Building a Successful Business: A Holistic Approach to Entrepreneurship

Starting a small business requires understanding the fatal assumption and balancing the entrepreneur, manager, and technician roles to create a successful, system-dependent business.

### Building a Successful Business: Lessons from "The E-Myth Revisited" by Michael E. Gerber
* 🚫 50% of small businesses fail within the **first year**, and 75% of those that pass the first year fail in the **next 5 years**.
* 🧠 The Fatal Assumption: Just because you're good at the technical work of a business doesn't mean you know how to **run a business** that does that work.
* 👥 The Entrepreneur, Manager, and Technician: Every business owner is actually **three people in one**, each with different needs and perspectives.
* 📊 Three Phases of a Business: Infancy (**technician phase**), Adolescence (**manager phase**), and Maturity (**entrepreneurial phase**).
* 🏢 The Franchise Prototype Model: Creating a business that can **operate without you**, like a **well-oiled franchise**.
* 🔄 Business Development Process: **Innovation, Quantification, and Orchestration** to continuously **improve and systematize** the business.
* 💼 "You can start as a mature company from day one. You have an **entrepreneurial perspective**."
* 📈 "Maturity isn't the end result of the previous two phases. You can **start a mature business from day one**."

there's a scary reality about starting a small business. 50% of small businesses fail within their first year. 75% of those that passed the first year fail in the next 5 years. How are you going to beat those odds? How can you create a business that doesn't fail, runs smoothly, and gives you the time and money to enjoy life? That was the question spinning around my head until I found an answer through Michael E. Gerber's book The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It. If you're thinking about starting a business or if you have started one but feel stressed and busy all the time, then this video is for you. This is one of those books that I wish I had read before starting my business. Okay, let's get started. Part one: The Fatal Assumption. This is you. You work in a company for somebody else. You're good at your job, damn good. You are one of the best employees, but things aren't going well for you. You might not feel

appreciated. Or you don't feel like you are paid enough. One day, you're at work and for some reason you don't like your boss's behavior. Maybe he said something or did something. The reason doesn't matter much, you just didn't like it. Suddenly, a voice in your head said, Why am I working for this idiot guy? I know the job better than he does. This business would collapse if I weren't working here. Why don't I start my own business and be my own boss? From that day on, you just couldn't stop thinking about creating your own business. The entrepreneur in you woke up and wasn't going back to sleep. The excitement of being your own boss and becoming independent was irresistible. You had to do it. So, you start your business. But here's the thing you didn't realize yet. You were about to go from hating the idiot boss to becoming the idiot boss yourself. Including myself, most people start a business this way. Before starting, they were doing some technical work for a company and one day they

decided to start their own business, but this is a recipe for failure because the person who starts a business this way makes a fatal assumption. And it's this: the technical work of a business and a business that does the technical work are two totally different things. Just because you understand the technical work of a business doesn't mean that you understand a business that does that technical work. Just because you are a skilled video editor doesn't mean you know how to create and run a video editing business. Unfortunately, most people fail to see this. This happens to millions of technicians daily. A barber opens a barber shop, a hairdresser opens a beauty salon, and a musician opens a music store. The tragedy is that when the technician falls prey to this fatal assumption, the business that was supposed to free him enslaves him. He used to do one job when he was working for somebody else, but now besides that job, he has to do 10 other jobs that he has no idea how to do. One day you wake up and realize that you don't have a

business. You have a job, and it is the worst kind of job. You were running away from your boss, but now your business is your boss, and it is the worst kind of boss. Soon the job you used to love becomes the job you hate. The journey that started with excitement turns into terror, exhaustion, and failure. In the next part, you will understand why this happens and how to avoid it. Part two: The Entrepreneur, Manager, and the Technician. Everyone who goes into business is really three people in one: an entrepreneur, a manager, and a technician. The easiest way to understand this is if you've ever been on a diet. Everyone who has tried dieting knows there's a fat guy and a skinny guy inside them. Skinny guy knows what you have to do to get skinny: diet and exercise. All you have to do is chisel skinny guy out of you like a marble statue. But fat guy doesn't want to go on a run. Fat guy likes junk food. You can work out later, maybe tomorrow, or never. Anyone who has ever experienced the

conflict between the fat guy and the skinny guy. Know what I mean? You aren't just a skinny guy or fat guy, you're both. When you're the skinny guy, you're always making promises for the fat guy to keep. And when you're the fat guy, you're always making promises for the skinny guy to keep. If you've ever felt like the fat guy and the skinny guy, you know that you can't be both. Someone has to lose, and they both know it. Well, that's the kind of war going on inside the owner of every small business. But it's even worse because it's a three-way battle between the entrepreneur, the manager, and the technician. Unfortunately, it's a battle no one can win. Understanding the differences between them will quickly explain why. First is the entrepreneur. The entrepreneur is the visionary, the dreamer. This is who's inside you daydreaming, looking at the clock, imagining a better life. They live in the future, never in the past, and hardly ever in the present. They are your innovators and always best at working with the

unknown engineering chaos into harmony. They have a strong need for control because they need the control of people and events in the present to make their vision or dreams come true. This causes a big problem. They live in a world made up of too many opportunities, and everyone around them is just slowing them down. This means they usually do whatever it takes to make their projects move forward, even if they have to bully, harass, or scream at their employees. To entrepreneurs, most people are problems that get in the way of their dreams. Next is the manager. The entrepreneur has the future vision for the business, but the manager within you keeps the business running smoothly in the present. They are practical. The manager wants to keep things organized and in order. It's their job to clean up the mess of the entrepreneur. If you're like me, you have a junk drawer in your house. It might be in your kitchen, in a desk, or office, but there's a drawer that's just full of random items. You don't know how it got there, but one day you woke up, and it was

full of junk rubber bands, old mismatched keys, a broken watch, batteries that might be dead, and always some loose screws and nails waiting to poke you when you reach inside. This is what the manager sees when he sees an entrepreneur's business. They can't work in this mess. He sees a junk drawer that needs to be cleaned and organized. Instead of everything being shoved into a drawer or tossed into piles, a manager would go to work with a label maker. Everything has a place and everything should be put back in its place. Keys are on a key ring, screws and nails are in plastic bins labeled screws and nails, batteries are tested and then either thrown out if they are out of power or put into clearly labeled bins by size. Managers treat people and tasks in a business the same way they handle junk drawers. They plan for problems to happen, everyone has their place and their jobs to do, and they make sure it happens. The technician, if you're watching this video and you want to quit your job, you are a technician.

if you've ever thought to yourself, if you want it done right, do it yourself, you are a technician. Technicians love the feeling of getting things done, having their hands on projects, and living in the present. They don't care about the future of the business or the problems of yesterday; they just want to get to work. They want to know how to do it, and they want everyone to get out of their way. Everyone gets in the technician's way. The entrepreneur creates new and interesting work for the technician, but they are always interrupting or distracting. The manager is also a problem because they want to make technicians part of their system. If it were up to the technician, they would go to work every day and never worry about the future. This is the worst mentality if a business is going to survive for many years. In your life, you can probably see these three characters in action. You can see how one part of you craves a sense of order while another part of you dreams about the future. You can see how another part of

you can't stand being ID and jumps into work and feels guilty if he isn't doing something all the time. So to sum up this part, there are three people in you: the entrepreneur, the manager, and the technician. The entrepreneur dreams, the manager worries about everything, and the technician gets the job done. Part three: three phases of a business. Businesses grow just like people. There are three stages that a business will grow through: infancy, adolescence, and maturity. Infancy: the technician's phase. This is how most businesses start. As a technician L business, you are finally free of the boss. It's an exciting start that's about to be exhausting. You are now going to be a master juggler. Every day from now on, you will be juggling balls in the air, doing all of the work inside your business. One ball is managing the business's money, and the other ball is selling your products and services, all while juggling advertising, marketing, legal fees, and taxes. In the infancy stage, all you do is work, work, and more work. Hours are long. You might work 12 to

14-hour days. You work every day, 7 days a week. Even at home, you're working. You are totally invested in your business. But there's a big problem. There's more work than you can handle. You work harder, you put in more time, but you can't juggle all balls. Start to drop and hit the floor. You can only work so hard alone. Infancy ends when the owner realizes that the business cannot continue to run the way it has been. In order for it to survive, it will have to change. When that happens, when the reality sinks in, most business failures occur. The technician locks the doors and walks away. The rest go on to adolescence. Adolescence, the manager's phase. This is the moment when you decide to finally get help with your business. Every business that lasts must grow into the Adolescent phase. Every business owner who survives needs help. What kind of help does an overloaded technician get? Technical help. Someone who can do the work that isn't getting done, which is usually the work you don't like to do.

if you like sales, you bring in someone to build the product. If you like production, you bring in a salesperson. If you don't know who to bring in, it's usually an accountant because most small business owners hate accounting. So, you hire your first employee, Harry. Harry knows accounting; he's an experienced hard worker. Harry has been crunching numbers longer than you've been alive. He's worked in businesses just like yours all his life. And now Harry is going to find out the deepest secret you've been hiding. He will soon discover that you don't know what you are doing. Day one on the job, and Harry goes to work on your books. He's looking over the mountain of spreadsheets, printouts, and paperwork you've given him. And in a moment, it hits you. You don't have to do that job anymore. You can now be a manager and not just a technician. A few weeks later, you realize Harry can do more than just accounting. He can answer the phone. He can work with customers. He can tidy up the storefront.

he can do a little bit of everything. Life gets easier with Harry. You start taking longer lunch breaks and relax a bit, but there's a problem. You let Harry take over tasks inside your business instead of telling Harry what to do. This is a dangerous game because if you aren't telling Harry what to do, he does things his way. This means your business is slowly changing from the way you did things to a new and unrecognizable business. Harry needs more help, so he hires new employees. Because you are so busy working and growing the business, they answer to Harry instead of you. You keep this up because it frees you up to do what you love until problems start happening. Mistakes start piling up, unhappy customers start complaining that things aren't the way it used to be, deadlines get missed. This poor management begins to take its toll. You begin to realize that no one cares about your business the way you do. You begin to realize that you never should have trusted Harry. You never should have trusted anyone. You should have known better as the balls continue to fall at

an overwhelming rate. You realize no one is willing to work as hard as you work. No one has your judgment, or your ability, or your desire, or your interest. If it's going to get done right, you're the one who will have to do it. Walk into any adolescent business and you'll find a busy owner. They are trying to do everything, even though they are paying workers to do it. The more the owner does, the less the workers do, because you don't know how to do it any other way. Every adolescent business reaches a point where it pushes beyond its owner's comfort zone. You lose control over your business and can't even manage your Harry. When Harry came, you just threw things at him and ran away. But Harry has needs too. He needs more direction. He needs to know why he's doing what he's doing. He needs to know where the business is going and what's the overall strategy. If you can't manage Harry, how are you going to grow? Instead of growing the business, you'll say, Forget this, we'll go back to the old way.

when it was just you and you alone, we won't worry about all these employees and expenses. So you shrink down the business where you feel comfortable. But you don't realize that you have already been there. You have already been small, and you couldn't do it. So you shrink down the business where you feel comfortable. Things go fine for a while, but one day you wake up and realize, I don't want to do this anymore. You're lying in bed and don't have the energy to get up. Then you turn to your partner and say, I'm not feeling well. I think I'm sick. I don't want to go to work. And your partner says the quiet truth out loud, But if you don't go and work, no one else will. Right at this moment, you realize you don't own a business. You own a job, and it's the worst job in the world. Because if you take a sick day, you don't get paid. If you don't show up today, there's no one who will do the work for you. And you can't sell this business to

anyone because You' just be selling them a job you hate. When the dream is gone, the only thing left is work. You might ask, What will happen if I don't go small and keep growing? Well, you'll eventually self-destruct. Let's say, Against All Odds, you survive because you're stubborn and determined to stay in business. You do whatever it takes to keep the lights on, and you have to be working all the time. You're consumed by the business day after day, is the same, you never change, the business doesn't fail, your body and mind do. You get sick, you get hurt, but you keep going. You're like a fan that's been left on 24 hours a day, and with one final wee, the fan blades stop spinning. This is how most small business owners feel today, but it doesn't have to be this way. There's a better solution. Up until this point, we have described the problems that cause most small businesses to fail. In the rest of the video, we'll talk about the solutions. It starts with the maturity phase, maturity.

how to create a business that doesn't fail. It's not guaranteed that all businesses that go through infancy and adolescence end up at maturity. If you're lucky, you might reach this stage. But here's the key point: maturity is not the final result of the previous two phases. You can skip them and start as a mature company from day one. Yes, you heard it right. You can start as a mature company from day one. Famous companies such as McDonald's, Disney, IBM, and Apple didn't end up as mature companies; they started as mature companies. A company can start as mature if the entrepreneur has an entrepreneurial perspective. Let me explain this perspective with an example. Tom Watson of IBM said, From the beginning, I had a clear picture of what the company would look like when it was finally done. I had a model in my mind of what it would look like, a dream, a picture. Then I realized that unless we acted that way from the beginning, we'd never get there. IBM had to act like a great company before it became a great.

company, the entrepreneurial perspective, asks the same question as Tom Watson of IBM: how must the business work from an entrepreneurial perspective? Business is the product, not whatever the product is produced in business. This doesn't mean the entrepreneur doesn't care about the product; they do, but they have a more holistic approach. Here is how the technician and entrepreneur perspectives differ: the entrepreneur sees the business as a system; it produces results for the customer. The technician sees the business as a place for him to work to make him money. The entrepreneur starts with a clear vision and then works backwards words to make that vision a reality. The technician doesn't have a vision; they just have work to do and money to make today. The entrepreneur sees the business through their customer's eyes. The technician sees the business through their own eyes. To the entrepreneur, a new customer is a new opportunity. To the technician, a new customer is a problem because it means more work. Here's the thing: you can't teach the entrepreneurial perspective to a technician. Don't even try. What you

need instead is a business model that allows the entrepreneur within you to do what needs to be done. At the same time, that business model should satisfy the needs of the technician and the manager. A business model that satisfies the needs of all three is called a franchise prototype. In the next part, I will explain this business model in detail. Part four: Franchise Prototype Model. The easiest way to understand this business model is just to look at McDonald's. Please keep in mind that I'm not telling you to get into the hamburger business. We are talking about their business model here. Now you can say many things about McDonald's. You can say their food isn't healthy. You can say that people shouldn't eat junk food. But what you can't say is they don't deliver on their promises because they do. They have a system that works like a Swiss watch. This is because every step of the business was tested, tweaked, and improved until it could be copied in every McDonald's restaurant. Food is made and served the same way across the globe. Frozen meat patties are the same size.

and shape pickles are put on buns in the same patterns, so they don't slip off the sandwich. Fries are kept warm for 7 minutes before they get soggy, and food will be served to customers in 60 seconds or less. Basically, every problem has been thought through, documented, and systematized in a way that you can take any 18-year-old from the street, and he would be able to do the job. Now, how can you create such a system in your business? First, you have to change your perspective about what a business is. The problem isn't your business; it never has been. The problem is you. It has always been you, and it will always be you. Nothing will change until you change your perspective about what a business is and how one works. Second, every day should be spent working on your business, not in it. See your business as a product on the shelf. See it as a machine with interconnecting parts and ask yourself, how can I get my business to work without me? How can I get my people to

work without my constant interference. How can I systematize my business in such a way that it could be replicated 5,000 times, so the 5,000th unit would run as smoothly as the first? Pretend that you are going to franchise your business. Pretend your business is a model that you will copy and create 5,000 more businesses like it, not almost like it, but just like it - perfect clones. After asking all these questions, you will realize that you need to create systems for everything. You need to create a system-dependent business, not a people-dependent business. If your business success depends on hiring experts, it will be extremely hard for you to succeed. Experts are hard to find and are expensive. Instead, set up systems in such a way that even someone with the lowest qualifications can do the job effectively. This doesn't mean you go and hire just anybody from the street. For example, if you need an accountant, you still need someone with accounting knowledge. However, if your business system is built well, you will not need a top expert - a less experienced accountant

can also do the job well. This is what the author means by building a system-dependent business. To build a system-dependent business, you need checklists for every task. You need how-to manuals with step-by-step instructions so that anyone can do what you do. I know this is a boring part, and I hate to do it, but it is absolutely necessary. If you skip this step, you will waste so much time and fail. I have personally skipped it and hired people, and here is what happened: since I didn't have the proper system, they couldn't do the job 100%. They could only do 90% of it, and I had to help with the last 10%. Now imagine you have hired 10 people and have to help each of them with the last 10%. This will probably consume all your time. Again, I have made this mistake, and I've seen others hiring a bunch of people and then, after a short while, firing them all for the same reason I just described. So you need to build the system first. Now, some of you watching

might might say, What the hell is this system you keep talking about? So let me give you an example. Imagine you're opening a cake shop. Each position in your shop would have a detailed job description. This clarity ensures that every worker knows exactly what to do and how to do it, from buying the ingredients to keeping the shop clean, sweeping floors, scrubbing pans, and handling transactions at the register. For bakers, there would be clear guidelines on how to bake the cakes, the temperature settings for the ovens, how long each type of cake should bake, and the secret recipes that make your cakes special. After all, it's not just any cake shop, it's your cake shop, it's your prototype. You want your cake to look and taste the same. It should deliver a consistent experience to the customers. Building the prototype of your business is a continuous process. It's not like you do it once and finish. The author calls this a business development process, which we will cover in the next part. Part five: Business Development Process. This process consists of three steps.

Innovation quantification and orchestration. Innovation is asking the question, What systems can we improve in our business to help our customers? Please keep in mind, it's not the product that requires innovation, but the way your business operates and sells its products. And here's the thing, you don't need to implement big innovations. For example, what color suit should your employees wear to make the most sales? Is it a brown, blue, or black suit? For 2 weeks, test it. You might find that even your best salesperson makes less money when they wear a brown suit, and your worst salesperson's sales almost doubled when they wore a blue suit. Here's another test to try. Instead of greeting customers the old way by asking, May I help you? say, Hi, have you been here before? This simple change switches the conversation from a yes or no question to an invitation to talk. If they say they've been to your store before, great! We're so glad to have you back. Here's a special offer we're running for our repeat customers. If they haven't been to

your store. Before welcome, we have a special discount for new customers. It's small tweaks like these that can have dramatic changes for your business. But how can you find out if the innovations and the tests you did are working? This is where the quantification comes in, which is the second step in the process. This means you're going to find the data of your business. Instead of vague feelings, you'll know for a fact how the business is performing after making a change. Think back to the different colored suits. You can track and see how much money was made by each color. If sales increased by 16% for salespeople wearing blue suits, this becomes the new uniform. The trick is to track data for a short time to get a baseline so you know what's normal in your business. Then you make a change. If the data shows the business improves, you keep the change; otherwise, keep things the way they were or try another test. After you're finished with your tests, you decide what to keep. This final step is called orchestration. You take all of the

Learned lessons from innovation, plus proof from quantification, and create a new system for your business. If you found out that black suits and this new greeting doubled your sales, then your standard uniform becomes a black suit, and you teach all of your employees to greet customers, asking if they've been here before. You didn't guess, you tested it, you proved it. You repeat this process for every step of the business to create a system that can work for anyone. This was the last part. Let me recap everything we covered in this video. We started with the fatal assumption: just because you understand the technical work of a business doesn't mean that you understand a business that does that technical work. Every entrepreneur is three people in one: the entrepreneur, manager, and the technician. Each wants different things, and they pull you in different directions. The entrepreneur is the visionary and innovator, the manager wants smooth operation and order, and the technician wants to focus on immediate tasks and nothing else. Business phases: infancy, the owner handles all tasks leading to

exhaustion and failure. Adolescence delegation begins, but poor management leads to chaos, and the owner is forced to shrink down the business. Maturity. Maturity isn't the end result of the previous two phases. You can start a mature business from day one. You have an entrepreneurial perspective. Franchise prototype model. This model focuses on creating a business that can operate without you like a franchise. To build such a model, you need to build a systems-dependent business, not a people-dependent business. You need to see the business as a product and work on your business, not in it. Finally, we talked about the business development process, which consists of three parts: innovation, continuously seeking ways to improve how the business serves its customers; quantification, measuring the effects of changes to understand what improves business performance; orchestration, implementing successful innovations as standard operations. Thanks for watching. I hope it was a useful video.

How to start a SMALL business that doesn't FAIL and makes you financially free

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LITTLE BIT BETTER

The E-Myth Revisited: A Guide to Small Business Success

Starting a small business has high failure rates, but The E-Myth Revisited offers solutions to this common problem.

The book explains the fatal assumption that leads to business failure: the misconception that understanding the technical work of a business is enough to run that business.

Instead, the key is to embody the roles of an entrepreneur, manager, and technician to achieve success.

The Internal Struggle of Small Business Owners

Small business owners often experience a conflict between their roles as entrepreneurs, managers, and technicians.

The entrepreneur is the visionary, constantly focused on the future and innovation, often feeling frustrated by those around them.

In contrast, the manager strives to maintain order and organization in the present, feeling overwhelmed by the chaos created by the entrepreneur.

Meanwhile, the technician is focused on getting the work done in the present, often feeling disrupted by the demands of the entrepreneur and the manager.

There are three key roles in a business: the entrepreneur, the manager, and the technician, each with distinct responsibilities and mindsets.

The three phases of business growth are infancy, adolescence, and maturity, with each phase requiring a shift in focus from doing the work to getting help and then to management and leadership.

The infancy phase is characterized by the technician's relentless work to juggle all aspects of the business, the struggle of being overwhelmed, and the realization that a change is needed for the business to survive.

During adolescence, the focus shifts to the manager, who starts getting help, hires employees, and transitions into a management role.

The Pitfalls of Allowing Harry to Run Your Business

Allowing Harry to take over tasks without proper direction leads to a loss of control and a decline in the business's performance.

Failing to manage Harry and provide him with guidance can result in a chaotic work environment and a disconnection from the original business vision.

Ultimately, relinquishing too much control to others can lead to the realization that the business owner is trapped in the worst job in the world, with no one else capable of taking over.

The Importance of Having an Entrepreneurial Perspective

Having an entrepreneurial perspective is crucial for the success of a small business, as it allows for long-term planning and vision.

Famous companies like McDonald's and IBM started as mature companies, thanks to the entrepreneurial perspective of their founders.

This perspective focuses on the business as a whole system that serves the customer, rather than just a place to work for money, which is the technician's viewpoint.

Creating a Franchise Prototype Business Model

A franchise prototype business model satisfies the needs of the entrepreneur, the technician, and the manager, as exemplified by McDonald's.

The key is to change your perspective about your business and focus on creating systems that can be replicated, rather than relying on hiring experts.

By systematizing your business, you can make it less dependent on specific individuals and more capable of being replicated on a large scale.

Building a system-dependent business requires checklists for every task and how-to manuals for anyone to replicate.

Without a proper system, hiring employees may result in them only being able to complete 90% of the job, consuming more of the owner's time.

In the business development process, innovation is focused on improving the business's operations and sales strategies, such as testing different approaches for employee attire and customer greetings.

The Business Development Process: Innovation, Quantification, and Orchestration

Innovation is about continuously improving how the business serves customers, while quantification involves measuring the effects of changes to understand their impact on performance.

Orchestration is the final step, where successful innovations are implemented as standard operations, based on the proof gathered through quantification.

This process allows for the creation of a system that can work for any business, focusing on the entrepreneur, manager, and technician roles, and aiming for a systems-dependent business model.