I finally read The E-Myth by Michael Gerber which comes up almost as often as the suggestion of Rich Dad, Poor Dad. I must admit, this book qualifies as "best selling", but not "best written". However, the idea of "creating a business that would work once it was sold - no matter who bought it" is a novel idea. My key takeaway from the book was to build my business from day one with the idea of being able to separate myself from my business (i.e. to franchise it). Did anyone else gather other other nuggets of wisdom from this book? Are any of Michael Gerber's other books worth reading?
It's been a while so my recall is a bit hazy but my biggest take away from the book was the importance of systems and being sure to implement them from the onset. I am actually learning this lesson the hard way as we speak. For my first few years of real estate investing I worked off excel sheets, paper files, memory, etc. Now that I have employee's, my lack of systems and repeat-ability are costing me valuable time and money. I (we) now have to go back and correctly transfer every client, lead, buyer, notes, etc into a CRM management system. More time on the front end would have saved tons of time on the back end. In the short period of time with the CRM business has run so much more smoothly and it just reiterated the importance of what was stated in the E myth.
I don't recall how much Gerber spoke on the actual systems themselves but the underlying theme of franchising is being able to transfer your business model and operations anywhere with the expectation of similar results. At the time I "thought" this did not really apply to my business as I had no desire to franchise but it would have served me well to have that mindset form the start.
It has been worth every minute of time to go back and get things set up right. Perhaps I should revisit my E-Myth notes!
@Andrew Michael Thanks for your recollections and also how the E-Myth relates to your real estate business. Gerber spoke to the idea of when you execute a task, make a checklist or document your process so that a much lower skilled person could do that task successfully. I like your idea of "repeat-ability" by your employees. That's very easy to measure and a worthy goal to strive towards. It sounds like setting up tools (i.e. CRM) up front is a key piece of successful systems.
Hi @Natasha Keck I have not read the E-Myth by Michael Gerber but it's going on my booklist after reading your post! And I appreciate your spoiler about quality of the writing.
@Andrew Michael what CRM are you using? My business partner and I are looking on contact management systems/apps to help us track the need to follow up with people we speak to in our real estate business.
Also interested in your CRM @Andrew Michael and your experience with it.
I am using Hubspot and its 100% free. Of course you get more if you get the entire business package but even what they give you, you can customize everything. I have all of my leads, deals, notes, follow ups, make calls, emails, everything though there now. Its completely changed my business. I can recommend it enough.
Thanks for sharing your experience with the book I m defentaly going to read it.
Almost done with the E-Myth and I have to say it has been a very eye opening book on how to run a business. The biggest thing I took away so far is to treat your business as a mature business from the beginning. It sounds like it is a huge time saver because you will probably have to get your systems in place eventually to scale up your business. Better to get your systems in place when are just starting and have less responsibility, than to have to get your systems in place when you are in the adolescent phase, with many more responsibilities.
Work on our business, not in your business. You have to get out of being the technician. Create systems. I listened to the book on Audiobook. It was the most boring book I have ever listened to in my life. It literally almost put me to sleep in traffic. Good nuggets of wisdom though :)
@Brendyn Dabrowski Ah yes, the old begin with the end in mind. A valuable insight!
Hahaha! @Daren H. Glad I'm not the only one. I really like the book, but I zoned out pretty bad a couple of times.
I appreciated the guidance to build your systems so that you can plug anyone into it. I am a believer in building a good team, but I think it is a major hang up for people to try to have all all-stars and if they lose anyone, especially if that person is a single point of failure, the wheels come off.
You want to have good people but you shouldn't need great people if you want longevity and to be able to remove yourself.
I listened to the book on audio so I didn't get the lacking in the writing department. Might make a difference.
One of the key messages to "E-Myth" and many such books is the idea that rather than simply make a job for yourself - DIY from rehab to rental and management, for example - you should build a business which can run and produce income even when you're away - on vacation, laid up from an illness or accident, busy finding new investments / income opportunities, ... it should even pass to your heirs upon your demise without a hiccup! How many times have you seen old, established family businesses disappear because the kids didn't want to continue it? It should be saleable, at least, so the estate can pass it on to a new owner and divide the proceeds among the heirs per your will.
@David Dachtera It sounds like you've read a few books on this topic. Any suggestions for other books on creating a business with key ideas?
Look up a book titled, "What Your CPA Isn't Telling You" by Mark Kohler. It may be out of print, but it's available on Kindle and from Audible. You should also checkout "Lawyers are Liars" (by Mark Kohler, a JD/CPA - go figure).
@David Dachtera Thanks! I've read "Lawyers are Liars", but haven't read "What Your CPA Isn't Telling You". I'll see if I can pick up a used copy.
One of my biggest takeaways from reading this book was the distinction between "self employed" and "business owner". If your operation requires you to be hands-on at all times you don't own a business, you own a job. If you have employees and systems in place that allow the operation to hum along day to day without your constant input, you own a business.
Hence the phrase (as stated above) "work on your business, not in your business".
Some people prefer to stay solo and hands-on, but once you decide you want to grow and scale, you realize it's impossible to do without help. There are only so many hours in the day and you will need additional people to create additional hours. The documented systems allow almost anyone to be able to step in and get to work without having to reinvent the wheel every time you add a person or position.
A real-world example in our business that I see used a lot:
Create a step by step manual on how to enter information into your CRM as it comes in, and what to do with it once the input is complete. Hire a low cost by the hour Virtual Assistant anywhere in the world and give them your how-to manual. They will be up and running performing your admin, freeing you up to do the things that make you money. Works for marketing, mailing lists, bookkeeping, etc. etc.
As entrepreneurs we have the gift and the curse of wanting to do everything ourselves. Once we realize how much more money we make by paying someone else to do repetitive tasks it is incredibly freeing. (it took me a long time to admit it...!) Get away from working IN (tactical), and start working ON (strategic).
This book was a huge part of me when I went full time with my own CPA practice 11 years ago. The idea of working ON my business rather than IN my business. Consider the tax side of our firm. Our firm prepares several hundred returns, and I actually prepare NONE of them. Staff does (which keeps the billing down too)I am responsible for everything, so I perform tech reviews on every one and manage the relationship. The key is training and trust as the book points out. Nobody prepares our firms tax workpapers better then me, and I don't mean that egotistically. For my staff to do that I must train, train and review. Which I did and do. As a result, my staff works with known expectations, and implement the policies and procedures that I have developed from decades of work experience yielding a smoothly prepared and accurate deliverable. See? I get to do the fun part and grow my business by not working IN it but ON it.
@Jim Kennedy Thanks for the insight. Do you have any tools that you use to implement the policies and procedures? Is this just a good ole binder with documents, or something more fancy than that?
One of phrases from that book that stuck with me is
"If you're a major COG in the organization, you're also the major CLOG."
And I find that to be true. When I started my real estate business, I make all the decisions and as it grew, that limited the growth of my company. Now, I have 6 full time employees plus myself (2 acquisitions, 2 sales, 1 project management and 1 who oversees the operation).
Also, if I am a major COG, then I can't really leave the business.
Now, with all these folks I trained, I don't make the day-to-day decisions on what property to acquire, which property to sell or lease, etc. I can now focus on expanding the business and raising capital so we can do increase our portfolio.
I agree... the working on your business, not in your business was the most eye opening. I also love the concept of system thinking.... making sure that everything can be broken down into pieces so that it can be delegated and farmed out.
I've met so many landlords that get burned out because they are fixing toilets and doing all of the rehab work themselves. When I first started in the business, I thought I was at a disadvantage because I'm not handy nor do I have any desire to be. However, I know how to hire and manage good, talented people. I also know how to motivate them and treat them well... (without breaking the bank, of course! Working "in the business" is never a concern for me because it's not where my talents lie
The way I put the E-myth concepts to work... I make sure my main contractors can text, email and have working smart phones (I know.... but you would be surprised). I set them up on gmail if they don't have it so things don't get lost and also so that I can add them to my spreadsheets (where I keep track of products, skus, pricing ext.) Every rehab looks exactly the same... classic transitional finishes that be dressed up or down. Clean, inexpensive but good quality is the theme. As much thought is taken out of product selection as possible.... and we write SOPs (Standard Operating Procedures) for everything we can. (I have an assistant that helps me with these tasks.) We also have a cost associated with rehab activities... ie... a roof is $50 per square... materials are separate... etc...) Then everyone can estimate how much the job is going to cost prior... (thanks to @J Scott for your fabulous book, The Book Estimating Rehab Costs - excellent and highly recommend!)
@Theresa Nicoletto $50 a square??? Wow in which world??? $50 could be if you go really cheap on materials not including the labor. You should estimate roofing at least $155 /square (3 Tab) if you get a cheap crew and materials. The felt alone is $20/ 4 Squares, Cheap shinges will start at $55/square, drip edge $1/ LF, Flashing, sealant, nails, nail caps, Labor will start at least $75/square if you buy the material. I have done homes in Oklahoma City because we are Texas (Fort Worth) and since we are cheaper than the locals, a lot of times we get calls to come up ( about 4 hours away).
E-Myth is a good a read for sure. However, many business books have similar ideas. I would suggest everyone get a subscription with getabstract. The have a book summary of every business book imaginable.
I've read the E-myth Revisited about 15 years ago and found it valuable. When I started out I was an eBay seller that made it big, and the book helped me draw a future org chart with dedicated people for all of the tasks that I was originally doing myself. In the end, I was able to sell the eBay business and have the brand continue using the same systems under a new owner.
Another book in the same vein but perhaps more modern is
Work the System: The Simple Mechanics of Making More and Working Less by Sam Carpenter
He has a second book which I'd like to read as well.
@Justin Stanfield - In my "world" people read the full post before they Mansplain how it's wrong.
My post said, "a roof is $50 per square... materials are separate... etc...")
This means that:
I pay $50 a square for LABOR ONLY
Materials ARE SEPARATE (this means materials are not included in the labor quote above of $50)
I have done 17 roofs. I have 2 crews. They charge me $50 a square.
You mentioned you come from Ft. Worth to OKC because you are cheaper than locals.
You are not better or cheaper than my guys. Sorry, but you're just wrong.
How do I do it? I negotiate, share construction contacts and keep my guys busy & working.
@Daniel Hanson Thanks, I'll check out the book "Work the System". Congrats on having built a business & sold it using this technique of building a business separate from yourself!
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