It is one of the best books in the field of entrepreneurship. I’ve just read the revised edition and think it is still valid and vital for entrepreneurs.
Gerber says entrepreneurs should work on their business, not in it. When an entrepreneur works in their business, they become a technician, a doer, a problem solver, but they also become a slave of that small business. They cannot change results radically. Instead of doing the daily tasks of whatever the business may be, such as cooking pies in a pastry shop, designing a project in the office or selling goods on the street, an entrepreneur should be working on the business model.
There are certain rules to be followed when working on a business model. The first rule: The model must provide consistent value to your customers, suppliers and lenders, beyond what they expect. The value is what people perceive it to be. The definition of value is different in each person’s mind. So, whoever the person is, the business model should provide value to that person, whether it is perfection, time, discount, easiness, speed or help.
The second rule: The model must be operated by people with the lowest possible skill level. This is against common belief. Gerber says that if your business model depends on highly skilled people, it will be very difficult to find new employees quickly that are capable of producing the kinds of goods or services your company makes without lowering their quality. Highly skilled people are highly sought after in the job market. By the lowest possible level of skill, Gerber is referring to the lowest possible level necessary to fulfill the function of the work. Gerber draws attention to the business model of McDonald’s, which sells its model just like it sells hamburgers worldwide. At McDonald’s all of the roles are very simple and even a primary school leaver can handle such work. So McDonald’s franchises can easily recruit people, it is an easy job; everybody can learn how to do it in a very short period of time.
The third rule: The model must stand out as being of impeccable order. In a world of chaos, most people crave order. People look for order. A business that looks orderly tells its customers that its people know what they are doing. A business that looks orderly says to its customers that they can trust in the results delivered and assures its people that they can trust in their future with the company.
The fourth rule: All work in the model must be documented in an operations manual. Documentation means “we know what and how we do it here.” Documentation provides your people with the structure they need and with a written account of how to “get the job done” in the most efficient and effective way.
The fifth rule: The model must provide a uniformly predictable service to the customer. While a business may look orderly, this is not sufficient. The business must also act orderly. It must do business in a predictable and uniform way. People look for consistency, and if the business is not consistent, it will result in disappointment.
The final rule: The model must have a uniform color, dress and facilities code. There are colors that work and colors that don’t. The colors must be scientifically determined and then used throughout the business model — on the walls, the floors, the ceiling, the vehicles, the invoices, employee’s clothes, the displays and the signs. This is important because there needs to be consistency to form a corporate identity.
My final remarks are taken from the introduction of Gerber’s book. Gerber thinks that any business reflects who the entrepreneur is. If the entrepreneur is disorganized, the business will be disorganized. If the entrepreneur is greedy, the employees will be greedy. Therefore, if the entrepreneur’s business needs to change in order to thrive — the entrepreneur must change first.