System Builder

“Why Most Small Businesses Don’t Work and What to Do About It”. This is the sub-title of Michael Gerber’s book “The E Myth Revisited”. With more than two million copies sold worldwide, it has become the foundation for much of the advice to the owners of SME’s about successfully growing their business.

By successful, Michael Gerber discusses about the business continuing to operate successfully and consistently, whether the business owner\manager is there in the business or not. He also introduces what has become the world famous concept of the business owner “working on the business and not in the business”. By this Michael Gerber explains that the role of the business owner is not to “work in the business” doing what the business does i.e. designing in a graphic design business; cutting hair in a hairdressers; or project management and cost control in quantity surveying company, etc. but “working on the business”.

So what does Michael Gerber mean by “working on the business”? Well he suggests you the business owner ask yourself the following questions:

Answering those questions and putting the answers in to action is “working on the business”.

Michael Gerber’s book is founded on The Turn-Key Revolution and The Business Format Franchise. The turn key is that traditionally most business founders believe that the success of a business is down to the success of the product it sells. Under a Business Format Franchise the success is built on the belief that the true product of a business is not what it sells but how it sells it. The true product of a business is the business itself. The Business Format Franchise provides a franchisee with an entire system of doing business.

The best example of this, which Michael Gerber draws on extensively in his book, is McDonalds. Love them or loathe them, McDonalds in its 2014 accounts showed that franchised sales had grown to a staggering $69.6 billion a year business, with over 36,000 restaurants worldwide in over 100 countries and growing in number every 8 minutes. And all of this in the space of just 59 years! When Ray Kroc first came across the MacDonald’s brothers’ hamburger joint in California in 1952, he was amazed at how efficiently it worked and what a money machine it was. As a milkshake machine seller Ray Kroc had no money and he therefore persuaded the MacDonald’s brothers to let him franchise their business. Ray Kroc never cooked a hamburger in his life but 12 years and several million hamburger later, he bought the MacDonald’s brothers out and went on to create the largest retail prepared food distribution system in the world. Michael Gerber describes the way he did this as a business development process, which is in effect systemisation.

Now consider this statistic, that of new business start ups 80% fail in the first 5 years! Compare this to a franchise business where the failure rate over the same 5 year period is only 25%. The reason for this is that a franchise or a business using a franchise format is totally systemised. Consider also that research carried out by our association AVN shows that business owners – people just like you and me – would be willing to pay a staggering 86.77% more to buy a business which differs from its rivals in just one crucial way.

Well I am sure you have already guessed the answer but according to the research, the key to making a business more valuable is to make your business LESS dependent on you the business owner! And you do that by systemising absolutely everything, just like Ray Kroc did with McDonalds.

However, systemising a business is a mammoth task and many businesses would struggle to know where to start. So to help our clients, we along with all the other member firms in AVN, have co-funded the development of System Builder.

System Builder is a Cloud based software application which helps the business owner to fully systemise all aspects of the functions of their business in a logical manner.