2005 Winter/Spring Volume No. 5
Working ON Not IN Your Business
In 1987, Michael Gerber wrote a groundbreaking, best-selling business book named, The E Myth: Why Most Businesses Don’t Work and What to Do About It, – ”E” standing for Entrepreneur. In it, he talks about the hidden secret to becoming a wealthy and successful entrepreneur.
Putting it simply, the secret is to work on your business, not in it.
That means spending your days working to make the people who work for you more independent and developing a management system that helps your employees run the business themselves. You gradually remove yourself from the demands of dealing with immediate problems and making all the daily decisions.
For a small portable restroom operator, that means giving up the keys to the truck as soon as you are profitable enough to afford a fulltime service person. Why would you want to pay someone else to do something that you can do yourself? Because, as long as you labor in your business, you don’t have enough time to do the things that are most profitable—training staff, planning, marketing, and managing growth.
Gerber suggests that the goal of anyone who starts a business should not be to build a job for themselves, but to build a business operation system that can run itself. If you do this, your growth potential is unlimited, and so is your freedom.
Once you are large enough to afford a few drivers, an office staff, and a sales person, then the trick is to develop a system of management practices that any skilled manager can use to take over your management job.
If you take a look at the most famous entrepreneurs in recent history, you can see why this is true. Take for example, Ray Kroc, the founder of McDonald’s, or Sam Walton of Wal-Mart. Ray and Sam didn’t build stores—they built systems. The more they worked on and perfected their systems for doing things, the more stores they could open and the more successful they became.
While you may not have the ambitions to become the Sam Walton of portable toilets, there is a valuable lesson in the way he did things that can help you achieve any goal you have—such as to retire early, to leave a healthy business to your kids, to grow from 500 units to 5,000 or more.
The expertise that helped you make one business successful can be used again and again to purchase existing businesses in nearby towns or to create new ones in undeserved markets. And the great thing, is that it becomes easier the more you develop your system.
Other benefits of the “E Myth” strategy include that it frees you from the chains of a job that gets harder and harder the more your business grows, and it makes your business more valuable if you would ever want to sell it. Investors would obviously pay more for a business that runs itself, than one that needs close supervision to keep it running.
Perhaps the most important benefit for families is that, if for any reason you couldn’t work temporarily, your business will run without you and your family won’t be left in dire straights.
A business with a clearly defined way of doing things is also easier to pass down to children, who can learn to manage it without having to make the same mistakes you did when just starting out.
However, to make your business independent you need to develop a handbook or methodology for why the business does what it does. Here are some tips to help you create a self-sustaining portable restroom business:
• Every night before you quit for the day, sit down and write in your own words every-
thing you did that day in a journal. Mention the business calls you made, who you
talked to and what was discussed, what bills were paid, what was purchased, what
employ-ees you talked to about the business, and what was discussed. Record the
customers you talked to and why. Record what you did to attract new business.
Keep the journal for a complete billing cycle. Distill this information into two or three pages of key tasks. Create a flow chart of necessary tasks, a job description, and comments on how to complete tasks successfully.
• Ask key service employees to help by writing their own detailed job descriptions.
Go over these with them and determine what tasks can be systemized. For
example, service drivers should have a daily checklist of what needs to be done on
service stops, dumping runs, and in-yard maintenance. What is the maintenance
schedule on equipment? How is sink maintenance different from toilet
maintenance? Do workers know how to repair, clean, and maintain pumps or
other service equipment? How long should a service stop last, and what needs to
• Ask office staff to create job descriptions. What is said when the phone is
answered? How are files system-ized? How are messages relayed to the right
people? How are estimates, invoices, bills, and receivables tracked, billed, and
paid. Are supplies tracked, and how often are they ordered?
• For sales staff create a description of minimum job expectations and detail the
reward system for com-missions or other reimbursements. Sales staff should have
on file a list of customers, former customers, prospects, and contacts. They should
be able to define a system for developing leads, for contacting them on schedule,
and for following up after a sales call and on regular post-call intervals.
By systemizing your business, you’ll not only make yourself replaceable, you’ll also make it easier to replace key employees should they leave, or be promoted to your job. In the process, you’ll also discover the strengths and weaknesses of your business and ways to make it better.
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