Originally posted – Jul 26, 2013
Many business books talk about how entrepreneurs often find themselves caught up in the day-to-day struggle for survival, putting out fires here and there just to stay in business.
He (the entrepreneur) didn’t realize the enormous number of decisions he would be making every day, many or most of them in areas unrelated to the actual product or service being provided. All of a sudden that plumber who went into business for himself is having to learn how to keep the books. He needs help, and now he’s dealing with personnel issues. The roof leaks in his shop. He’s trying to figure out the best way to market his business. He has to figure out how to accept credit cards. He needs to get a federal tax ID. He’s trying to get a loan to finance his new location after his business starts to take off. Does he keep it as a sole proprietorship, an LLC or an S Corporation? What about insurance?
And he’s still trying to do most of the plumbing himself!
Well, guess what? That’s the way most of us do it. Unless you’re some kind of genius who can simply read about stuff and then do it right the first time, you’re going to have a learning curve. Besides, you can read for a year and never hear about some of the stuff that rears its ugly head after you open the doors.
But the point is: you did it! Now what are you going to do with it?
I didn’t “buy my job.” I bought my freedom!
I personally dislike it when I hear someone say, “He didn’t start a business; he bought himself a job.” I dislike it because it sounds condescending, like somehow there is dishonor in actually serving people in your business, instead of only “working on your business and not in your business.” Like somehow you were supposed to know all this stuff before you took the plunge and decided to go into business for yourself. But, really, there’s no better way to find out how to run a business than just getting in there and doing it.
I was that guy. I opened my first laundromat in 2005, building from the ground up with no previous experience in the laundry business. Please don’t raise your eyebrows at me. And, yes, the learning curve was very steep. I had done an awful lot of research, enough due diligence to choke an MBA, but even when you think you have identified the best practices in the industry and try to implement them, you just really don’t know until you open your doors and try them out to see if they work. Some do. Some don’t.
The reality of the situation is that you do what you have to do to survive, and this can often mean you do the work! But the good news is that now you own the business! It’s you who will reap the rewards, not that idiot you used to work for. (Oh, wait a second. I was the one working for the idiot. You probably liked your boss.)
And it means freedom. In fact, when friends or customers ask me how I like running my own business, my favorite response is: “Well, I have very little free time, but I have a lot of freedom.” The lack of free time, especially in those early days, is because of the effort involved in finding what works and what doesn’t.
So, after a lot of trial and error, you’ve come up with the systems and processes that seem to be most effective. You’ve got it going on. Your laundromat is a success. You’re making a pretty good living. Your business has a good reputation, and it looks like you could do this for many, many years.
But you’re still doing an awful lot of the work yourself. Nothing wrong with that. We are at our best when we are serving our fellow man for the right reasons. Fortunately, in a capitalist society, our fellow man rewards us with green certificates of appreciation that have pictures of presidents on them when we have served them well. (I stole… uh… borrowed that from Rabbi Daniel Lapin’s book, “Thou Shall Prosper.” Great book.)
But again the question: what are you going to do with it? Could you better serve more people if you expand to two locations? Or three, or more? How do you do that?
Business consultant Michael Gerber has an interesting book with a clunky title, “The E-Myth Revisited.” (It’s an update to “The E-Myth,” written a number of years ago. The “E” stands for entrepreneur. And he really needs to pay me for explaining all of this.) Gerber’s main point is that most small businesses fail, while most franchises succeed. He notes that most people getting into business are like the plumber described at the beginning of this article. Only instead of figuring it out, they wind up going out of business because of a “crisis of vision that creates an inevitable cloud of misdirected activity.” That is to say, they are in over their heads.
But, most franchises succeed. The main reason, he reasons, is that the company selling the franchise already has it figured out. They have a written, proven guide to the systems and processes needed to succeed. The “secrets” have been revealed. It’s right there in black and white – the exact steps you need to take to make your business become a Subway, a McDonald’s, a Jani-King or a Jiffy Lube.
Gerber writes that the best way to help your business succeed is to treat it as a franchise prototype, even if franchising is not what you’re actually going to do. Formalize the systems, processes and training materials you use in your business. By turning those daily tasks into systems, putting it in writing, formally making your wishes known on how you want stuff done, you are setting your employees up for success. No longer must you rely solely on the talent of a star performer to make sure your business is a success, sometimes referred to as “delegation by abdication.” You’re better able to train those employees, who in turn are better able to deliver the type of service that will help your business grow. They no longer have to read your mind about your expectations for their performance. The system is there, the answers are there, and when an employee is unsure of how to handle a situation or task, it’s there in black and white. Plus, it also means you no longer have to be the trainer. Before, you were the only one who knew what you wanted. Now the processes are written down, so you have the freedom to delegate the training to another person.
And that, I believe, is one of the key ingredients in making your business scalable. A one-store owner may be able to get by with less formalizing of those procedures, particularly if the owner is very hands-on – and, again, there’s certainly nothing wrong with that. Plus, a new business owner is likely spending a lot of time just figuring out what works. No point in formalizing until you know what you’re doing!
But, for anyone who has the ambition of multi-store ownership, standardizing and formalizing the procedures is an absolute must.
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