"The E-Myth Revisited" - 2 mins book review

“According to data from the Bureau of Labor Statistics, as reported by Fundera, approximately 20 percent of small businesses fail within the first year. By the end of the second year, 30 percent of businesses will have failed. By the end of the fifth year, about half will have failed. And by the end of the decade, only 30 percent of businesses will remain — a 70 percent failure rate.”

The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, summarises some common pitfalls and best practices for small business owners.

Entrepreneur, Manager, Technician

Every person, in their professional life, has 3 roles: entrepreneur, manager, and technician. Entrepreneur - lives in the future, generates ideas Manager - pragmatic personality, lives in past. Puts ideas on structure Technician - lives in the present. Knows how to do the job and wants to do it. The usual small business owner is 10% entrepreneur, 20% manager, and 70% technician. That means that the wrong personality drives business. Instead of giving persuing manager vision, technicians focus on immediate tasks. But that doesn’t mean that you need to focus only on managerial parts of the business. The best business owners are fully balanced.


So what does it mean to be an entrepreneur? The work of an entrepreneur is to wonder what business “that” might be. Figure out what business you want to create and what task to solve. Finally, grow and educate yourself to scale.

A true product of the business is not what is sold but how it sells it.


In the world of small business, there is one anomaly - Franchise.

Less than 5% of franchises terminate in 1 year and less than 25% in 5 years.

Francaise is the business as a product. In the context of this book, we are talking about business format franchises, not just trade mark. The difference between trade name franchises vs business format franchises is that the first sell value of the brand name while the further one provides a business as a product. Business as a product would sell only if it works. So to make a franchise successful it should be easy to replicate. To do it build a system-dependent, not a people-dependent business. Create a franchise prototype to be easily replicated with interchangeable parts.

Franchise model

  1. Provide a consistent value (McDonald’s, keeps its promises in all of its stores, despite city, country, and continent)
  2. Operated by people with the lowest possible level of skills. Lowest necessary level required to fulfill functions. You need to give results systematically not personality-dependent.
  3. Model stands out as a place of impeccable order. The structure provides relatively stable points of reference we need.
  4. All work in the model is documented in manuals
  5. The model provides uniformly predictable service to the customer. Expectations create a requirement for a consistent experience
  6. Utilise the same colors and shapes, symbols, images, and colors. They are powerful motivating forces. Some colors work, some don’t. Same for shapes: logo, merchandise.
Great business build not by great people, but by ordinary people doing great things.

Work on your business

Work on your business, not in your business. Pretend that you want to create franchises even if you are not planning. Think of your business as anything but a job (how my business can work without me; how can I own a business and be free of it?). Problem is not in business, it is in you, until you change your perspective of business, until you accept that business is art and science.

Innovation loop

Business must grow. Three-step model for growth: innovate, quantify and orchestrate again and repeat. Orchestration - do what you do, say what you say, and be who you are as long as it is working.

Discretion is the enemy of order and quality.

Business development program

Your business development program should consist of

  1. Primary aim
  2. Strategic objective
  3. Organisation strategy
  4. Management strategy
  5. People strategy
  6. Marketing strategy
  7. System strategy

Some points I found interesting from above:

Primary aim.

What do I value most? What do I want my life to look like? how my story would go? How do I want to write a script for my life? You should live my life like it is important. Actively make your life into the life you want to be.

"Great people create life actively while others are living by accident not intentionally."
People strategy.

Most companies are organized around personalities, not functions - it is causing chaos.

“All organizations are hierarchical. The organization is a structured institution, if it is not structured it is a mob, the mod doesn’t get things done”

Work is an idea before somebody does it. When it is done it is a reflection of the idea.

"People look at work as punishment for who they are and where they stand."


“Life games reflect life aims”

People don’t just want to work for exciting people but work for people who created a clearly defined structure where they can test them. Such a structure is called a “game”.

Rules of the game:
  1. Never figure out what you want people to do and then create a game out of it. To be serious game should be the first.
  2. Never create a game you don’t want to play.
  3. Make sure there are ways to win a game without ending it, the game should not end.
  4. Change the game from time to time, tactic not strategy. (Strategy is the moral foundation of the game).
  5. Never expect the game to be self-sustaining, remind the team about it.
  6. Game has to make sense. Logic is to give your people an argument to support emotional commitment.
  7. Game needs to be fun from time to time. Fun need to be defined by people.
  8. If you can’t create a good game, steal someone’s game. Anyone’s idea is as good as your own.
You need people who want to play your game not one who believes they have a better game.


I found this book interesting, even tho I’m not the target auditory for it. Some concepts can be applied across multiple areas. Especially I can relate to “Entrepreneur, Manager, Technician” as I fell into the same trap multiple times.

1984 by George Orwell

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