A Review of The E-Myth Revisited by Michael E. Gerber
Why Most Small Businesses Don't Work and What to Do About It
Michael E. Gerber, the author, is an authority on small business development and entrepreneurship. With nearly 50 years of experience working with small business owners, he founded E-Myth Worldwide in 1977, a company dedicated to coaching and training entrepreneurs.
His expertise comes directly from studying and working with thousands of small businesses and identifying patterns in their successes and failures.
Background
The E-Myth Revisited was published during a significant shift in the economy when small businesses became increasingly important to economic growth. The book addresses a critical problem: the high failure rate of small businesses. Studies showed that as many as 80% of new businesses fail within their first five years.
"E-Myth" refers to the "Entrepreneurial Myth,” the mistaken belief that technical skills alone are sufficient for business success. This 1995 revised edition builds upon Gerber's 1986 book, incorporating new insights and updated examples.
Core Message
The central thesis of The E-Myth Revisited is that most small businesses fail because their owners are technicians who know how to do the technical work but don't understand how to build a business as a system.
Gerber argues that a successful business owner needs three distinct personalities: Entrepreneur (visionary), Manager (pragmatist), and Technician (worker). Most small business owners are predominantly technicians, which is why they struggle to survive. To thrive, they must develop their managerial and entrepreneurial capacities.
Structure
The book is structured as a narrative conversation between Gerber and Sarah, a fictional small business owner who runs a pie shop. During their conversation, Gerber identifies the three phases of his business development model:
Infancy: technical phase
Adolescence: managerial phase
Maturity: entrepreneurial phase
Within each phase, Gerber introduces key concepts using frameworks and practical applications.
Key Takeaways
The book identifies the keys to building a successful business:
Work on your business, not in it: Owners should focus on building systems and processes rather than doing all the technical work themselves.
The Turn-Key Revolution: Businesses should be designed to run independently of their owners, similar to successful franchises.
The Business Development Process: A systematic approach to business growth consisting of three distinct stages: innovation, quantification, and orchestration.
The Franchise Prototype: Even if you don't plan to franchise, build your business as if you were going to create 5,000 identical locations.
Systems Thinking: Create organized, documented processes for every aspect of the business that anyone with basic training can execute.
Notable Quotes
"If your business depends on you, you don't own a business—you have a job. And it's the worst job in the world because you're working for a lunatic!"
"The technical work of a business and a business that does technical work are two totally different things."
"The purpose of going into business is to get free of a job so you can create jobs for other people."
Critical Analysis
Writing Style
Gerber makes complex business concepts digestible and engaging. His conversational tone helps one relate to Sarah’s challenges and understand how she resolves them.
Some will find the dialogue somewhat contrived and repetitive. And Gerber’s enthusiasm sometimes leads to dramatic statements that, while memorable, oversimplify complex business issues.
Content Value
The systems approach to business development is spot on. Gerber's explanation of the entrepreneur's journey and their evolution from technician to entrepreneur is insightful and his prescriptions are actionable.
Approach
Gerber draws from his extensive experience with small businesses through E-Myth Worldwide. He provides valuable real-world insights. What you won’t find is rigorous academic research or statistical evidence to support his claims.
Nevertheless, his advice aligns well with established business principles and has been validated by hundreds of thousands of successful implementations.
Practicality
The book excels at providing actionable advice and clear action steps. The Business Development Process and the Franchise Prototype concept offer concrete frameworks. The emphasis on documentation and systems creation provides specific tools one can use immediately in their business.
Limitations
The book's focus on systematization does not fully address the unique challenges of creative or highly specialized professional services.
The franchise model approach does not suit all business types or industries.
Some suggested organizational structures will be too rigid in a rapidly changing business environment.
The book doesn't adequately address current business trends like remote work and the dramatic impact of AI.
Final Assessment
The E-Myth Revisited remains a foundational small business text. Despite its age, its core principles are as relevant today as when first published.
Its greatest strength lies in its ability to shift one's mindset from working in their business to working on it. And while some parts could use an update, the focus on systems development and scalability are timeless.
This book is ideal for:
Small business owners struggling to grow beyond self-employment
Technicians considering starting their own business
Entrepreneurs looking to scale their existing operations
Business coaches and consultants
Students of business and entrepreneurship
The book is particularly well-suited for those in the early stages of launching their business and those who feel trapped and overwhelmed several years into their business.