Working ON your Business
Working ON your Business
Instead of IN your Business
Today’s topic is inspired by a book by Michael Gerber called the E-Myth Revisited. And it’s got a great perspective on starting a new business. What this blog post will try to do is break this multi-vision, decades-old idea and well thought out a researched book, down into a digestible blog post, and try to adapt these concepts and strategies to the custom apparel business.
What is the E-Myth?
This is the myth that most businesses are started by entrepreneurs. When in fact, they are not. Most businesses are started by people Gerber refers to as technicians – the people who enjoy doing the hands-on work. An example would be someone who does embroidery at home, they’re not dreaming of starting a multi-state/multi-national embroidery empire, but are looking to expand into a commercial business because they like doing embroidery and see the way it makes people feel when they are given something they’ve made, and they believe they can do that for a living. And it’s usually their first business. Other times they’ve worked for a larger company, and understand the machinery, and the artwork, and decide to branch out on their own.
And the biggest mistake people make when they do this is think that they’ll just be doing to embroidery, or garment print, and they’ll be successful. They assume that because they understand the work and are good at it, that they understand how to run it as a business. These are actually two completely different concepts.
What does a business need?
Besides the technician, Michael Gerber talks about two other parts or personalities that every business needs.
The entrepreneur is the vision. They have the long-term thought of the business – what it’s going to do, what it’s going to be.
The manager is the one that makes the business work. They make sure the orders get filled, the customer gets what they need.
These roles can all be filled by the same person. The entrepreneurial side envisions a new business. The managerial side figures out how to get the machinery and supplies, where it’s going to go, how to ship everything, etc. The technician side then figures out how to make the shirts, how the printer works.
And when a person is all three things they tend to have the percentages of 10% Entrepreneur, 20% Manager, and 70% Technician. And most of the time they’re forced into the managerial role because something will go wrong and they have to fix it, so the manager role is purely self-defense.
What is the ideal mix?
A good business builder will be an equal mix of all three – 33% Entrepreneur, 33% Manager, and 33% Technician.
How do you become a good business builder?
When a business is in its infancy often times its 70% technician, because you are the only person in your business. If you’re not making the shirts, you’re not going to make any money.
But eventually (ideally) your business will step out of its infancy and you won’t be able to juggle all the aspects of your business. You become so busy just taking orders and filling them, that you’re unable to grow your business. Your time and energy are finite. You can’t take on any more customers, or expand into new products.
So you have four options.
And the first one is to go small again. If the business was just meant to be a side project or a part-time thing, then this is probably your best course of action. From there, decide what is your maximum capacity? How many hours do you actually want to work in a week, and how many shirts can you produce in that time. And perhaps as a result of this, you increase your pricing. Your cost may become too high for some customers, but the ones you do keep become more profitable for you. You may also want to lower the number of events you attend, or stop marketing.
The second option Gerber refers to as “go for broke”. And this means to continue working harder and harder until you get enough money that you can make a major change. You can hire another person, get more equipment, and/or rent a larger space.
The third option is not really one that will benefit you, which is to just hang in there. This third option means that you’re working 60-70 hours a week by yourself, just making shirts. The business doesn’t grow, and you have to think, where’s the benefit to me?
The fourth option is to think of the business as a model, a system that can be replicated. You take this business and sell it as a franchise. You take your business and break it down it to steps so that someone else can replicate exactly what you’re doing. And part of this is writing out a job description for every role in the business. Ideally what you want to be able to do is hand someone a job description and instructions and say “go”, because it allows you to focus on other aspects of the business instead of training.
These job descriptions and instructions are really important for any business really, because what if you get sick, or want to take a vacation? If you’re the only one there, and you’re suddenly not there, the business stops.
The problem with most failing businesses I’ve encountered is not that their owners don’t know enough about finance, marketing, management and operations — they don’t, but those things are easy enough to learn — but that they spend their time and energy defending what they think they know. The greatest business people I’ve met are determined to get it right no matter what the cost. – Michael Gerber
This means digging your heels into your business and writing every step-down. And when you get to the aspects of your business that you don’t know too much about, taking the time to learn a little bit about them. You don’t need to be an expert at everything, but you do need to learn all these things in order to function.
Once you have all the job descriptions and instructions written down you can then go ahead and outsource with confidence. Because you know what you need to have done, so when you’re hiring a bookkeeper or accountant, for example, you know what to look for, and the questions you need to ask. And while the bookkeeper may have a few more thoughts on what your business needs to consider, you know exactly what the bookkeeper is going to be doing – the business is still in your control.
What are the steps?
- Primary aim. A personal goal that goes around your business. What do you want to do? Do you want to work from home? Do you want to have a million dollars? Do you want a certain number of employees? Do you want to only work 20 hours a week? And write it down. You need to marry the primary aim of your business with your personal goals. It will help you align your everyday activities towards your goals. If you don’t have a goal, you’ll end up somewhere else, and chances are it won’t be somewhere you want to be.
- Organizational strategy. This is all your job descriptions, all the different jobs in your business and where they fit it.
- Management strategy. What is the process involved in your business?
- People strategy. This is creating an environment and a plan. So when you go out to find the people to fill different roles you know what to look for, and they know what their responsibilities are. As well as, what are you going to promise customers, and how will those employees fill those promises?
- Marketing strategy. Focus on the customer. What does the customer want? Why does the customer want to do business with you? Who is the customer?
- Information system. How is all this tied together?
The people who are successful in business find out what their aims are and what their business is – what do they want and what does their business do. And then find a way to merge these together. So your business is your goals, and your goal is your business.
- Join us on Facebook: Custom Apparel Startups
- Listen to more podcasts: caspodcast.com
- Watch some sales and business webinars: caswebinars.com
- Learn more about Rhinestone Machines, Embroidery Machines, Direct to Garment Printing and more at http://coldesi.wpengine.com
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