E-Myth Business Blog

Why You Can't Afford to Ignore Quantification

This week's podcast is brought to you by the 2012 State of the Business Owner Report.

Today, we talk about quantification.

In order to grow your business systemically, you must have a goal in mind and a way to track your progress.

In this episode we discuss:

How quantifying your business metrics provides a foundation for growth
How to track your marketing efforts
A simple way to measure department performance in one hour a week

Why You Can't Afford to Ignore Quantification

(Download MP3)

Subscribe here.

Next Week's E-Myth Business Challenge:

"Alexandra owns A+ Tutoring based in Minneapolis. After three years of solid success, Alex has been struggling to decide whether to expand into other cities from her base in Minneapolis. She eventually chose to enter Austin, Tx., where she found a great manager.

A+ began tutoring students this month. She has “big expectations” for herself and her company, but continues to struggle. She would like to find a way to stop working 15-hour days. She wonders whether to pursue a more aggressive expansion plan within Minneapolis.

Most of all, she knows that her somewhat haphazard approach to growth isn’t sustainable and vows to begin planning in earnest. She believes finding good managers is the key. Do you agree?"

You can give us your answer below, or email us at podcast@e-myth.com. Be sure to listen next Friday to hear the answer.

The Qualification of Quantification

Quantification of any business element is always nested inside that element's qualification. Numbers by themselves don't mean anything. Only numbers in application tell a story. So, in trying to quantify elements of your business, it is critical to ask the question “why?" Why do you want to get a particular set of numbers to quantify a specific element of your business? It may be that you have never properly developed a P&L statement. In this case, the why is staring you in the face every day you wonder how your company is performing. To continue developing quantification models without a purpose that is tied back to your Strategic Objective is a dead end. What are the five or six key metrics that determine the health of your business? Are you wasting a lot of time and effort by reporting on metrics that aren't your business’s actual leverage points? Asking why is the critical qualification process required before you embark on any quantifying project.

Your Strategic Objective is the guiding light of your company – all quantification efforts are downstream of it. Your business's leverage points are the metrics that translate what your business performance is relative to your Strategic Objective. As Yogi Berra so eloquently stated: “You've got to be very careful if you don't know where you're going because you might not get there.” If you don't ask why, you won't have a link between where you are, where you want to be, and the leverage points in your business that will help you get there.

How to Set Financial Goals and Reach Them

Making money is not the sole purpose of your business. It’s about creating something of value about which you are passionate and to which you are committed.

But unless you carefully track and quantify how money is flowing through your business, your vision will never reach its full potential.

If you want your business to be successful, then you must manage it carefully and ensure that it becomes profitable, cash positive, and maintains a healthy position over time.

In order to achieve your vision, you need a plan.

The 2012 State of the Business Owner Report shows that owners who had written plans for revenue growth, and the means to track it, grew their revenue 60% faster than businesses with no written plan in 2011.

The Two Phases of Your Financial Tracking Plan

Creating a plan to track and manage your financial goals consists of two phases:

Establishing clear financial targets for your business.
Carefully tracking how your business is performing in relation to those targets.

Phase One:

In order to establish clear financial targets, you need:

Your Primary Aim (Your Personal Vision)
Your Strategic Objective (Your Business Vision)
Your Budget
Your Cash Plan

Phase Two:

In order to track your financial performance, you need:

Your Income Statement
Your Cash Flow Statement
Your Balance Sheet
Your Budget and Cash Variance Reports

How to Establish Financial Targets

The financial targets you set for your business must be based on what your business needs in order to break even, at the very least. However, you really want to aim for what you want your business to achieve in order for it to fully realize your vision.

It is essential that you have a vision for your life and get to know yourself well enough to understand how much money your business needs to earn in order to provide you with the life you want.

You need to educate yourself on the basics of business finance and work closely with financial experts, advisors, and professionals as much as possible. You don’t need to be the financial expert, but you need to be the financial leader and find experts who can help you pull your business’s financials together.

You want to establish financial targets for your business at least three to five years into the future. Financial targets should be linked to your businesses profitability, cash position, and financial health.

Once clear targets are set, the next step should be to create a budget and cash plan that breaks down your plan to get from where you are now to those targets in incremental periods. For example, to reach your target revenue goal three years from now, you need to reach a certain point after two years; and to reach that two year mark you need to be at a certain point after one year, etc. This allows you to focus on how you’re going to achieve your goals in the first year.

How to Track If You’re Achieving Your Targets

After you have targets in place and a budget and cash plan to achieve those targets, you need to carefully track whether your business is on track.

That is the purpose of financial reports, and there are only a few basic financial reports that you need in order to quantify how your business is working.

These include your Income Statement, Cash Flow Statement, Balance Sheet, and your Budget and Cash Plan Variance Reports.

It is not enough to just track sales or net profit, you need to understand and pay attention to every line item to understand more fully the controls you have over these important indicators.

Your Income Statement tracks your revenue, expenses, and your profitability. Many business owners are familiar with their Income Statement, but few actually learn how to use it as a strategic management tool.

Many business owners routinely check their bank accounts to confirm their cash balance, but few actually create a cash plan for their business and understand how to use cash to their advantage

Your Cash Flow Statement tracks the actual flow of money into and out of your business, and increases your awareness of predictable patterns.

Your Balance Sheet gives you a picture of the financial health of your business at any given moment in time. Surprisingly few business owners pay enough attention to their Balance Sheet, even though it is the one statement that can convey critical information such as the equity value of their business and how leveraged the business might be.

Nothing ever works out exactly as planned, but you still need a plan.
You need to know what the difference is between what your business is actually doing and what you planned on.

Budget and Cash Variance Reports simply show your business’s actual performance compared to what you anticipated and projected in your budget. A regular review of your Variance Report helps you fine-tune your projections, predictions, and expectations for the next budget cycle.

Some Helpful Tips

You should consult with financial experts and professionals who can advise you competently.

Confronting what you don’t know and seeking expert counseling is a sign of a mature business owner.

Good financial management software can help you ease the seeming drudgery of financial report-generation. Automate as much as possible with programs such as QuickBooks.

Seek recommendations from your accountant in order to assure alignment with the system they’re using.

To learn more about how planning and tracking is key to building a thriving business, check out the 2012 State of the Business Owner Report.

How to Create Your Marketing Message

This week's podcast is brought to you by the 2012 State of the Business Owner Report.

Today, we talk about effective messaging.

You can only begin to reach the right prospects when you know who your best customer is, and what they need to hear.

Today we discuss:

How to start creating your marketing message
The competition triangle (what it is and why you need to understand it)
E-Myth's marketing message, and why it's evolving.

How to Create Your Marketing Message

(Download MP3)

Subscribe here.

Next Week's E-Myth Business Challenge:

"Katy and Bob Patterson own an upscale restaurant in a prominent mall. After a flat period from 2008 to 2010; they embarked on a marketing campaign, which resulted in a return to growth, with a 10 per cent increase year over year in 2011.

When they sat down to plan for 2012, Katy and Bob realized they had little idea about how to quantify the results of their marketing. They had tried tracking some activities, but it proved difficult and they weren’t consistent. Bob was almost ready to give up, but Katy insisted they had to find a way to quantify their lead generation activities to best take advantage of what was working and what was not? How can they track what caused their new customers to come in?"

You can give us your answer below, or email us at podcast@e-myth.com. Be sure to listen next Friday to hear the answer.

Effective Messaging

We all get stressed out looking for that next great message, the one that will have customers lining up at the door. The key to finding it is looking for it in the right place. It’s not a marketing thing, at least not yet. There’s a primary step before that, and it starts with you.

First, ask yourself the question, “What messages am I sending out today?” If someone asked your employees why the company exists, would you like their answer? How would you answer? Do your employees feel good about the product or service your company offers? When was the last time you talked with them about their individual value and how they fit into your long-term vision? I don’t mean to be critical; it’s tough to find the time to focus on this softer side while your inbox piles up – believe me, we know.

And as hard as it is, until you change the conversation – write a new story at your company – you are communicating with your customers, and they are not getting your intended message.

People want to feel good about doing business with you, but how can they if you don’t? If you don’t truly believe the promise you’re making to your customers – deep in your bones – then you haven’t found your message yet. Invest in that moment, it’s worth it. When you find it your customers will tell you. And, for most small businesses, they’ll do all the advertising and messaging you’ll ever need.

Why Marketing Begins with the Right Message

Your business needs more sales.

Right?

While many owners want to focus their attention on sales, to start there is an exercise in futility.

You might like to think that the answer to “more sales” is simply a matter of better sales training, more seasoned sales people, or a more aggressive ad campaign, but there are many conditions to be uncovered before any of these initiatives will have an impact on sales.

Think about it.

What good is an advertising effort that draws massive amounts of attention if it doesn’t reach the right people?

You may experience a temporary bump in sales with a “shotgun” approach to advertising, but it will not be sustained if your initial engagement doesn't generate loyal, trusting customers who are touched by your message.

The Result of Great Advertising

Your Lead Generation (or advertising) System is a collection of sub-systems that works only when these two results are achieved:

It must broadcast your promise to those market segments who are your most likely potential customers.
It must compel them to take action.

That's it. The sole purpose of your Lead Generation engine is to deliver qualified leads to your door.

The practical components of your lead generation activity include selecting the most appropriate channels and matching them to specifically-tailored messages, and then managing the technical execution of the campaign, and measuring the results.

Benchmarks for Creating a Lead Generation Strategy:

Review Target Market Information
Determine the choices of channels that are most appropriate for your target markets
Develop Message Content that is in concert with your selected channels
Develop Creative Elements of the Message
Pre-test the Message
Track and Quantify the results of each message/channel combination in terms of inquiries and sales

Why You Need the Right Channels

Effective Lead Generation is equal parts art and science.

Your first step in resolving “not enough sales” is to find the sources of information on which your best customers regularly rely on.

It does you no good to invest in channels that potential customers won’t see or trust.

To generate leads –qualified leads – you need to capture and attract the attention of those who are most likely to have the interest, desire, and ability to take advantage of what you have to offer.

How to Find the Right Channels

The “science” of effective lead generation is understanding your target market enough to know what channels of communications are relevant and credible parts of their lives.

Do they live for coupons or do they consider them crass and find them embarrassing? Do they get their news from TV? Yahoo? The Wall Street Journal? Are they faithful to local AM radio or dedicated to regional public broadcasting?

You need to know.

A number of years ago, a new, small car was introduced. Given its design and cost, the target market was young adults.

The well-funded car company’s marketing department, working under a company wide strategic directive to “use cutting edge technology,” chose text messaging as an appropriate lead generation channel.

At the time, texting was the cool means of communication among teens and young adults.

I polled my clients as to whether they’d heard of the new car.

The results of my informal study were fairly conclusive. A few had noticed it on the road, but the only ones who actually knew anything about it either regularly texted or were close to a young adult who did.

This avenue was deliberate and achieved a specific result.

Why You Need the Right Message

Once you’ve identified the most reliable channels, your next task is to pair them with irresistible messages.

Your messages must speak to your probable customers’ needs and desires in ways that will touch them.

Sending irresistible messages through channels that are outside your customers’ sphere is a recipe for failure.

So is finding the perfect channel and flooding it with uninspiring messages.

An effective message not only broadcasts the promise of what your business will deliver, but does so in a way that compels your potential customers in your target market to take action.

It’s important to note that the lead generation channels you use shape your message.

Some of the constraints are obvious.

Radio does not accommodate visual images, and print channels don’t accommodate sound. Your beautiful tri-fold brochure with large amounts of text may be perfect to convey your message to the leisure reader at her kitchen table, but might frustrate her need for instant gratification if it’s reflected on your website. The impact of an image on a billboard is not going to be the same when viewed on an iPhone.

How to Create an Effective Message

Words, images and sensory elements are the basic ingredients of your message. Assembling them to form an integrated, compelling and magnetic message is the art that makes the creation of effective messaging more than a science.

Online resources, like copyblogger.com’s internet marketing and copywriting courses, can help you improve your skills in this area. They, and any other marketing professionals, will tell you that your message should be crafted to get specific results.

An effective lead generation message must do a number of things:

Attract attention
Create the right impression
Provide a convenient way for the customer to respond (a “call to action”)
As much as possible, pre-qualify your leads

This process takes time to perfect, so start with a few of your best attempts when reaching out to a group of prospects. Then, test which efforts work best, use them, and continue to learn more about creating the most effective message.

Recruiting and Hiring

This week's podcast is brought to you by the 2012 State of the Business Owner Report.

Today, we talk about recruiting and hiring.

It is important to know why you're hiring and how to choose the person who best fits your company culture.

We discuss:

How to define your company culture
Powerful ways to find the right employees
The #1 tool you must have before starting the hiring process

Recruiting and Hiring

(Download MP3)

Subscribe here.

Next Week's E-Myth Business Challenge:

"Jack and Barbara own a successful independent computer retail store. As former Mac technical specialists and consultants they started out as independent contractors working for themselves and grew into a million dollar business with two locations offering retail products, consulting, service and repair, and training and education. Business was great until the debut of corporate Apple stores. How can they compete and continue to grow?"

You can give us your answer below, or email us at podcast@e-myth.com. Be sure to listen next Friday to hear the answer.

A Most Important Decision

Recruiting and hiring are pivotal moments when your business is truly relational. You have the opportunity to communicate your vision to the potential candidates that help you build this vision into a reality. The more clear you are on your vision and the results you want from the position, the easier it is to recognize the right candidates and make the perfect hire.

Your recruiting message must attract the ideal candidate – some of your best information can come from your current employees. What brought them to your company? Why have they stayed? The more data you can collect from your employees, the better your ability to find the right person and the more likely you are to find exactly who you want for each position.

The single greatest factor in achieving your desired results is hiring great people, and most importantly, the ones who are the best fit for your company. Company culture and values compatibility should be assessed as strongly as one’s skillset. Too often, businesses only focus on skill-level and never consider the full scope of all that a candidate brings to the workplace. Unengaged employees create a disconnected and disjointed work environment, resulting in low productivity; while employees who are inspired by your vision, culture and mission are highly engaged and extremely productive.

Research shows that most hiring decisions are made in the first seven seconds. Your challenge is to balance the impact of your emotions regarding the hiring decision with more objective, rational perspectives.

Think through ‘who’ you want to hire before interviewing, and ask questions that elicit the evidence that tells you whether they fit the profile or not. And remember, your most important interviewing technique is your ability to listen. You should be doing no more than twenty percent of the talking during an interview.

Five Steps for On-Boarding a New Employee

Congratulations! You’ve hired a new employee.

Now that the hard part is over you can get back to business, right?

Not quite yet.

Getting your new team member “on-board” and successfully integrated is a process in itself. And it doesn’t happen on its own.

The Wrong Approach

Too many business owners and managers believe that people will naturally find their own way through the policies and cultural distinctions that make up their business.

Beyond the anxiety of the actual recruiting and hiring process, the most nerve-wracking experience for a new employee is their first day on the job.

Trying to make a good impression while having to digest overwhelming amounts of new information can be daunting.

The term “on-boarding” is often used to describe the intentional and structured approach for ensuring that new employees get to know you, your company, the culture, and…well, where everything is! Like the restroom or the photocopier.

These five simple steps can minimize the stress for your new hire, reduce the time needed to get them “up to speed,” and provide a high level of comfort and confidence – preparing your new employee for success.

1. Have a Plan

Just as the first impression you make on a new customer informs their long-term expectations and behavior, your new employee’s orientation communicates your culture and management style.

Every aspect of the new employee orientation process should be planned and documented; and it should begin before that first day on the job.

Nothing can be more disconcerting for a new employee than to be bombarded with multiple forms to sign, manuals to read, and then be shuffled off to an empty office or cubicle for the remainder of the morning.

Paperwork is going to be required, and an agile organization could easily provide many of the necessary legal forms and an employee handbook ahead of time. Required reading from your company website may provide a wealth of information for a new hire. Not only can your new employee show up the first day already familiar with your Strategic Objective, vision and mission statements, and an organizational chart, but employee testimonials and short presentations by key leaders can help set the stage on or even before that critical first day. (Nobody gets through the door here without having read The E-Myth Revisited).

2. Manage the First Day

Ideally, everyone will have been apprised of the new arrival, the employee’s computer will be set up, instructions for logging in, accessing programs, using the phone system, etc. will be ready.

Allow for some “free” time in the day and arrange for a “buddy system” so that the employee is not left feeling lost or uncertain as to what to do next.

Make sure the new employee knows ahead of time what to bring, where to park, who to ask for when they arrive, etc. A tour of the facilities is essential and all of the key people they will interact with should be introduced during the day.

3. Get to Know That Person

Through all your best efforts to create a smooth and seamless transition from new hire to team member, keep in mind that every employee is different and requires a slightly different approach and level of attention.

Many managers and owners ply their new employees with information and instructions, but fail to listen to them and really get to know the person they have just brought on board. Learning more about the individual’s personal goals, their perceived role in the business, and their working (and learning) style can set the stage for creating a winning career path.

Plan some type of informal activity to allow a more relaxed interaction with other employees. Many businesses have developed new employee “rituals” for introducing everyone and creating the beginnings of a team relationship. Facilitating these relationships from the beginning can be crucial for fostering the team environment you seek to maintain in your company culture.

4. Go the Distance

How long does the on-boarding process take? That depends on your company, the position, and the employee. It is safe to say that the process of becoming a part of your team, your culture doesn’t end after the first week. Your plan should extend to include the first two to three months of the new employee’s tenure in your company.

Your on-boarding process should include short and long-term benchmarks and expectations. Your new employee should be able to sit down with his or her manager and be told: “This is what you should know or be able to do on your own in the first week, after three weeks, within the month, and after three months.”

Having these expectations expressed in writing drives and informs your training agenda, supports your monitoring of their progress, and gives that new person a valuable way to chart their own progress – marking off small, progressive victories in acquiring new skills and knowledge as the time goes by and not having to worry that they’re not meeting expectations; the expectations are clearly outlined!

5. Check in With Them

As the leader of a company that wants to demonstrate the value of innovation and continual improvement, always be on the lookout for insights and feedback that allow you to refine and improve any of your processes or systems, from recruiting, to hiring, to orientation, to training.

A new employee is not coming to you from a vacuum and their previous experience and knowledge make them perfect “test kitchens” for your existing systems and procedures. If there are holes in your systems (only natural, because they’d been developed by experienced employees who made assumptions about what a person would know), the new employee, not subject to those assumptions, will be the best person to expose them.

Make it clear to your new employee that while you are expecting them to use your existing systems, their feedback about unclear sections or gaps they discover are especially valuable and anticipated.

Set the Stage for a Star

Preparation is one of the hallmarks of effective leadership.

Setting the stage for the future success of any employee is crucial, and it begins at the beginning.

The entire process of finding and hiring a new employee can be seen as a type of relay where the baton is passed at critical points along the course. The final pass occurs when that new employee finally accepts your offer.

If you are actively recruiting, or plan to hire soon, consider now how prepared you are to successfully bring someone on-board.

Customer Service Starts Here

This week's podcast is brought to you by the 2012 State of the Business Owner Report.

Today, we talk about meeting customer needs.

It is important for every business owner to know the pivotal moment to begin rolling out the red carpet for customers.

We discuss:

The most important part of your sales process
Long held myths about customer service
Needs conversion vs. lead conversion

Customer Service Starts Here

(Download MP3)

Subscribe here.

Next Week's E-Myth Business Challenge:

"John and his business partner, Kimberly, started up a new online business in 2011. They have been operating the business themselves, supported by a team of freelance programmers. Last fall they went out to a group of venture capitalists and received funding to develop and grow the business. As they build out their business plan, the question of how to approach recruiting and hiring 20 new people over the next 18 months has them concerned. How do they do it? What do they need to think about first?"

You can give us your answer below, or email us at podcast@e-myth.com. Be sure to listen next Friday to hear the answer.

Meeting Your Customers' Needs

We don’t invent the needs of our customers. Those needs exist long before they hear about our product! Our work is to understand and speak to those needs. From the perspective of Lead Conversion, this means a lot of listening.

One need that almost all potential customers have is to be heard and spoken to regarding what they have said they need and want. Most salespeople are able to speak volumes about their product, as well they should. But how do we get the prospect to feel this same enthusiasm? First, ask a lot of questions, second listen to your prospects answers, then ask more questions. Once you truly understand your prospect’s need, you will be able to speak intelligently to that need and direct your knowledge of your product to the right place. They will feel resonance with your product when they see how it relates to their life and their needs.

A sales script is a key tool to help salespeople stayed disciplined to the process of speaking to these needs. If the sales script is written well, it will elicit important information from the prospect about their particular need and create space for the emotional experience they must have if they are going to come to a purchasing decision.

Perfecting Your Customer Experience

You have a business. It’s humming. Your employees are laboring away diligently.

Your revenue and profits have been slowly growing. Everything seems to be fine; but you, the owner of this business, have a queasy feeling.

Yes, your customers keep finding you and you keep satisfying them, it seems; yet you don’t really know why it’s all working.

Making unintentional aspects of your business intentional should be at the heart of your business development process.

Do You Know What Your Customers Want?

My client, Ted, has a retail store that sells a variety of cookware, gifts and sundries that are quite unique yet somewhat unclassifiable.

One of the first questions I ever asked him was: “Do you know what your customers want?”

“They want gifts,” Ted replied. “Unique, different, something out of the ordinary.”

And then he added. “Or they want to give themselves a gift.”

“Okay,” I replied. “So how do you deliver the goods?”

“My buyer and I spend voluminous amounts of time at shows and online, seeking out merchandise that we feel our customers will like and buy.”

“So what is your brand promise then?”

“Brand promise?” Ted echoed in a deflated tone. “Remind me again what you mean by that?”

“Your brand promise is the way you satisfy your customers’ relevant expectations.”

“We have unique gifts and cookware from all over the world that will dazzle the eye and please the senses and make you feel like a million bucks because you gave the best gift in the world,” Ted said giddily.

He seemed genuinely pleased with his response, and I sensed he was on the right track, but I also knew from experience that he hadn’t truly made the effort to verify the core ideas of his promise.

**Do You Know What Your Customers Really Want?**

“How do you know that your customers want, need and desire unique gifts and cookware?” I asked quietly.

“They come into the store; they come repeatedly. We have a core group of shoppers. Some come from far away. Some have been with us for years. What else could they want or need? Great cookware from all over the world, amazing gifts, unique treasures to give their friends and family. I’d say if we know anything about Amazing Treasures it’s giving our customers what they desire.”

“But how do you know with absolute certainty what your customers need and desire?” I asked, unwilling to let Ted settle for what seemed true, but could still be based on assumptions. “Or, to consider it another way, why do they schlepp into Amazing Treasures, and not just buy those same items online?”

Ted didn’t respond right away, but after a while I heard his familiar sigh, as if giving in, and he finally said, "I don’t know for certain. And I’ve been around E-Myth long enough to realize I need to verify my thoughts and observations right?”

“Right!”

After further discussion, Ted decided to create a brief survey and distribute it to those customers that he and his employees recognized as repeat visitors.

The Real Reason Someone Buys From You

It turned out he was right that they sought out Amazing Treasures for the uniqueness of the gifts, but he also learned that even more valuable to them was the shopping experience itself. It turned out they liked the way they were greeted and treated by the staff, the way coffee and tea were always available and the soft music playing in the background.

Through one simple survey, with good, open-ended questions, Ted came to appreciate that his customers certainly wanted unique treasures, but even more relevant to their expectations was the entire intimate and connective experience of shopping there as opposed to the big box stores, chains, strip mall stores, or online.

Step One in perfecting your customer experience is to find out what your customers’ deepest needs are. A simple survey furthered Ted’s understanding. You can do the same.

Step Two is to understand how you can satisfy those expectations better than the competition, and in a way that is uniquely differentiated. This understanding is the foundation for your brand promise.

Step Three is integrating the promise into the client experience.

Once Ted understood the relevant expectations of his customers and how he could uniquely satisfy them, he went to work innovating the experience even more, identifying the critical touch points between his employees and customers, and other carefully orchestrated steps in the experience to make them feel as if they were being cared for completely.

And his business grew as customers spread the word about the superlative shopping experience and the imaginative cookware and gifts.

Once you clearly understand your customer’s relevant expectations and you consistently articulate how you will uniquely satisfy them through your brand promise, these three steps alone will put you far ahead of most small business owners. But don’t stop there; keep going...

Step Four is exceeding your customers’ needs.

In Ted’s case, he developed a variety of games, special events, surprise promotions and a loyalty program that went beyond what he had discovered his customers wanted. But these surprises thrilled them and increased his business. And he realized that embedded in his brand promise was the commitment to continually reinforce not only the uniqueness of his stock, but the uniqueness of the shopping experience.

So, to summarize, the four steps to satisfying your customers are:

Uncover their relevant expectations.
Create your brand promise to uniquely satisfy those expectations.
Formulate your client fulfillment so that they are satisfied every time.
Discover ways to create even more value, surprises, and the wow factor to continually exceed their expectations.

As a coach, I love supporting my clients in discovering their unique brand promise. In the business development process there is very little that is more powerful than completely understanding this and building your business upon it.

Take our Creating Brand Loyalty seminar and begin to uncover the hidden power in your business’ true connection to your customers.

Think Like a Manager

In this podcast, we talk about why it is necessary for every business owner to think like a Manager.

When you understand the importance of managing resources, and how to do it, you can reach your business vision.

We'll talk about about:

The problem with "job descriptions"
Why most owners have issues with their managers
How to create a positive company culture by thinking like a good Manager

Think Like a Manager

(Download MP3)

Subscribe here.

Next Week's E-Myth Business Challenge, sponsored by the 2012 State of the Business Owner Report

"Melissa Parker is the owner of Couture Designs, a wedding and formal dress design and manufacturing business. Ms. Parker says Couture Designs' biggest challenge is production and fulfillment. They are dealing with decreased production capacity in China, where the company manufactures most of its dresses, and keeping up with demand - particularly on the prom side of the business - which is growing faster than Ms. Parker would like. Unlike the bridal side, the prom business requires Couture Designs to maintain inventory. While brides order dresses and expect to wait three months for them, prom dress shoppers want their dresses immediately. Because most of Couture Designs small retail clients can’t afford to invest in numerous styles and instead buy just one prom dress style each season, Ms. Parker must anticipate which designs will sell best. She recently chose the 18 prom dresses Couture Designs will produce and hopes she made the right decisions. How can she meet customer needs while balancing her production and fulfillment costs? What should drive her decision making?"

You can give us your answer below, or email us at podcast@e-myth.com. Be sure to listen next Friday to hear the answer.

Management and Responsibility

Managing a business requires that you are comfortable holding responsibility and reporting to an authority – the two always go together. Even if you are your own boss, you are still responsible to an authority: your bank, your shareholders, your integrity. Frequently, individuals start businesses because they can’t stand reporting to anyone else – they think they will be free of authorities that make the decisions and have control. This is an illusion.

Can you tell me the last time that you operated outside of authority, and were truly in control? Maybe you thought that starting a business would mean you could get out from under a lousy boss and be free. Beyond your boss, or your local police officer, there is still the nation you choose to live within that has laws and consequences. Even if you went to Antarctica, where there is almost zero government, you’re still under the influence of gravity and temperature. There is no place and no business that exists without authority.

Ultimately, authority enables and requires you to hold responsibility. To the police officer, you have the responsibility to avoid criminal activities. In Antarctica, you have the responsibility to wear protective clothing against the weather.

So when you find that you are trying to grow your business without creating limits or boundaries, and failing, ask yourself this question: “How am I trying to avoid real responsibility?” Responsibility is the freedom you wanted to create through your business – the choice to manage within that responsibility is the mark of a successful owner.

How to Be an Entrepreneur

A few weeks back, an engaging and lovely video about the E-Myth approach to business was released on YouTube by Epipheo. It’s called How to Be an Entrepreneur.

The video was inspired by the principles in our book, The E-Myth Revisited, but there was one crucial point misrepresented:

There is a better way of looking at the three personalities of the Technician, Manager, and Entrepreneur.

The E-Myth Approach

The first thing to realize is that every person has all three personality types within themselves.

Most have a propensity to lean one way, but no one personality is better than another.

Each of the personalities is necessary at different times. The E-Myth approach says that you must find the right balance between all three.

A common misconception is that the Entrepreneur is the highest form of thinking and that the Technician is the lowest.

This is not the case.

There is a time to think like an Entrepreneur, a time to think like a Manager, and a time to think like a Technician.

The book says that most businesses are started by Technicians who go into business for themselves … and the results can be disastrous if they stay in Technician mode.

At the end of the video is a suggestion that partnering with others is an effective way to “balance the Technician/Manager/Entrepreneur personalities.”

Often, partnerships are formed by entrepreneurs with complementary skill sets – such as software developer and graphic designer, or business development lead and production manager. But complementary skills are different from complementary weaknesses.

Partnerships should not be rushed into or created just to fill holes.

Wouldn’t it be better to understand how the Entrepreneur, Manager and Technician personalities can be developed within you, so that you, the business owner, can lead your enterprise, manage employees and satisfy customers?

Sure, the day may come when you want to partner or bring in managers or even hire a CEO to lead your successful company; but until then you’d be better served by owning your responsibility and developing yourself as a leader.

**How to be an Effective Entrepreneur**

The weakest area for many Technicians turned Entrepreneur is the Manager. Often, technicians leap to entrepreneurial pursuits quite easily.

The ability to dream, to vision, to imagine a better way is within anyone’s reach, and most technicians who take the time and put in the energy will do this.

But when the vision starts to take shape in reality, managing its execution requires a Manager’s effort, understanding, determination and practice.

Are you a Technician turned business owner? You’ve probably wondered if this pursuit could be easier with a partner – and we encourage you to grapple with your own strengths and weaknesses to determine if you have the capacity to become an entrepreneurial manager before you turn to someone else to abdicate your authority to.

Once you see that you have the ability to think like a Manager, as most of us do, then it’s time to learn a deeper understanding of the managerial functions to begin changing how you do business.

The Importance of Each Personality

At E-Myth we believe that a business owner must first develop themselves in all three aspects: Entrepreneur, Manager and Technician.

By understanding the relevance and importance of each personality, you can put systems and processes in place that support each function. These will provide the structural foundation for your business.

Click here to read more about E-Myth’s approach to business, or subscribe to our newsletters to receive valuable tips each week.