Throughout the years several books have made an impact on how I think about running our business, but I am sure I have not referenced any as much as Michael Gerber’s E-myth Revisited: Why Most Small Businesses Don’t Work and What to do about it.
According to Gerber, “The E-Myth, or entrepreneurial myth, is a fundamental misunderstanding in business. It’s the notion that skillful technical work and a good idea form a sufficient basis for business success.”
The author opens the book by describing two professionals: one, a pie maker and the other, an auto mechanic. Both are very confident in their skills and have decided they should open a business. The pie maker knows their pies taste better than any they can buy in the area and the skilled mechanic knows they will run an auto shop better than their current boss.
Unfortunately, their road to failure begins almost immediately and this is where Gerber steps in. I’m going to cut to the chase and share the summary version of this initial lesson with you – when we master a technical skill, we are a technician. This does not automatically make us entrepreneurs or business owners. We have to be able to work ON the business, not just IN the business.
Think about this for our own hardware industry. Master carpenters or plumbers might be first in their fields when it comes to cutting wood or changing fittings, but that doesn’t mean they have a clue about the universal components of running a business.
I call these components the three P’s – People, Product, and Profit. I’ve heard the three P’s categorised differently by various authors and experts but I like to think of them in their simplest form.
The People
“I bet you think this business would be easier without having to deal with employees and guests”. A teammate once said that to me and we all got a good chuckle out of it. But if we want to run a business, we have to be able to professionally take care of the human aspect – the teammates who serve our customers and the customers themselves. So, while humorous, the comment certainly holds a bit of truth.
The carpenter is confident in their ability to build beautiful furniture all day long but if they want to sell it, they will have to deal with people along the way. They will need helpers in their shop, or a marketing plan. They will have to explain how their product works and should be cared for over its lifetime.
Having employees means understanding Human Resources. That means hiring, training and counselling. It also means understanding, documenting, and following national regulations regarding employee treatment, that requires consulting a Human Resource advisor when developing a handbook.
Fortunately, customers don’t require handbooks or HR advisors, but they do come with their own set of needs. For example, documenting guidelines for how to treat customers and skillfully communicating those expectations to the team will go a long way in ensuring smooth service. Document the entire customer experience from start to finish. Include such processes as answering the phone and handling special requests.
Have you heard the adage “Common sense is not that common”? This is a reminder that we need structure and standards. It would be reassuring if we knew every customer/guest would be treated the best way every time but that’s not realistic without some guidance. Over the years our company has carefully honed our employee handbook, written detailed “how to” manuals regarding service, and trained to the standards we expect rather than leaving it up to common sense.
The carpenter and plumber might be great with their products, but PEOPLE is the P-word needed to excel in this aspect of business ownership.
The Product
“If you understand one product, you understand them all” When I opened my first hardware store in 2003 I did so because of need. My community had become downtrodden and sites were becoming derelict for decades but was showing signs of revival and I wanted to be a part of that renewal. Everyone I spoke to mentioned the need for a community hardware store – a place where we could buy paint and plants, ironmongery and floor stain. Beautiful old Victorian homes were being brought back to life and I could help, one bag of screws at a time.
At that phase in my life, I might have fallen victim to the pie maker and mechanics mentality. My desire to fill a need could have made me a technician, if I didn’t think more holistically about building a business with products my neighbours needed.
But this is where hardware store owners really shine as business owners. The diversification of our product and service mix means we are constantly learning how to market and sell new things. Is it too bold of a statement to say, we could also sell books or cars or insurance with this mindset? I don’t think so.
Knowing our products and leaning into diversification proves our creativity and highlights our adaptability. Bottom line, we can sell darn near everything. We’ve got product down pat.
The Profit
“We want a super organisation, not super humans.” My CFO made this exclamation one day in a leadership meeting when we were talking about how to improve our operations. His point was that we can’t rely on one or two exceptional individuals to make things work but rather our focus should be uplifting the entire team.
In my own business growth, the finance department was my tripping point. I am not proficient in, comfortable with or interested in numbers. It took me a long time to be comfortable making those admissions but as soon as I did, I freed myself to find someone who was.
Just because Gerber says we should understand each aspect of running a business, doesn’t mean we must do each task! Knowing when to ask questions, consult an outside resource or hire an expert are equally important. For us to scale, our business needed an inside expert to build a finance department that met regulatory requirements and ensured we were profitable, spending and calculating like the world class company we wanted to be. Having that person on board freed up my time for business components that are more aligned with my skillset.
One final note on this topic: we could probably argue all day about which role is the most vital when building a business, but that same CFO likes to remind me that without a sound financial footing, none of the other roles can exist for long. This is the E-myth simplified to one sentence.
A Key Takeaway
How will you lead? What are your strengths? I would argue that if you can understand People, Product and Profits in one business, you can start or run any business. To be honest, Gerber’s book strongly resonated with me because people often ask me how I compete in a maledominated field. Gerber made me believe that I could run a daycare center, a bookstore or a hardware store if I mastered the appropriate skillsets.
Step back and take a look the big picture. That is exactly where we belong as business owners and leaders. Our role is to be able to see, manoeuvre through, and understand all the parts, not get stuck in the weeds. To work ON the business, not IN the business.
Sometime around 2016 one of my teammates came to me and said, “You know Gina, this place is known
as `Recovery Hardware’ in the community”. That little phrase jumpstarted a book by the same name that tells so many beautiful stories of the people that helped grow our business. If you’d like to read more about them, you can order the book Recovery Hardware by Gina Schaefer from Waterstones.
