Statistics show that the majority of a small businesses will fail by the end of the first year. What are reasons for a small business failure? How do you know whether your business will survive its first year? How do you know whether or not you are on the same path of business failure like thousands before you? Why lose your money your precious time and energy if there is someone to share their experience who have already been there? Why not learn lessons our business failure from the person sharing the lifelong experience and wisdom? For them, it took years of failure to learn those lessons. However, for us we can learn them in minutes. Why small businesses don't work and what to do about it?

The book called Emyth revisited by Michael Gerber has an answer for you. Michael Gerber is the founder of a company called Emyth Worldwide. His company has decades of experience in helping people grow their small businesses. The author says the number one reason why small businesses fail is that it is started by a technician. The technician only has specific and limited knowledge in certain areas. This specialized knowledge means a technician doesn't know how the business works. The reason for our business failure depends on what the technician was doing in his previous job. As in most cases, the technician turned business owner was doing the technical work in his previous job. The technicians only know how to do a specific thing. As by definition, technicians are the ones who has specialized in a chosen field. So the technician might only know how to build a certain product or provide specific service. But they may not know how the business works. The book says it's one thing to know the technical work that the business does and entirely different thing how their business work doing that technical work.

The number two reason for a business failure is a technician building a product or a service just because he or she knows how to build it. This becomes problematic when that product or service doesn't solve any problems of a customer or doesn't fulfill any need of customers. So the problem is the technician builds a product or service first, only then tries to sell it. But the customer may or may not want or need that product or service. So the book revolves around this problems for the first 1/3. Then, the author provides solutions to these problems The first solution is to create a business that is customer centric. The book says first know your customers, their needs their wants and their problems, then create a solution which is your business that fulfills the need or solve the problem of your customers and not the other way around. Jeff Bezos says that success of Amazon largely depends on this principle: In Amazon they are obsessive about customer satisfaction. Start with the customer and work backwards.

The second solution the book provides is work on your business, not in your business. You see, you have to start your business in a different way. From the start work on your business. Think about how to create a business that works without the owner. Think about how to create a business that gives consistent results every single day. The main difference in a technician in an entrepreneur is in their way of thinking. What is the product? For a technician the product is what it delivers to the customer but for an entrepreneur the business itself is the product. The entrepreneurial perspective has less to do with what's done in a business and more to do with how it's done. I think this is the main takeaway from this book. It's not the product or work itself that's important. What's important is the business how it looks how it acts how it does what it is planned to do.

The commodity isn't what's important, the way it's delivered is. So how to create a business that doesn't depend on you? How to create a business that works and gives consistent results even in your absence. The answer is franchise prototype. The franchise prototype is where all assumptions are subjected to the test. The main reason why you test all assumptions about your business is to find out whether your business will work or not before it becomes operational in massive scale. You test all assumptions about your business by creating a prototype or Minimum Viable Product. and only when your assumptions are proved to be true, you can think about expanding your business otherwise you keep tweaking your business to fit a specific customer need or want. Next make your prototype system dependent rather than people dependent. So how do you know whether your prototype or your business is system dependent or people dependent? To know the answer ask these questions about your business: Will your business work when all your original employees leave? Is your original employees replaceable? Replaceable in the sense that even if all employees leave the business will be able to provide consistent results every single time. If your business works and if your business can provide consistent results even if your all original employees leave then the business is system dependent. So how to create a franchise prototype?

The author talks about three steps for creating a franchise prototype:
Number 1: innovation.
Number 2: quantification.
Number 3: orchestration.

Innovation is about doing new things. Not just thinking about it, but actually getting it done. Doing things differently. To create a unique experience one has to continuously experiment the things you see, hear, touch and feel. and that's all innovation is about. Doing things differently. and seeing whether the change or innovation or experiment is working or not. So now you have made some changes, now you have experimented with the business about how it looks how it acts how do you know whether that innovation or change is working or not? The way to know whether the innovation or change is working on not is by quantifying all the results from your innovation. For example, if you make changes in the dress code of your employees or color theme of your companies or some other customer touch points, you must have quantified all the results or changes in the number of customers for certain test periods.

So if there is a higher number of customers, higher retention rates, higher profits resulting from the changes you have made then your innovation may be working. and in order to replicate the success resulting from the changes you have made, you have to document everything in operational manuals. Documentation is the key for consistent results. With proper documentation, you can build a business system that can be replicated over and over again. With proper documentation your business can give consistent results to your customers. With proper documentation your new employee can be trained to provide same result as previous employees. so that your business will provide consistent results even if your original employees leave. So that's how you make a business system dependent. Your business will provide same result whoever might be the employees. 

The third is orchestration. Once you innovate a process and quantify its impact on your business, once you find something that works better than what preceded it, once you discover how to increase positive responses from your customers, from your suppliers, from your lenders and from your employee at that point it's time to orchestrate the whole thing. Building a prototype of your business is the continuous process. you have to keep innovating keep quantifying all the results of that innovation and keep orchestrating that innovation to produce same results every single time. If you keep in your mind all these ideas or knowledge that the author provides, then you are one step closer to creating a successful business. and when your business doesn't need your constant interference to run smoothly, then you are free to pursue other things that you have always wished to do. And if you want to sell your business, then people will buy it. People will buy your business because it works without you. 

People will buy your business because the business is system dependent and provides consistent results every single time More importantly, you'll save your time and your money, your investment and your business. Also a business will survive if you keep innovating to meet a specific customer need or want. So this is what I learned from the book Emyth revisited. Problems of most small businesses, reasons for the failure and how to avoid it.  

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