The Entrepreneurial Myth
Aug 25, 2021 by Roger Scherping
In 1995 Michael Gerber wrote the classic business book The E-Myth. The “E” stands for entrepreneur and is not a reference to anything digital. Gerber’s Entrepreneur Myth goes like this. You have some incredible skill, something that you really enjoy doing and which you are really good at. The book uses the example of a woman who is a fabulous baker. She has learned her trade very well, she makes great pies, and her employer sells lots of her pies. Over time this woman suffers what Gerber calls the Entrepreneurial Seizure: She decides to start her own business. She asks, Why am I working for someone else? Independence sounds really exciting. She believes that with her excellent baking skills she will be fully qualified to run her own business. After all, any dummy can start their own business, right?
The Fatal Assumption
Gerber says that the Fatal Assumption is this: If you understand the technical work of a business, then you understand a business that requires technical work. Of course, that is not true. The technical work of a business and a business that does technical work are two totally different things! But the technician fails to see this.
If you were starting a business that required technical skills that you did not have, you would, of course, realize that you need to learn them. Conversely, the baker who has the technical skills that the business requires still needs to learn all about business management. Nothing in her pie-baking career would have taught her about cash management, hiring employees, getting a loan from a bank, purchasing supplies and equipment, and all of the million other things that a small business owner needs to know. Gerber says that this is the fatal trap that too many entrepreneurs fall into.
And, to add insult to injury, this woman who loved to bake pies no longer gets to bake! Her real passion, the one that drove her to start her own business, falls by the wayside because she is instead spending all of her time running the business. The “freedom” that she was chasing actually meant giving up what she loved doing and exchanging it for a bunch of activities that she neither enjoys nor knows how to do!
The Business Side of Business
I have been to business school, so I know that even a classroom cannot fully prepare you for the challenges of running a small business. There is just so much you need to learn, and most entrepreneurs learn it all the hard way. They learn from their mistakes and despite their blind spots as they stumble through building their business.
I found a great article that summarizes the challenges an entrepreneur faces in running a small business. Click here for the full article.
The article says that when small businesses fail, it is almost always due to management problems. So what are the main challenges a small business faces? The article lists these (non-COVID) challenges:
1. Lack of capital/cash flow 23%
2. Recruiting/retention of employees 19%
3. Marketing/advertising 15%
4. Time management 14%
5. Administrative work 13%
6. Managing/providing benefits 8%
7. Other 7%
Remember the comment above about the entrepreneur with the technical skills that the business requires who still needs to learn all about business management? This is a pretty good list of what they need to learn. How much do you think that the baker mentioned above knew about these things when she started her business? Can you relate to this yourself with your business? How prepared were you to deal with these challenges? Those entrepreneurs who learn how to meet these challenges are the ones who succeed.
Here is a list of the skills that the article says an entrepreneur needs to succeed:
- Budget and resource management
- Managing individual and team workflows
- HR management, including employee recruitment, hiring, and training
- Branding and marketing
- Overseeing day-to-day operations
- Setting goals and helping your team achieve them
How to Scale Your Business
The article presents five tips that the entrepreneur should follow to successfully scale their business.
Planning can mean doing a formal business plan, including a financial plan for your business. ProjectionSmart can help with that. Our Proof Plan will help you write a business plan, and our financial tools will help you see your financial future and understand how much cash you will need to launch your business. And be sure to update your plan every month. ProjectionSmart can help you do that so that you are always looking ahead.
2. Automation is your secret weapon
The article says that automation is non-negotiable for businesses today. Automation improves customer satisfaction, increases sales, and reduces costs. It is especially important in a world where we are dealing with COVID and a severe shortage of workers.
3. Crunch your numbers
At ProjectionSmart, we could not agree more! You need to understand your numbers to succeed!
Set up a solid bookkeeping system. Be sure the system gives you accurate feedback on how you are doing. Set up a budget and track your progress. ProjectionSmart uses your budget to project into the future to see where your business is headed financially. Our customers tell us that being able to see their financial future gives them a piece of mind like nothing else does.
You cannot possibly do everything in your business if you expect to scale! You will need to learn to delegate. Delegating tasks saves you time and allows you to use your superpowers to concentrate on the things that will have the most impact on the business. As they say in the world of the Entrepreneurial Operating System, “Delegate and Elevate!”
5. Embrace new technologies
There is so much software available today to help you run your business, from marketing and sales to HR, customer experience, project management, and accounting. Whatever you are trying to do, there is probably a piece of software to help you do it faster and more efficiently. But do not spend a lot. Find the right tool that will help you run your business at a reasonable price. Make sure that it is easy to use because you do not have time to implement and maintain complicated software.
Beating the Fatal Assumption
Maybe you also got caught by the Fatal Assumption, but now you know that the technical work of a business is different from a business that does technical work. You have scrambled to develop the skills you need as an entrepreneur. The five stops listed above will help you scale your business, and ProjectionSmart can help you do that. We help businesses plan and see their financial future. Give us a try for free.