I just read a book that is challenging a how I see the world, like the Dip did many months ago. Like the dip, this book talked a lot about things I knew I SHOULD be doing, but didn't really understand why. I'm a stubborn person, so understanding the "Why?" is really important for me to actually make changes.
The book is called "The E-Myth Revisited". I'd heard about it and had it recommended to me over the years, but hadn't gotten around to reading it because the name sounded absolutely terrible. That's my stubbornness, again.
In a nutshell, the book is about how to to organize, run, and think about your small business. Different examples in the book actually made me nervous because it was as if they were describing me personally. Problems that I've run into were described with psychic accuracy, and solutions were described which made me think, "oh, of course!". Needless to say, I will probably be making some big changes as a result of the book.
My notes on the book:
If you start a business, do everything in it, and cannot be removed from the business, then you haven't created a business-- you've created a job. Instead a business should be thought of as a series of systems which can be performed by average people.
At first glance this systemization seems like it would suck the soul out of the business, but really it's the opposite. If you control and systemize everything, it creates a mechanism for you to leverage your decisions, vision, and values across every part of the business.
So the first goal is to work ON the business, not IN the business. In other words, even if you are performing all of the tasks at first, make sure that you are building systems and documenting them so that others can take over.
To that end, act as if the business is going to be replicated. Doing this forces you to document every process and system in detail.
Building systems based on unskilled labor increases consistency and allows employees to become apprentices and learn about your unique methods. Bringing in people who already do things their way, even if it's good, will deviate from your vision and cost more.
Be extremely consistent and orderly. There is a lot of chaos in the world, and people gravitate to things that they can depend on. Inconsistency is frustrating. The customer experience should be consistent and emotionally appealing.
Employees must know the purpose of their work so that it can matter to them. Work done "because I said so" is poorly done. They must know the steps to take to get the results, and they must know the standards they'll be judged by.
Four questions to ask about your business:
The business is NOT the final product. The business is the systems and the experience they create. How the business treats the customer is even more important than the actual product it delivers to them.
Everything that is measurable should be measured. Then everything should be tested to improve these measurements. Almost no one does this.
Remove discretion from every step. Systems should prescribe actions for any contingency.
In the middle of the book the author starts talking about how important it is to create your life intentionally. He gives eight questions to answer to figure out what your "primary aim" is. I always avoid answering these questions for some reason or other, but this time I did them and found it to be pretty valuable. I'll have another big post about this in a couple days
Back to the notes...
How big do you want your business to be? How much money do you want it to make? Your expectations will be wrong, but ANY goal is better than no goal (this concept is what made me take the time to answer my life questions. They're hard, but any idea is better than no idea).
Can your business fulfill your financial goals? Will it support your goals in life? If no, then there is no point to doing it. Choose a business that WILL support these things.
What kind of business are you in? Not the actual commodity, but what is the message? What is the experience? For example, colognes are usually in the business of selling fantasy, not scented water. Watch the commercials.
When will all your systems be documented enough that you could remove yourself from the business?
What standards will you have for reporting, cleanliness, clothing, management, hiring, firing, training, etc?
When designing each position in your company, ask the following three questions:
Do each job yourself first, and only hire someone else when you've completed a position manual for that job. That's how you spread your standards and values across a company.
Make the rules and follow them strictly. If you make exceptions for yourself, people won't take rules seriously and will make exceptions for themselves too.
Think of jobs as games. Games don't have to be fun constantly, just occasionally (twice a year). Think of jigsaw puzzles, which are never really fun.
"There's nothing more exciting than a well-conceived game."
A business should be a community which gives its employees principles and purpose.
Real needs don't matter. Perceived needs do. Sell people things they want, not things they need.
"What must our business be in the minds of our customers in order for them to choose us over everyone else?"
Systems are created to free the time and attention of employees.
To make a sale, first get permission to talk to the customer. Then demonstrate that you are an authority, that you understand his problem, and that you are PERSONALLY willing to solve it using the resources of your company.
There is a lot more to the book, and like any book, a lot of the real value comes from immersing yourself in the author's world for an hour or two. The sections I wrote notes on are the sections which were most valuable to me, but you might have different interests, needs, or priorities.
Re the 4 questions below. Thought of two 'venues' where I've seen these ideas applied: First, in the office where I am the assistant to an executive--my boss seems to have asked themselves these questions and has become more free over the years to turn things over to the staff and pursue other interests. The first question is contingent on having trustworthy, able staff/"people" and involves -- I propose -- being discerning in the hiring process to find people who buy into your vision and then, to make the work environment so satisfying that the employees do see the work as continuation of life, not apart from and opposed to it. Second, I am a college adjunct instructor, and I also find the questions useful in terms of course planning:
On page 95 of Rich Dad Poor Dad he says after "incorporating yourself" - car expenses and family vacations are legitimate business writeoffs. This is clearcut tax fraud.
Maybe by some stroke of luck this guy happened on principles that work, even though he had never tried them himself in a business of his own. It has happened before, but I agree that spending money on books to learn how to make money is counter-productive. If you have a brain, you'll learn far more from starting a business and actually trying to make money.
If you strip Rich Dad Poor Dad down to its core, all it's saying is to "pay yourself first." Whether that constitutes tax fraud or not is up to what you do at the end of the month when you find that you don't have enough money to pay the IRS. As I remember, Kiyosaki advocates using your brokeness as an incentive to come up with creative ways to earn more money so you can keep paying yourself first, and still have enough left over to pay the tax collector.
Tynan, were you paid to write this article?
I looked on this dude's Wikipedia, and he founded one successful business. What does this business do? Offer advice on how to run a business.
I actually don't find T's style preachy. More like...enthusiastic? If nothing else, he always presents his line of reasoning along with his views, so either I end up learning something new/agreeing, or it forces me to challenge and re-affirm my existing beliefs. In any case, it's a win-win. Keep up the good work.
-----Instead a business should be thought of as a series of systems which can be performed by average people. -----
This sounds great, but I see it as being completely unusable. How the heck are you going to turn Life Nomadic into a system performed by average people?
A real value giving business, not one that caters to perceived needs, can't be done by average people.
Life Nomadic is about TYNAN and the insight/value he offers his audience. And yeah dude it's going to take a lot of effort and hours, maybe it's a "job" not a business, but who cares? It's good stuff.
-----This sounds like a very direct extension of the philosophy set forth in 'Rich Dad, Poor Dad', -----
That's the scary part. RK is a known liar who has ZERO business success outside of selling self-help books that were a failure until he tapped into the scammy MLM-Amway cult audience. His "ideas" about hyper-leveraging real estate contributed to the mortgage crisis. He also advocates tax fraud in his book as solid business advice. johntreed.com
Someone named Nick sent me an e-mail the other day that I think poses a good enough question to answer it publicly:
I am a 21 year old university student and have realized in the past 2 years that self-education is the foundation personal growth. As such, I've started devouring books; 2 or 3 a week on a probably too broad range of subjects. But I know that I'm missing a lot.
What should I do to improve my education outside of just "read a lot?" Where should I start?
Derek Sivers is holding a one-time class to teach you the "magic touch" in business, with examples, war stories, and lessons you can apply right now to do better by your customers and profit as a result of it -- and all the proceeds will go to charity.
The class will be on February 19th at 5PM California time (8PM East Coast). You can find out more at GiveGetWin by clicking here.
The Mentality Behind the Magic Touch; Derek Sivers interviewed by Chiara Cokieng
Derek Sivers sold CDBaby for $22 million dollars in 2008. In this interview, he explains what he's been doing now, how he's engaged with his new projects, and -- most excitingly for business owners and entrepreneurs -- the mentality behind the "magic touch" he had that made CDBaby so loved by its customers, and a huge part of how it grew so quickly. Here's Derek --
In 2008, when I sold CDBaby, I was about to start a new company immediately. Literally the day after I sold CDBaby, I was ready to start my next company. I incorporated it, I started programming, got a few months into building it, and then realized that if I were to do that, I wouldn’t be making any real change in my life.