80% Of Small Businesses Fail: Here’s What You Need To Know About The 20%

80% Of Small Businesses Fail

80% Of Small Businesses Fail: Here’s What You Need To Know About The 20%

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You want to know why 80% of small businesses fail (and what to do about it)

The E-Myth Revisited explains in depth how to safeguard yours so you don’t end up among those by building a company that’s based on systems and not on the work of an individual.

My favourite quote from Michael Gerber:

The E-Myth Revisited Summary

Gerber explains how running a business and performing technical work are two different things and shows you how you can set up a business that depends much more on capable systems, than on people, and can ultimately be handed over to anyone with the right procedures.

The 3 lessons that’ll help your business survive growing pains:

  1. Having great technical skills does not mean you know how to run a business.

  • This is simply wrong: People tend to think being great at a technical skill also makes them great at running a business. Being a great chef, attorney or writer does not make you good at running a business in that industry.

  • Once you start a business, You have to sale, record and manage finances, create marketing material, answer customer queries, set a strategy, and, and, and…

  1. Visualize your business as a nationwide franchise from day 1, then build the 1st store.

  • The solution lies in systems. Ever since McDonald’s, businesses have relied on franchising. So picture you’re building your first store, what’s your unique offering for the customers?

  • If you structure your business model as a franchise from day one, you’ll be systematizing everything as soon as you get a chance, this allows you to remove and replace yourself from that particular task and sustainably grow the business.

  • Come up with a detailed how-to guide, which you can then use to train your first and future employees.

  1. The franchise path allows you to build a business on systems, not people.

Three types of systems will make up your core business.

  1. Tangible systems – Objects like your coffee maker.

  2. Intangible systems – ideas and living things, like your free rusk policy or the work approach of your employees.

  3. Information systems – training guides and manuals, and the data you collect, for example, how many customers order filter vs. cappuccinos.

The fact that it’s 3 decades old (first published in 1986) doesn’t make it any less valuable. Gerber advocates doing a lot of thinking from the get-go will prevent you from landing yourself in a situation you can’t get out of.

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