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The E-Myth Contractor

by Michael Gerber

Chapter One

The Story of Richard and Anne

I didn't have to invent lies--my tongue did it by itself, and I was often astonished at how clever and farsighted a tongue can be.
--"A Friend of Kafka"
Isaac Bashevis Singer

Every business is a family business. To ignore this truth is to court disaster.

This is true whether or not family members actually work in the business. Whatever their relationship with the business, every member of a Contractor's family will be greatly affected by the decisions a Contractor makes about the business.

Unfortunately, unless some family members are actively involved in the business, many Contractors tend to compartmentalize their lives, seeing their business as separate from their family. These Contractors see their business as a job, and therefore none of the family's business.

"This doesn't concern you," says the Contractor to his wife.

"I leave business at the office and my family at home," says the Contractor, with blind conviction.

And I say with equal conviction: "Not true!"

In actuality, your family and business are inextricably linked to each other. Believe it or not, what's happening in your business is also happening at home.

Consider the following, and ask yourself if each is true:

  • If you're angry at the business, you're also angry at home.
  • If you're out of control at the business, you're equally out of control at home.
  • If you're having trouble with money in your business, you're also having trouble with money at home.
  • If you have communication problems in your business, you're also having communication problems at home.
  • If you don't trust in your business, you don't trust at home.
  • If you're secretive in your business, you're equally secretive at home.

And you're paying a huge price for it!

The truth is that your business and your family are one--and you're the link. Or you should be. Because if you try to keep your business and your family apart, if your business and your family are strangers, you will effectively create two worlds. Two worlds that can never wholeheartedly serve each other. Two worlds that split each other apart.

Let me tell you the story of Richard and Anne.

Richard and Anne were married, with two children. They lived near Sacramento, California. They dearly loved each other, were active members of their church, participated in community organizations, and spent "quality time" together. All in all, they considered themselves one of the most fortunate families they knew.

Richard had worked as a framer for 8 years while diligently studying at nights for his Contractor's license. When he finally had his license in hand, he started his own home-building firm.

Before making the decision, he and Anne spent many nights talking about the move. Was it something they could afford? Did Richard really have the skills necessary to make the business a success? Was there enough business to go around? What impact would such a move have on their lifestyle, on the children, on their relationship? They asked all the questions they needed to answer before going into business for themselves.

Finally, tired of talking and confident that he could handle whatever he might face in business, Richard committed to starting his own home-building company. Because she loved Richard, and did not want to stand in his way, Anne went along, offering her own commitment to help in any way she could.

That's how Best Construction, Inc. got its start. Richard took out a second mortgage on their home, quit his job, and set up shop in their garage.

In the beginning, it went well. A building boom had hit Sacramento, and Richard had no trouble getting framing sub-contracts from the hard-pressed builders he knew in the area. His business expanded, quickly outgrowing his garage.

Within a year, Best Construction employed four full-time framers. It also employed a bookkeeper named Robert to take care of the money. A young woman named Sarah handled the telephone and administrative responsibilities. Everyone worked out of a small office in a strip mall in the middle of town. Richard was ecstatic with the progress his young business had made.

Of course, managing a business was more complicated and time-consuming than working as a framer. Richard not only supervised all the jobs his people did, but he was continually looking for work to keep everybody busy. In addition, he did the estimating, collected money, went to the bank, and waded through illimitable piles of paperwork. Richard also found himself spending more and more time on the telephone, mostly dealing with customer complaints and nurturing relationships.

As the months went by and the building boom continued, Richard had to spend more and more time just to keep things rolling, just to keep his head above water.

By the end of its second year, Best Construction employed 12 full-time and 8 part-time people, and had moved to a larger office downtown. The demands on Richard's time had grown with the business.

He began leaving earlier in the morning, returning home later at night. He rarely saw his children anymore. But Richard, for the most part, was resigned to the problem. He saw the hard work as essential to building the "sweat equity" he had long heard about.

Money was also becoming a problem for Richard. Although the business was growing like crazy, money always seemed scarce when it was really needed. He had quickly discovered that Contractors were often slow to pay.

As a framer, he had been paid every week; as a Sub-Contractor, he often had to wait--sometimes for months. Richard was still owed money on jobs he had completed more than 90 days before.

When he complained to late-paying Contractors, it fell on deaf ears. They would shrug, smile, and promise to do their best, adding, "But you know how business is."

If Richard pressed the point, the Contractor would say, "Look, I'll write the check when I can. If that isn't good enough, I'll just have to get someone else to do the job." Afraid of losing a contract, Richard would back off.

Of course, regardless of whether Richard got paid, he still had to pay his people. This became a relentless problem. Richard often felt like a juggler dancing on a tightrope. A fire burned in his stomach day and night.

Making it worse, Richard began to feel that Anne was insensitive to his troubles. Not that he often talked to his wife about the company. "Business is business" was Richard's mantra. "It's my responsibility to handle the company and Anne's responsibility to take care of the children, the house, and me."

Anne's seeming lack of concern rankled Richard. Didn't she understand that he had a business to take care of? That he was doing it all for his family? Apparently not.

As time went on, Richard became more consumed by Best Construction. Not surprisingly, Anne grew more frustrated by her husband's lack of communication and lack of interest in her and the children. She persisted in quizzing him about what was going on in the business, why he always looked so stressed. She pressed him to spend more time with his family.

Robert, the bookkeeper, was also becoming a problem for Richard. Robert never seemed to have the financial information Richard needed to make decisions about payroll, purchasing, and the general operating expenses of the business, let alone how much money was available for Richard and Anne's living expenses.

When questioned, Robert would shift his gaze to his feet and say, "Listen, Richard, I've got a lot more to do around here than you can imagine. It'll take a little more time. Just don't press me, okay?"

Overwhelmed by his own work, Richard usually backed off. The last thing Richard wanted was to upset Robert and have to do the books himself. He could also empathize with what Robert was going through, given the company's growth over the past year.

Late at night in his office, Richard would sometimes recall his days as a framer. He missed the simple life he and his family used to have together. Then, as quickly as the thoughts came, they would vanish. He had work to do and no time for daydreaming. "A business is a great thing," he would remind himself. "I simply have to apply myself, as I did in school, and get on with the job. I have to work as hard as I always have when something needed to get done."

Richard began to live most of his life inside his head. He began to distrust his people. They never seemed to work hard enough or care about his business as much as he did. If he wanted to get something done, he usually had to do it himself.

Richard's secretary, Sarah, quit in a huff one day, frustrated by the amount of work he was asking of her. Richard was left with a desk full of papers and a telephone that wouldn't stop ringing.

Clueless about the work that Sarah had done, Richard was overwhelmed by having to pick up the pieces of a job he didn't understand. His world turned upside down. He felt like a stranger in his own business.

Why had he been such a fool? Why hadn't he taken the time to learn what Sarah did in the office? Why had he waited until now?

Ever the trooper, Richard plowed into Sarah's job with everything he could muster. What he found shocked him. Sarah's work space was a disaster area! Her desk drawers were a jumble of papers, pens, pencils, erasers, rubber bands, envelopes, business cards, and candy.

"What was she thinking?" Richard raged.

When he got home that night, even later than usual, he got into a shouting match with Anne. He settled it by storming out of the house to get a drink. Didn't anybody understand him? Didn't anybody care what he was going through?

Richard returned home only when he was sure Anne was asleep, and then slept on the couch. He left early in the morning before anyone was awake. He was in no mood for questions or arguments.

When Richard got to the office, something was very wrong. Robert, the bookkeeper, was AWOL.

Fear flashed through Richard's body like an electrical current. People were disappearing--first Sarah, and now Robert. But Robert handled the money!

He tried to reach Robert at home. No answer.

Rummaging through Robert's desk, Richard discovered that the checkbook was missing! And all of the company's financial records!

Richard felt panic welling up inside of him like lava. He took several breaths and tried to slow his raging thoughts. Maybe Robert took the records home last night. Maybe he was putting in some overtime. He began to pace the floor, good thoughts battling it out in his mind with bad ones.

Two hours passed. Richard was beside himself. The phone kept ringing. Four jobs were in the works, and unless he visited the sites, his people wouldn't know what to do next. Still, he paced, nearly paralyzed with terror and indecision. What to do, what to do?

Finally, he called the bank. The words would forever ring in his ears: "Your balance is zero." Nightmare was now reality.

Richard was plunged to the depths of despair. "I've blown everything," he cried. "What will I say to Anne and the kids? What can I do now?"


What lessons can we draw from Richard and Anne's story? As I've already emphatically said, every business is a family business. Every business profoundly touches every family member, even those not working in the business. Every business either gives to the family or takes from the family, just as individual family members do.

If the business takes, the family is always the first to pay the price.

In the case of Richard, in order for him to free himself from the prison he created, he first had to admit his vulnerability. He had to confess to his wife and to the rest of his family that he really didn't know enough about his own business and how to grow it.

Richard, like so many other Contractors, had tried to do it all and keep it all to himself. Had he succeeded, had the business supported his family in the style he imagined, he would have burst with pride. Instead, Richard had unwittingly isolated himself, thereby achieving the exact opposite of what he sought.

He destroyed his life--and his family's along with it.

Repeat after me: Every business is a family business.

Are you like Richard? I believe that all Contractors share a common soul with him. And that all of you must learn--some the hard way--that a business is only a business. It is not your life. But it is also true that your business can have a profoundly negative impact on your life unless you learn how to do it differently than most Contractors do it. Differently than Richard did it. Perhaps differently than you do it.

The tragedy in Richard's case is that his business could have served his and his family's life. But to have made that happen, Richard would have had to learn how to master his business in a way that was completely foreign to him.

What happened instead is that Richard's business consumed him. Lacking a true understanding of the essential strategic thinking that would have allowed him to create something unique, Richard and his family were doomed before he even opened the doors.

What follows are the secrets Richard should have--could have--known if he had only been interested.

Let's start with the subject of money.

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