In The E-Myth, Michael Gerber puts forth the reason that most small businesses fail. The business starts because a technician who is good at something (repairing toilets and other small house repairs for example), decides he should be in business for himself.
Now, this technician may be excellent at fixing toilets, but that does not mean he knows how to buy, sell, and rent houses. However, the technician hates his boss and his job, so he leaps into the housing business figuring if he can repair the houses himself, the rest ought to be a snap.
The problem is, the business of buying and selling and renting houses is so specialized and time consuming, that he can never get too far because he does not really understand how to run the business, he just understands how to fix toilets.
The key is then to develop three separate and distinct personalities in business, according to Mr. Gerber.
1. The Entrepreneur. This is the dreamer and the person with the vision and the plan to make things happen. He is the lifeblood of the business, and without him, there would be nothing.
2. The Manager. This is the person who coordinates the employees. Without him, nothing would ever get done.
3. The Technician. This is the person who keeps doing it, doing it, and doing it all day long. This is the person that is the nuts and bolts, hands-on laborer who does the work.
To some extent, we must become all three. All of us, have all three personalities inside of us. In fact, due to your budget, you may perform all three jobs when you start. But you need to create these company positions on paper and in your head. It should be an overall part of your business plan. Then, when you can, you need to hire people to fill these positions. That way, your position as an entrepreneur can grow, and you will have the staff available to help you get there.
Now, the growing pains often come because it is so hard to train good help. I have an ad in the paper looking for good contractors. However, I now have a crew foreman who is in charge of these contractors, and I have developed a way for him to make sure his job gets done more easily and with fewer hassles.
The classic problem with contractors is they don’t do everything they were supposed to do in their bid and later they claim that these were “extras” and will cost more. When you go back to your bid, sure enough these details were left out.
Remember, the more streamlined your business, the more efficiently it runs. Here is the procedure that I developed for my foreman when getting bids from contractors. The foreman walks through the job with the contractor who will be doing the repair job, and he carries a tape recorder with him.
Everything that needs to be done goes on tape. Next, the foreman types up the transcript of every little thing that is to be done by the contractor, the contractor signs it as part of the bid, and everybody gets to work. That way, less hassle and misunderstandings later on down the road.
Also, I am now in the process of creating an operating procedures manual for the office. Every little thing that we do will be journalized and any new employee will have to read the manual thoroughly before they go to work for us. As well, the manual will be used as a text book to guide the employee through day-to-day operations.
Does all of this take time? Sure! Does it help clarify my thinking? YOU BET! In fact, it will may make us strive to do things more simply in the future. I absolutely cringe when I think about our complex bookkeeping program for dealing with our properties. We are constantly running into mistakes that only Rick (the technician in this area of our business) can fix. Is Rick a good bookkeeper and tax guy? Sure, but he has rare skills. Right now, that part of our business depends too heavily on Rick the technician. He is THE only guy that completely understands it.
What if Rick gets sick?
The key is to NOT end up with a business that requires extraordinary people to run it. That is the classic mistake of the technician. He CAN’T hire anybody to replace him because nobody else is good enough.
Rather, you want to end up with a business that runs extraordinarily well with average people running it. So, what you want is an extraordinary business, not extraordinary people IN a business. I only realized this by journalizing the process of what we do. I would encourage everybody to do the same. It is a real eye opener!
You need to go to work ON your business, not go to work IN your business. In short, you go to work on making your business run more smoothly.
I would like to point out that most successful companies are successful because extraordinary people put together extraordinary systems for doing the ordinary things that the business needs to get done. But these extraordinary people don’t do these ordinary things themselves, although they probably still do some of these things from time to time. That is how they keep their hands on the pulse of things.
The basic goal of any business should be to simplify procedures so that most anybody with limited skills can do them.
Remember, once a year the CEO of Southwest Airlines may serve you your coffee and take your tickets on that commuter flight. Sam Walton drove a pickup truck to WalMarts across the country and had worked about every position possible before he died and left his family billions.
(That is how he came up with the concept of the friendly greeter that hands you your cart and says, “Welcome to WalMart.” That started out as a security guard who was friendly. Sam thought he could kill two birds with one stone–welcome the customer to the store and get security for no extra cost.)
And finally, Ray Crock created Hamburger University to teach thousands of managers how to cook an acceptable burger prior to opening a store.
I am working ON my business now, not in it, to make every part of it more simplified. The part that I am directly responsible for (showing houses and creating lease option offers), is now very simple. I never speak to any lease option buyers until they have seen a home.
My homes are kept clean, and I show my homes every night of the week without being there. All this for little more than the cost of a voice mailbox, a classified ad, and a cleaning lady. I am sure I can make this part better, though, and I will be creating a procedures manual for that part of the business soon.
So, let’s quit arguing about whether or not to do your own handyman work. Of course you should, when you start. If not, you need to expose yourself to that kind of work so that you can get inexpensive bids from competent people. Then, let’s go to work on getting systems in place to streamline the process of getting good handyman people, and also every other part of our business as well.
Let’s get extraordinary systems in place to buy, sell, and rent houses as easily as possible. (Not to sound like a commercial for JP’s books, but that is what educating yourself about how other people run similar businesses accomplishes.) The discussion forum posts on this site are also an invaluable resource for that kind of thing. In the end though, it is YOU, going to work ON your business, not IN your business, that will get the job done.