There’s a business book called “The E Myth,” by Michael Gerber. The “E Myth” concept is based on the “myth of the entrepreneur,” which at its core is what I see over and over as a business adviser. And that is the belief that if you’re good at doing something, making the best widget there is, let’s say, you’re bound to be good at the business of making the best widgets. It’s part of the “if you build it they will come” (and it will be profitable) school of thought.
There’s a business book called “The E Myth,” by Michael Gerber. The “E Myth” concept is based on the “myth of the entrepreneur,” which at its core is what I see over and over as a business adviser. And that is the belief that if you’re good at doing something, making the best widget there is, let’s say, you’re bound to be good at the business of making the best widgets. It’s part of the “if you build it they will come” (and it will be profitable) school of thought.
This line of thinking focuses on the thing being produced, whether it’s a widget or some service called “widget.” What it neglects is the process of widget production. And it is in that process and all the steps and skills required to advance it, that things all too frequently start to fall apart.
First of all, to even get to the place where you can produce your widget, more often than not you need a place in which to produce it. That can be a shop, a manufacturing plant, a commercial kitchen, or a virtual “place” consisting of a website and the technology connecting you to your customers. That takes planning, but it also takes money. So, the expert widget maker needs to become a business planner and something of a financial analyst. He needs to know how to project expenses and profits, how to price his product, and how to come up with a breakeven point beyond which he is actually making some money.
OK, so now there is a “Widget Shop” in which the widget maker has a lot of time and money invested. The shop is a sitting target for risk. Not to be too paranoid about this, but customers can sue you, your pipes can break, termites can eat the shop, your workers can make off with the cash drawer, whatever. So the expert widget maker needs to ensure against all those things happening, he needs to become a risk manager. Obviously, insurance can be purchased to protect against some of this, but so can setting up processes to make sure bad things don’t happen, that there are checks, balances, and quality controls in your operations.
So, let’s move on to those customers, the key to the widget maker’s success. They need to have a high-quality customer experience, be satisfied with their purchases and expect an appropriate response to any product or service complaints that might occur. To ensure all this the widget maker now needs to become a customer service specialist. He needs to be able to conduct his business and react to issues that arise in ways that make sure a new customer becomes a repeat customer.
Servicing those customers may require employees. If so, Mr. Expert Widget Maker needs to be a human resources specialist, developing an attractive salary and benefit plan, finding good employees to hire, and training them and ensuring they are proficient on the job so they can give the excellent customer service he expects to his customers.
Wait a minute, you need to get those customers into the shop, before you even have a chance to provide customer service or can afford to pay employees, so you need a marketing plan and budget. Enter the marketing specialist role. The widget maker needs to get the word out about what his widget is, and why it is a better widget than all those sold by the other widget makers. Issues that arise here are the methods to use for advertising, how much to spend on each of them, what message you are trying to get across, and how to measure the effectiveness of different advertising approaches.
OK, so now your widget business is open, you’ve done what you could to manage your risk, you’ve gotten the word out to your target market about the benefits of your widget, and you’ve hired employees and trained them in customer service.
Now, you’ll need to count all the money you’re making, so we’re back to finances again, but this time you’re keeping track of what’s coming in and allocating it to the right category. So, while you don’t need to become a bookkeeper, you need to have some bookkeeping knowledge. Wouldn’t you know it, the SBDC comes to your rescue once again! Not only can we assist you in all the other roles noted above that you either need to fill internally or hire out, but we can help you to understand bookkeeping. What a deal!
Please join us for “Introduction to Bookkeeping for Business Owners,” co-sponsored by the Bank of Hawaii, from 9-11:30 a.m. on Thursday, April 27. This is a repeat of our sold-out January workshop, and is back by popular demand. Registration and details available at www.hisbdc.org
Dennis Boyd is director of the West Hawaii Small Business Development Center. The Hawaii SBDC Network is funded in part through Cooperative Agreement with the U.S. Small Business Administration and the University of Hawaii at Hilo.