The E-Myth by Michael Gerber as well as Think and Grow Rich by Napoleon Hill have probably had a greater influence on business owners and entrepreneurs than any other book. The E-Myth can be a game changing book for new business owners as it is easy to read along with being applicable to any service industry. The “Myth” is the assumption that if you understand the technical work of a business, you understand what it takes to succeed in business. Most home performance contractors started off doing the install work at some time or another and most energy auditors, who have their own auditing companies, started off doing energy audits with aspirations of entering into business for themselves. That’s how I started. The problem however is that we, as owners, cap ourselves, become burnt out, bored or go out of business if we stay in a technician’s mentality and don’t push ourselves to do what is necessary to grow our businesses. The E-Myth actually gives a nice roadmap to follow which helps us say goodbye to business-limiting practices once and for all.
I realized that I had to be working on my business instead of in it if I wanted more freedom in my life. More financial freedom a well as more time freedom was now my new priority. This is the foundation that the E-Myth is built on; that success first starts with your definition of what it means to be successful, or your “primary aim.”
What do you value most?
What gives you the most energy?
What kind of life do you want?
Who do you wish to be?
For me, my primary aim was to evolve and the key to this was to choose the closest estimate of my final destination and running with it. Do you wish to own a multi-million dollar office building and warehouse with 12 crews running each day, managers for several departments and be the leaders in your service area for home performance? Do you want to have a self-running business which allows you to take months of time off a year to travel the world? Do you just want to be able to take your kids to school every day and invest in their future with your time and careful planning? All of those things sound good right? I suspect everyone has similar aspirations but deep down, each of us have different goals and the more vividly you are able to define your primary aim, the better.
How much money you need in gross profit, pre-tax income, monthly and daily targets to reach your goal?
For time freedom, define the organizational structure you will need in place to free up your time and how their performance will be measured, what problems will be encountered and their solutions, and what training manuals are needed. You also need to decide how you are going to act, what kind of business environment do you want? What do you want your staff to say about you if they were writing a review on GlassDoor.com?
I don’t think this section is as well defined as compared to the other sections and rightly so as it is a different business subject and the book is meant to appeal to a wide audience, not just to home service companies.
To be a successful business owner, we must stop working as a technician in the business and begin leading the company by working on the business. One of the keys to growth is to adopt a franchise prototype to your home performance business. Michael points to developing a systems strategy in each aspect of your business. It was incredibly helpful to think through all the steps that can canned and cloned in my business. “Hard systems” are physical things which save money or allow your staff to do their job better such as having a better insulation machine to save time or purchasing your Pookie by the pallet for discounts. “Soft systems” are people practices and methods to give people a framework for doing their job. Ideally, I would like to build my soft system so well that use someone with no construction experience, or with only a grade school education, and they would be able to provide great service or high quality work/deliverables every day.
One of the obstacles I have had to overcome is the thinking that by canning and cloning, I’m kind of selling out and the fear that my business would lose the personal touch which my customers love. It actually took some time for me to overcome that idea, but while I was wrestling with it, I was simultaneously working on creating guidelines for reproducible results in a few aspects of the business. Once I had a few of those in place, it was now time to practice my managerial skills… which were embarrassingly poor… think Steve Jobs crossed with a stereotypical engineers communication skill. I won’t go into details here but I would like you to be comforted with the knowledge that if I can start from where I did and improve to a mid-level manager grade, then so can you. The nice thing is, I know when my business grows even more I will have the processes, job description and metrics in place to hire a full time manager whose primary strength will be managing people. That’s the power and depth of this book.
Once your systems are in place and implemented you are between Stages 1 and 2 of growth.
1. Infancy – when the owner is the technician and doing everything.
2. Expansion – systems are in place and better management skills are required.
3. Maturity – entrepreneurial vision is required.
These stages do not happen overnight, often taking years to accomplish, but getting out of Stage 1 was a game changer for my home performance business. I found it incredibly helpful to have strong technical knowledge so I could provide the crew and staff with guidance when needed. At some point between Stages 1 and 2, you will reach a point of critical mass, where you will find your time spent in the field in no longer needed. It’s a liberating feeling and is a moment which I will always remember in my business. When in that transition, remember these things to help it go as smooth as possible.
- Show up to the job sites randomly and spend time in the field. This gives you an opportunity to interact with the homeowner, build rapport and referrals along with having a finger on your crew’s overall performance. If you totally remove yourself from the field, things can get out of control very quickly even if you have a trusted crew lead onsite.
- Hold weekly meetings with your staff. I separate them into crew, sales and sales and auditor meetings. Talk about your KPI metrics, technical stuff, feedback from your staff and feedback from homeowners to start. I find that I am still growing into this position, it’s not natural for me to be outgoing or excited but I would like my staff to have these traits when it comes to their work and as a result I try to convey them as much as possible.. You want to walk away from each meeting with a to-do list to improve on processes within your business.
For me, I totally bought into Michael Gerber's idea. At the time I first read the book, I was already getting burnt out from working in the field side by side with my technicians. I started my businesses thinking "if I could only make $100,000, man I would have be living life then!" Then once I reached my goal, and had a little momentum behind my home performance business, my time was spreading thin working in the field, doing audits, selling and all the paperwork required to keep my business up and running. I made several operational mistakes which brought me to a low point and made me realize that something had to change in my business. My first mistake was not having any disciplinary systems in place if our quality was not being met. My second mistake was assuming that if I paid my crew well, they would in turn repay me by busting their ass in the field. This was not the case with a specific crew I had and as a result I ended up overpaying them and getting my teeth kicked in as a thank you. My third mistake was not being on the job site as much as I should have been to quickly realize mistakes #1 and #2 and put a stop to it sooner. Now I pay the crew a base plus performance bonus, I have a clear set of expectations, KPI's and disciplinary actions if our standards are not being met and everyone takes responsibility for their work. I have random site visits scheduled into my week and weekly meetings help with training. My systems aren't perfect but the point is that I am now much better off in regards to my income, my time and my business than I was years ago. Now when I'm going through the book again, I find I'm facing a new set of challenges with the book serving as the perfect reminder of the path I must follow and that it has been done before by many business owners.
I have found E-Myth by Michael Gerber to be just as relevant and useful when I was just starting my business bringing in $100,000 a year up to the $1,000,000 mark years later. It is an incredibly useful book regardless of where you are in your business but is of particular value for home performance contractors because so many of us started as technicians who were good at what we did but did not want to make all the money for someone else and start bringing it home for ourselves but got stuck somewhere along the road. If you are at that point, you should know that reading this book gave me the courage to do things which I was not comfortable doing before and yes, I cut my teeth trying new things but I stuck with it and have reaped the rewards because of it.
Links: The E-Myth