There are a couple of stereotypes that come to mind when the word "entrepreneur" is brought up. First, is the more romanticized notion of being able to travel, take long lunches, and basically do what you want, when you want. On the other hand, there's the overworked, underpaid, and basically frazzled lump of a person. Those are the opposite ends of the spectrum, and honestly, depending on the day, either can be accurate.
We entrepreneurs are definitely lured away from more traditional jobs by the first persona, but for many of us, it's the second one that ends up taking root. And though none of us signs up for long hours and little pay long-term, those of us who are leading purpose-driven organizations often just chock it up to the cost of doing business differently. But I don't think this has to be the case.
Last week, I shared that I'd recently finished the book The E-Myth Revisited by Michael Gerber, which made the phrase "working ON your business, not IN your business" popular. In that post, I recounted that he says there are three different types of personalities that all business owners must display in order to be successful: the entrepreneur, manager, and technician. Building on that idea, today I want to share his strategy for growth and scale. And, like last time, I'll also tell you what some of the nonprofit and social enterprise leaders I admire do to work on their business.
The first part of the book, the section which primarily deals with those three personalities, made perfect sense to me. I recognized those traits in myself, but also saw areas of improvement I know I need to work on if I want to making it in business, as well as see my social enterprise thrive.
However, there were aspects of this second part that initially rubbed me the wrong way. But I pushed through, and Gerber made a strong case for his argument. I think I even became a believer along the way.
So, what was it?
The Franchise Model
The stance Gerber takes in this book is a bold one, in my opinion. He submits that to grow and scale, all small businesses owners must adopt a franchise mentality. That is, they must on some level be able to replicate themselves through systems and processes.
Some of you might automatically get stuck after reading that paragraph. Even being a girl who loves systems, "I totally paused," to quote Clueless, when I started this section of the book. At this point, I don't see myself setting up numerous Signify offices around the country, or hiring hundreds of employees. In fact, that thought makes me kinda want to barf. However, I am flying solo on this venture right now, and it would be super terrific to one day maybe have a bookkeeper, a few specialists on retainer, or heck, even an intern. And those things mean that I need to think bigger. I need to think in terms of scaling. In Gerber's philosophy, I need to franchise.
If a business is to thrive, it must obviously move beyond the founder. It cannot be wholly dependent on me or my skills—or in your case, you. Otherwise, it can feel very burdensome. It's more of just a job at that point. If I am out on vacay or sick in bed or taking that glorious three-hour lunch, nothing's getting done. Sound familiar?
Gerber equates business growth to the development of a person, with an infancy, adolescence, and maturity stage. The infant stage is exciting. Everything is new, but it can also easily get overwhelming. There are so many tasks to complete, and not enough help or time to complete them. You enter the adolescence stage when you hire someone. This is pretty spectacular, but too many owners end up wanting a break so desperately that they shove everything on to the newbie, which creates a whole new set of problems. It's possible said newbie either becomes overwhelmed too, may not yet carry the vision, or may have a different take on doing things that they execute in your absence. None of those are good alternatives. Gerber calls it "managing by abdication rather than delegation."
At this point, he says the owner has two viable options: the first is to either return to their comfort zone of the one man band, or expand with a franchise model mindset.
His solution to success is the "turnkey revolution," which is a model that allows basically anyone to complete the process. Yes, just like a franchise. He uses the example of McDonald's.
While many businesses fail every year, putting processes, systems, and organization in place allows 75% of franchises to succeed. Wow, that's crazy! This is because they are consistent and predictable. And we humans are often creatures of habit, so those two words are comforting.
There are four basic principles behind the turnkey model:
- Design for simplicity and efficiency. Your system should determine the outcome, not your people.
- Document everything in an operations manual. This includes the roles, the work itself, and everything between.
- Predictable service is a necessity. You must provide consistent value to your customers (or donors, for you nonprofit founders who are still with us).
- Be results-oriented. Create a profit for your business, and be able to measure goals and objectives. And, of course, be ready to tweak at any time.
I've already mentioned my first issue, and that was trying to define what scaling meant to me. Through his examples in the book, he is definitely talking about becoming a big player, but again, at this point, I have no desire for that. But his case was strong enough to help me realize that even wanting to scale on a very small scale could benefit from what he had to say.
Item number two may have made the hairs on the back of your neck stand up as well, and that was "Your system should determine the outcome, not your people." Okay, ouch! I pursed my lips and scowled a bit when he started in on this idea. After all, if I'm one person now, and want to expand that to two, three, or five people, I want to hire great people! I want to love them, and be friends with them, and invite them for sleepovers. (Okay, maybe not that last one, but I haven't ruled it out.)
But, after thinking about it a little more, I'd heard something similar before that I did agree with, and that was to hire based on the capability of the person, not the job description. Gerber may not agree with me there, but I'm gonna go with it. His point is that when you get a good system in place, most anyone should be able to pick up the ball and run with it. You should make it that simple, efficient, and seamless. And there is a lot of that I can stand behind.
Along those lines, I was a little put off with his continued use of McDonald's as an example. I'm personally not a fan for many reasons. But I am smart enough to recognize the business sense and innovation that company, and Ray Kroc, had in the early days. It just took reframing that concept for me. An assembly line is not what I'm looking for, but because I love systems, I understand the value of putting a process in place to help guide or predict an outcome.
The other thing I'll say is that if you choose to read the book, he pretty much sticks to product-based businesses to illustrate his point. So, you service-based guys and gals like me will need to think a little more intuitively.
Overall, I really did find the book interesting and worth my time. I would recommend it as well. There are some steps I've already started putting in place along these lines, and plenty more to come. If anything, it'll just get you thinking differently about your little engine that could.
If you've read The E-Myth Revisited, what did you think?
What It Looks Like in Action
I also asked a few small business owners that I know, or follow online, to share how they work on their business, not just in their business. Here's what they had to say:
"You can't do everything on your own. Outsource what you can to freelancers, so you can focus on scale and the North Star of your vision." – Grant Trahant, Causeartist
“Every year on January 2, the Plywood staff takes a retreat to focus on the year ahead. We turn off our email and spend the first few days of the year focusing on the big picture." – Callie Murray, Plywood People
“For sixteen years, through North Point and Orange, I have heard ‘work on it instead of just in it.’ I get it, but it is so difficult to live it out. With everything thing that needs to get done, stopping to theorize, dream, analyze, and ask tough questions often doesn’t make the list. But I declared summer of 2017 the summer of analysis. This summer we have worked on it instead of just in it, and it has changed the direction of our division in many ways. The greatest benefit of working on it, is the peace of mind that you are working on the right things.” – Ted Lowe, MarriedPeople
“To continually improve our effectiveness, we block four hours per week for the entire team to work 'on' the business. During this time, we may work on our marketing initiatives or redesign key business processes. There are weeks when it's really hard to protect the time on our calendars. However, even without a 100% success rate on our goal, we've seen our organization's projects move forward more consistently than ever before.” – Kevin Jennings, Junction 32
“The only way I actually find time to work on my businesses, instead of just in them, is by making them a priority. Think back to high school or college dating . . . if your crush was available to hang out, it didn’t matter if you had class in two hours, or a paper due tomorrow, or a project to work on. You can bet you were hanging out with your crush! You found time to meet up with them, because it was your priority. Your business is no different. You have to trust that the work that needs to get done will get done when you take the time to make working on your business a priority, just like it did when you were younger and you survived school work and a date with your crush all in one day.” - Christina Scalera, Founder of The Contract Shop
“The thing I've had to learn as Refuge is growing from a small mom-and-pop venture to a larger-scale nonprofit is to let go! Not to let go of vision and culture, but to let go of the details. That's not a problem for me in some areas—the things I don't like to do or don't do well—but anything having to do with messaging or partying, I want to have my hands in it. I have to find people I trust and let them lead. It's freeing, but hard at first. In the end, it's so worth it, not just for your organization and your own sanity, but for the people who take those details, learn, grow, and knock it out of the park. Plus, they get the credit and satisfaction, and that's really cool.” – Kitti Murray, Refuge Coffee Co.
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I'm Kristi Porter, and I started Signify to provide writing, consulting and strategy services to nonprofits and for-profit organizations with a social mission, primarily through copywriting, marketing, and business communications. I believe that cause-focused organizations like yours are the future of business. You're proof that companies can both make money and do good. And I'm here to help you get noticed and grow. When you succeed, we all win.