For those of you trying to build a scalable business that haven't heard of the book E-Myth Revisited by Michael E-Gerber I suggest you pick it up.
The E-Myth is one of the best books I have ever read on the topic of how to scale a business from an operational standpoint. So many Entrepreneurs I know just want to focus on vision and strategy and come up short when it comes down to the actual operations of the business. This book can help with that.
This post is on the topics I have learned from the e-myth and how I am applying them in my software as a service business, [TownSqua.re](http://townsqua.re?ref=shiporgetoffthepot.com].
Entrepreneur, Manager, Technician:
There are a lot of ways to categorize your roll in an organization. One of the main ways the E-Myth breaks down the people is into 3 categories:
The person with the vision that sees opportunity, and that certain kinda crazy that motivates them to pursue the opportunity.
Technicians are the ones actually doing the work required to produce the final product. This is the chef, the surgeon, the programmer or the artist.
Once the entrepreneur sees the value and starts to pursue it they will need a technician to build the product that the entrepreneur will be selling.
Since most businesses have many processes and most products require more then one technician to build the manager is the one that ties them all together and ensures they work together smoothly.
My Personal Struggle:
You might be asking "What if the entrepreneur can build the product themselves?". Well then they are wearing multiple hats and stuck in the predicament I all too often find myself in.
I have made a name for myself as a adept technician in the field of building web applications. I also frequently play the role of the entrepreneur, seeing a need and trying to build a business to fill it. The problem is that most of my solutions require a technician of my skill set. This causes me to end up being the technician doing the work. If I am working in the business building what we sell I cannot be working on growing the business.
My current personal mission is to remove myself from being part of the process so I can instead work on improving the process and expanding the business. Easier said then done.
When it comes down to hiring you basically have two options:
Option 1: Hire great technicians:
You can go find a hand full of great technicians and put them in a room then hope that they produce a great product but lets face it thats not how it works. Hiring great technicians may sound great but it comes with the following problems:
Tough To Find:
High level technicians are tough to find. I don't know what it is like in your industries but finding good NodeJS or MEAN Stack stack developer right now is like searching for a needle in a haystack.
Because of the scarcity of certain types of high level technicians and the laws of supply and demand hiring these people is expensive. If you are a small business owner like me chances are you don't have a ton of cash to burn on high level hires.
They have their own way of doing things:
Typically each technician has their own way of doing things. This means that they don't always work well with other technicians of the same type.
Imagine you have 3 head chefs in the kitchen and each one wants to make their own dish their own way. Absolutely no consistency between the 3 and even worse no consistency in the customer experience.
High level technical skills do not equal hard worker/good character:
You might find a person with the technical skills you need but does that mean that they are honest? Hard working? A culture fit? If you hire on skill alone and none of the other factors then you are taking a big risk.
Tougher to replace?
Some day you will walk into your office and the technicians resignation will be on your desk. It happens, a rival company poches your talent, or they up and decide its time to move on. What do you do then? Begin the search for another great technician and hope the customers understand the delay as their orders pile up.
Option 2: Hiring good technicians and make them great:
The other option is to find good hard working people with the minimum amount of knowledge that is required to get the job done. Then train them in the process you create to provide a consistent quality product or service to your customers.
You can hire motivated people with good character and raise their technical level:
By not hiring on skill alone you can find great culture fits with a solid work ethic that you can trust. Then train them up to fulfill the tasks required.
Your team will work well together:
If you are the one doing the training you can design the process that you train them for. You can design processes that allow one technician to easily work with the others. Think of Henry Ford's Assembly Line. Each technician on the line worked seamlessly to prepare the product for the next step in the line.
Since you aren't looking for an extremely high skill level in a particular area there are a greater number of job applicants that can fill position increasing the market supply of talent and their fore decreasing the expense to you, the employer.
You become change resistant:
Due to the decrease in cost you can hire more technicians and have some redundancy among your team. This way if someone 'gets hit by a bus' then you can move another technician into their place so there is no disruption in production as you begin to search for a new hire.
How to actually do this?
The key is to build processes and systems that raise the level of your technician and allow your managers to supervise the technicians as they produce your product or service.
The key is to make a "turn key", idiot proof system that is NOT dependant on you, nor any one person, to function.
I mean step by step instructions, simple checklists, that your technicians can use to fulfill their duties. Then the managers you can use to coordinate production between your technicians and ensure a quality end result.
This is how big businesses scale.
_On a related note this is how big businesses fail if they go too far in on either side of the balance. I'll save you my rant on that for now. For more info check out my book.
The exception to the rule:
'Only the Sith deal in absolutes' ~Obi-Wan Kenobi
There are exceptions to every rule. Some of you might be asking "But Matt you are a 'high level' technician, what if I the entrepreneur am not do not have a depth of knowledge required to produce the product I want to sell? Don't I need to hire high level technicians then?".
Not exactly, first remember that you get to chose the business you create. I would make sure it is something you fully understand. If not you may want to reconsider jumping into it.
Make sure the numbers add up:
If you cannot easily train technicians then I am not sure it is a cost effective business. If the overhead cost is greater than the revenue you get from selling your product or service then obviously it is not a sustainable business and I don't recommend you get into it.
What overhead costs am I talking about? The cost of recruiting hiring high level technicians. Keep in mind that you will probably need a couple of high level technicians to ensure that if one leaves the production line doesn't come grinding to a halt so that ups the cost even more.
Hire a teacher not a technician:
Perhaps you are a salesperson and you see a bright future in widgets(fake example), how do you start a business manufacturing widgets?
You might need to hire a high level technician but not to build your product. Instead to build your process. The technician you hire defines how something is to be built then train 2 more entry level hires to build it.
If you are going to do this then you will need to hire a technician that is also a teacher. If the technician wants to keep their secret methods to themselves then they are not the technician for the job.
When the technician is done drafting our manuals, training materials and getting your first couple of entry level hires moving then if they decide its time to move on or otherwise 'get hit by a bus' then your business can move on. Your entry level technicians will become more proficient as they continue to produce your product. While they are improving you or the managers you hire can use the training materials to train up more hires and increase production capacity.
Remember you chose what you sell, just because the restaurant down the street is producing the best burger on the planet doesn't mean you need to as well. McDonald's never made the best burger, but they do offer a 'fast' meal and a consistent customer experience.
- Play to your strengths
- Look for gaps in the market
- Be unique, but be consistently unique
I actually split this post into two parts. The second part is going to be on how the E-Myth can be applied to web dev shops and Software as a Service businesses. Look for that soon.
For now don't let yourself get buried inside your business. Allow others to help you build your business and set them up for success by giving them the processes they need to do their job well. You don't have to be the one building the product, hell in some cases you might not even be the guy building the process, but you do need to be the one working on your business not in your business if you want it to scale.