realize within a specified period of time. Then, you use it as a guide for designing further strategies and making key decisions. Most likely with your objective, you're not planning on selling to another owner, but simply using the cash flow to fund your profitable investments. That's just fine, as long as you're intentional about every aspect of your plan. But who knows, maybe in the process of running your "cashcow" business, you might just discover other possible outcomes for the business beyond any you've yet imagined.
Submitted Jun 25, 2009 10:35 AM
Ruth C. says:
I was wondering if anyone has any ideas on how the e-myth works for creative industries like illustration, graphic design and copywriting?
I love the e-myth and can absolutely see how it works for most businesses (in fact we are applying the ideas to a side project we are working on at the moment), but can't see how the method works for creative industries.
Sure, for some of the more mundane aspects of our work, but we do creative work a lot of the time. Most people come to our business because they like our "style" - it is one of our strongest selling points. And as most artists will tell you, their style is not easily replicated.
It also seems to me that what people are buying a lot of the time is our ideas. From my understanding the way these ideas form is an alchemy of the way our brains work, individual experiences, the way we see the world, the things we find funny or just the crazy tangent our mind is heading down on a particular day.
So far I can't think of a way that you can replicate the personal aspects of creative work through systems but I would love to hear if e-myth has an idea about this.
P.S. I know that we are currently hopeless technicians
Submitted Jun 25, 2009 5:08 PM
Colleen M. says:
Following on from Ruths comments. In a practice such as psycotherapy or counselling, where so much is about the relationship between client and therapist I can see how good systems in place for others to do support roles, booking, etc is possible. But besides writing a book what do you do to leverage such a practice?
Submitted Jun 26, 2009 12:37 AM
ramalinggam k. says:
Yes, the case for a fully systematized business is powerful indeed. But the question is, having created or evolved one, surely you need to sustain it so as not to go out of alignment or end up unsystematic again. How does one achieve this? I read somewhere the Irish brewer Guinness is celebrating its 250th anniversary this year. They even have a factory in Malaysia, a muslim-majority country. Surely they must be a continuously improving, continuously aligned highly systematized global brewer and worth a lot of money. What kind of mindset would be needed to create such a business?
Submitted Jun 26, 2009 1:27 AM
E-Myth Business Coach says:
@ ramalinggam K.
You are absolutely right Ramalinggam.
To build a sustainable business you need to be devoted to a continuous cycle of Business Development. You cannot build systems, put them in place and then never test, tweak or innovate them. You must remain flexible in the marketplace and always be in touch with the needs of your target market. At E-Myth we coach to this principle of business development.
The business development cycle is a continuous cycle of Innovation, Quantification, and Orchestration. Innovation is the creation of systems or the improvement of existing systems. Quantification is putting numbers to the impact made by business systems, and tracking their performance over time. Orchestration is the elimination of discretion, or choice in your business systems - doing it the way it's supposed to be done, consistently, predictably every time - until innovation improves it.
The point is that Business Development never ends. It's the secret to realizing your vision as the leader. It's the methodology for working on your business rather than in it.
Businesses evolve. Leading from the strategic, entrepreneurial perspective and engaging in the continuous cycle of business development is what will set you apart and build a lasting legacy.
Submitted Jun 26, 2009 9:40 AM
Gretchen K. says:
@ Ruth
Thank you for this great question. You make some valid points regarding creative work and systemization.
The answer to your question hinges in large part on your goals and objectives for your firm. What is your vision of the company and your role within it?
Do you want your primary role to be the principal technician, or do you plan to expand your business with either a much larger staff or multiple offices in various locations?
That being said, let's look at your thoughts about the business. You refer to the "more mundane aspects of our work" in contrast to the creative work that you do. The E-Myth perspective is that everything in your business - every function, every process and procedure, every task - falls within the Seven Centers of Management AttentionTM. The creative work, in your case, would constitute much of the Client Fulfillment center. Everything else then serves to support, facilitate, and deliver your product/service. In addition, there are the functions around developing your marketing strategy, generating the leads you need to create clients, and so on. In other words, all of your business can be systematized and become replicable. And to a large extent that would include the creative work.
An example is a recent client of E-Myth that owns a graphic design firm. The firm is poised to expand in their current location with plans to establish offices in other cities over the next couple of years. Their work is distinctive and, as you noted, has a particular "style" that differentiates them from their competition. By identifying the tangible and intangible qualities that mark their creative work and communicating and cultivating that with their staff they are able to sustain and replicate their personal look and feel - their "voice" - even though it is being produced by other people. This process is similar to the way a magazine's editorial staff works to establish and maintain a signature style and voice throughout the work produced by a variety of writers and editors. The graphic designer achieved this by documenting and systematizing every aspect of the creative work that they want done, as well as becoming very systematized in their recruiting and hiring processes.
So, can you replicate the internal processes of creativity? Perhaps not, but the external processes and functions can be and certainly should be whether you simply want to increase your business's efficiency to allow you the freedom to focus on creative work, or you want to grow your business to include a larger creative staff that can reproduce your firm's distinctive style.
I leave with you with two questions:
What do you need to put in place for this to happen?
And, how can the work get done without you having to do it all?
Submitted Jun 26, 2009 3:13 PM
Steve V. says:
For Ruth:
I've struggled with the same type of situation for over 5 years. I'm not sure my situation is more challenging than yours since I don't charge for my expertise or service (I'm paid through a referral approach) but I feel as though the answer lies in offering valuable information that positions you as the Expert or as an authority in your field. There is a simple and very effective approach waiting for you to use. if I can be of help please let me know.
Steve
Submitted Jul 1, 2009 4:28 PM
Alan L. says:
"She realized that in her effort to be self-employed, she'd created a never-ending job!"
Yes. I can totally relate to this! However, for me (at least) outsourcing anything ALSO seems to be something of a personal nightmare.
I don't feel I can really outsource the complicated stuff which brings in income (because if I do... then where will _my_ income come from?!)
At the same time, I neither feel I can really outsource the tedious, miserably dull, menial stuff which generates no income. Firstly, because I have no desire to bear it on my shoulders that I have requested someone else to complete tasks I don't even enjoy myself - that's pretty hypocritical! Secondly - and perhaps more importantly from a financial perspective - such tasks don't pay for themselves anyway!
So what can I outsource?
I refuse to concede there is no way out of this overworked, self-employment trap... though I'm mystified at present as to what that way out might be.
Submitted Jul 9, 2009 1:46 AM
VXCV V. says:
employees - work for others
self employees - work for them slef and own a job
enterprenure - build a buisness and peoples work for him
investors- invest in buisness and their nmoney make maoney
Submitted Jul 26, 2009 3:38 PM
E-Myth Business Coach says:
In response to # 16 Alan L. above:
You ask: "So what can I outsource?" and the simple answer is that you can outsource anything that you want to. In fact, you could outsource the whole of your business operations if you wanted to, and that is arguably what true entreprenuerial leaders do with thier businesses-they create the vision and communicate it and inspire others to make it a reality!
Take, for example, many contractors that I have worked with who bid on construction jobs at a certain price, then hire subcontractors to do the jobs for less money than the contracted price and keep the difference as their own income and profit. I've heard of people making $50,000 or more just by bidding on a job for $500,000 and then subcontracting it out for $450,000 and all they had to do was fill out some paperwork and cash the check! What's more, if they hired someone to do that bidding work for them, to fill out the paper work and cash the check, then they might make $40,000 on that contract while sitting on a beach somewhere enjoying the sun (now, why haven't I thought of that!).
You need to systemize your business so that you can 1) conduct the necessary work in an organized fashion and consistently produce your desired results, and 2) be able to delegate (outsource) the work you don't have time to do or don't want to do for whatever reason and still expect the same consistent results that are needed.
There seems to be 2 erroneous assumptions in your statement above. The first being that all work that you pay someone to do has to directly generate income, but in fact even work that does not directly generate income still has inherent value for the business and warrents a certain compensation. The second being that any work you find unappealing will be unappealing to others as well, when in fact there are plenty of people who might jump at the chance to do the kind of work you find dull and boring (hard as it may be to imagine it).
The real issue for you might come down to sorting and categorizing all the work that your business needs to operate effectively, then thinking about how many and what actual positions will be necessary to conduct that work, and then assessing how much money your business can afford to pay out to the people occupying those positions based upon the income it is generating and the profit you want to have left over. Once you have an idea of the position you'll hire for and the work that position will be accountable for, then you can find people who are well-suited to that kind of work.
If your business systems are set up effectively and your business is producing sufficient income than the odds are the people you hire or outsource to will produce the desired results for your business while enjoying their job and their compensation.
Submitted Aug 11, 2009 3:03 PM
Alan L. says:
Thanks for that - much food for thought. I concede your point that work which one person may find tediously dull may be sufficiently engaging for another.
"I've heard of people making $50,000 or more just by bidding on a job for $500,000 and then subcontracting it out for $450,000 and all they had to do was fill out some paperwork and cash the check!"
Ouch. This sounds like a textbook example of capitalist exploitation. It certainly goes against the notion that those who receive financial reward in society should be the same as those who actually do the work. I think we can create a capitalism without exploitation, but this is not it. This is just someone doing a $500,000 job and then being shortchanged by $50,000 because they were kept in ignorance of what the fee originally offered for the job was. With any luck this kind of unethical manipulation will decrease as information distribution becomes more efficient.
Submitted Aug 12, 2009 2:02 AM
Karen T. says:
I am just in the second year of running my company Canada 1 Property Pages and not making any money yet - I was introduced to the E-Myth way a couple of months ago - it makes sense - wish I had known at the start! I did have a business and a marketing plan, and a sketchy organization chart - more of a 'wish chart' but have embraced the systems idea - we are re-writing the employee manual, the 'how we do it here' manual for our website, and various scripts and 'sales' records - so I did have very rudimentary systems in place but the E-Myth book made me see that I needed go 'go deeper' with everything I had.
From my years in the banking and real estate development industry- and having to hire and fire I realized how important it was to have policies and codes of conduct - the E-Myth way goes way beyond anything I have worked with before and makes TOTAL SENSE so I have embraced completely - I am hoping to take some courses shortly.
I liked your column on the Board of Directors, I am thinking of putting together an advisory board now. Now that I have written our Business Standards and the reasoning behind each standard it will be easier to have employees, and a Director 'buy-in'.
From potential clients I am faced with 'yes, I like what you are doing, it does provide great value but let's see if you are here in 3 years' attitude. So having the 'sales' calls systemized will mean we can analyze our approach better and start to change the hesitation to a yes let me sign up!
3 things which I am struggling with now are:
1. How do I gain access to someone in authority in a major telecommunications company who I can sit down and discuss how a relationship with my business could be of benefit. I feel this relationship to be crucial.
2. How do I keep the momentum going in my cash-strapped business - my business is built largely on relationships - again it's this 'let's wait and see if you are around in 3 years' attitude. I am adding new service features this fall so will be tweaking our 'client conversion' approach.
3. I have fabulous staff but need to change some of the positions pay structure to commission based as I cannot afford to continue with salaries at this time- how do I decide how much they will be paid for each conversion? .
Your thoughts and comments are welcomed!
Karen
Submitted Aug 13, 2009 9:18 AM
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