The key ideas

The E-Myth Revisited

Michael E. Gerber, 1995

Why can a baker who bakes wonderfully go broke in her own bakery? Michael Gerber explains that small firms are usually started by craftspeople, not entrepreneurs, and that this is exactly what ruins them. He shows how to see your business as a product and build it so that it works without you.

Who it is for

For owners of small firms, craftspeople and freelancers who work for themselves with no days off and want to understand why everything rests on them alone. And for anyone who is only thinking about starting a business of their own.

The business that was supposed to free the craftsman from working for someone else actually enslaves him.

The pies it was all for

Sarah bakes the best pies around. Her neighbours and friends say so, and one day she decides to open a bakery of her own. A few years go by. Sarah arrives before dawn and leaves late at night. She counts money, argues with suppliers, looks for someone to cover for a sick helper. She still bakes pies, but she has almost stopped enjoying them. The book opens with this scene, and the author keeps talking with Sarah to the very last page.

Michael Gerber is an American consultant who has been teaching owners of small firms since the late 1970s. In 1986 he published The E-Myth, short for the entrepreneurial myth, and in 1995 a revised edition, The E-Myth Revisited, which became a classic.

The myth goes like this: small firms are started by entrepreneurs, people with an idea and a head for business. Gerber says that most of the time this is not true. A business is usually started by a craftsman: a baker, a hairdresser, a programmer, an accountant. He knows how to do the work and thinks that is enough to run a business that does that work.

In this book you will learn why so many small firms wear their owners out, which stages every business goes through, and how to build yours so that it works even when you are not standing at the oven. Gerber invites you to look at your business as a product that can be designed, tested and improved.

"Why am I working for this guy?"

Gerber describes the moment almost every small firm starts with. A craftsman has worked for someone else for years. He knows his trade well and watches his boss make foolish decisions. And one day a question pops into his head: why am I working for this guy? I could do all the same things and keep all the money myself.

The author calls this an Entrepreneurial Seizure. It passes quickly, but the decision stays. The person quits, rents a space and opens a business. And he relies on an idea that seems obvious: if you understand the work, you understand the business. This is what Gerber calls the Fatal Assumption.

The trouble is that it is not true. A baker knows how to bake pies, but not how to find customers, keep the books, hire and train people, or plan money six months ahead. All of that is now his job too, and there is more of it than baking.

So the business that was meant to free a person from the boss becomes a new boss, only a stricter one. You cannot leave it on a Friday evening, and it never goes on holiday. Gerber does not talk anyone out of starting a business. He says the mistake lies in the original picture, and the picture can be fixed.

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About the author

Michael E. Gerber is an American small business consultant. Since the late 1970s his company has taught owners of small firms to build their business on systems rather than on their own strength.

All books by this author: Michael E. Gerber

Terms from the book

  • McDonald
  • San Bernardino
  • Franchise
  • Kroc
  • IBM
  • Sarah
  • Watson
  • Delegation
  • Comfort Zone
  • Prototype
  • E-Myth: The book's original title, short for the entrepreneurial myth. It is Gerber's name for the belief that small firms are started by entrepreneurs.
  • Entrepreneurial Seizure: An image from the book: a craftsman's sudden decision to leave the boss and start a business of his own.
  • Fatal Assumption: The author's term for the belief that if you understand the technical work of a business, you understand the business that does that work.
  • Entrepreneur: In Gerber's model, one of the owner's three roles: the dreamer and inventor who lives in the future and looks for opportunities.
  • Manager: In Gerber's model, the role in charge of order, plans and predictability.
  • Technician: In Gerber's model, the role of the craftsman who does the work with his own hands and lives in the present.
  • Entrepreneurial Perspective: The author's term for seeing a business as a system that has to work without the owner's constant involvement.
  • Franchising: A way to grow a business by selling others the right to work under your brand. Business format franchising hands over a whole way of running the business.
  • Operations Manual: A step by step description of how every job in the business is done.
  • Primary Aim: The first step of Gerber's program: your picture of what you want your life to be.
  • Strategic Objective: The second step of Gerber's program: a description of what the business has to do so that the primary aim becomes reachable.
  • Position Contract: In Gerber's sense, a description of the result, the work and the standards for one position, signed by the person who holds it.
  • Demographics: A description of customers by outward traits: age, income, where they live.
  • Psychographics: A description of customers by inner traits: their values, their motives, what they respond to.

All terms

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