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Michael Gerber’s book E-Myth Revisited has some great insights and perspectives for people starting up a new business. We wanted to use Gerber’s book as a starting point to talk about how you should be working ON your business, and not just IN your business.
What do we mean by that? Working IN your business for custom apparel is creating client orders. Embroidering team jackets. Putting rhinestones on cheer shirts. You are in your business creating product that clients will purchase.
The E-Myth is the idea that entrepreneurs start the majority of businesses. However, in reality it is people who are passionate about a particular task that start the majority of businesses. Example: you love baking cakes for your family and friends. That turns into you selling cakes to others, and then into a full on bakery. It’s a hobby or passion that they decide they’d like to turn into a part-time or full-time job/business.
The challenge here becomes that most people who start out with a hobby and decide to turn it into a business is that they’ve never managed/run a business before. Where people can get stuck and start to struggle is that they think because they know the tasks of that particular hobby, it’ll be easy for them to simply switch it to a business model. Unfortunately many businesses fail due to this type of thinking.
A business requires three different types of people in order to be successful: Technician, Entrepreneur, and Manager.
In larger businesses these are three (or more) separate people. However in startups often one person – the person who starts the business – is the one taking on all these roles. Unfortunately when one person takes on several roles, they have to divide their time a focus between these roles, and it’s never even. Almost 70% of a person’s time will be as the Technician, working IN the businesses. Then only 20% is spent on the Entrepreneur side, trying to create long-term success. SO only 10% is left for the Manager side, and often this is as a reaction to when things go wrong and need fixing.
Part of working ON your business is figuring out how you can divide yourself equally – 33% to each role. You can’t just focus on the Technician side, filling orders, you need to figure out how you can set yourself up for longer-term success, and gain new customers (Entrepreneur). However, long-term success can only be run smoothly if the Manager side has set up systems.
There are, essentially four options, all of which assume that your business is already up and running, and you’re busy. So much so that you don’t actually have the time or man-power to expand your business and have new customers coming in.
Many hobby businesses start out because the person simply wants to move away from their every day job, and do more of what they actually enjoy doing. Also, working for yourself, in many situations, allows you an increased level of freedom and control over your time. However, as many startups business owners will tell you, they often find themselves working longer days, in order to build a successful business and to keep up with the customer orders.
In this situation you have to consider why you got into the business in the first place. If it was to work fewer hours, you may need to learn to say ‘no’ to new customers. You may also need to adjust your delivery promises (so you’re no longer doing rush orders) and increase your pricing (to compensate for the loss in profit from those customers you’re turning away).
When you “go for broke” you are working as much as possible, filling as many orders as you have hours available in the day. This is to gain as much capital as possible so that in a few weeks, or months, you have the funds to make a major change in your business. This major change could be that you hire someone to assist you with filling orders, or taking on a different role in your business (sales and marketing for example). It could be investing in a new or second machine so that you reduce the hours you spend in the shop and orders are being filled faster. Or you upgrade your space, so that you’re no longer in your garage but have a shop where there is more room for all your equipment and staff.
We have to put this option in here, but it’s not really a good one, or where you want to be in your business. As this means you simply continue to do what you’re doing. You’re business isn’t going to grow, and it could mean you’ll burn out if you’re currently working 60+ hours a week.
Franchising is how McDonald’s became so successful, and is the operational standard for many fast food restaurants. What makes them successful is that they have systems that are identical, regardless of location. To do this they broke apart the business to analyze and record every step and role of the business, and then those steps are duplicated across all locations.
While we’re not telling you to start selling your custom apparel business as a franchise, what you want to take away is that every role in your business needs to be broken down and the steps and responsibilities clearly written out.
We believe that using the franchising model will be what sets your business up for success.
If you’re the only person in your business, you’re taking on a lot of different roles. Such as:
What does this mean? You need to think of these roles all separately, imagining that a different person was doing all these jobs. What are they responsible for? What qualities should they posses? What is their job description?
For example, a Customer Support Representative should be personable. They are responsible for answering client emails and phone calls, etc.
Having all these roles written out will help you with a few things. First off is to assist you in considering whether or not you can, or need to, outsource some of these roles. Bookkeeping may not be something you’re particularly good at, and while you can, and have been taking on that role, perhaps the job that is taking you 3 hours to complete, could be done by a specialist in 1 hour. This means you’re only paying someone for a portion of their time, and frees you up to be doing something you’re more passionate about, whether that’s marketing or filling customer orders. Either way it may be more cost and time efficient for you to hire a specialist.
It also provides your employees with an understanding of their role, when you do hire more people. They can read their job description and know what is expected of them.
To work ON your business, you’ll want to break it out into these 7 steps Gerber outlines:
When you take the time to work ON your business, you’re looking at it as a whole, and then breaking it down into it’s individual parts. Allowing you to see what parts need more focus or improvements to help you and your business succeed.
We recommend taking a read through of Michael Gerber’s E-Myth Revisited to help you gain a better understanding of business, and how you can set your business apart.
