Build Your Business, Not Your Product

I’ve had a copy of The E-Myth Revisited floating around my house for years, picked up at Half Priced Books a while back and forgotten as I read through The 4-Hour Workweek, Crush It, The Dream and, most recently, Rework.  A friend reminded me of the book again last week so I sat down in the sun yesterday and cracked it open.  I skimmed through the first few chapters, reminding myself of the writing style and key concepts that being a business owner is not the same as being a working in your business.  The technician in you wants to work on your product, the manager wants to work on the people and process, but the entrepreneur needs to work on the business.

Photo courtesy of ihtatho via Flickr

The subtext of the book is that it reveals the secret as to why two thirds of small businesses fail in America.  I haven’t finished it yet, but midway through the book, I was struck by the concept of franchising and how its a valuable model to follow for any business, even if you don’t intend to actually turn your business into a franchise.

The argument for following the franchise model is that it forces you to focus on your business.  Your product is a commodity, your business is where the value is. It is likely that anyone can create your widget if given the focus and tools, but to replicate your business structure, processes, character and consistency is where the magic happens, and the book stresses that consistency is the key to business success. 

Build a business that doesn’t rely on hiring exceptional employees.  Requiring exceptional employees leads to scalability problems as you expand and find that the caliber of employee you rely on isn’t an option in many parts of the country or world.  The key to being able to hire ordinary employees and still achieve extraordinary results lies in the process.  Build a process that is fool proof.  Anyone can execute a well defined list of instructions and achieve similar or exact results.  If you can mechanize or automate it with software, you’ve removed that variable entirely. 

The aspect I was troubled by, which the book later addressed head-on, was employee satisfaction.  If your tasks only require low-skilled workers, how do your great employees feel motivated to grow and improve? The answer that I pulled from the book was to shift their focus as well.  Instead of your employee feeling like their job is to create widgets, make them feel as though their job is to improve the process of making widgets.  If your employees focus on improving the process and protocol that they use to do their job each day, they can see that improvements to the process increase their own efficiency.  Increases in efficiency driven by employees will motivate the employee and lead to higher margins and better quality for the product and company.

Business owners: Are you encouraging your employees to focus on your product or focus on your process?  If they did focus on your process, do you feel that it’d improve long term profitability and efficiencies for your company?  I’d love to hear your thoughts.

The book is E-Myth Revisited and you can purchase from Amazon here.