How to start a SMALL business that doesn't FAIL and makes you financially free

Summary

This video script explores the challenges of starting a small business, highlighting the common pitfalls that lead to failure within the first few years. It delves into the 'fatal assumption' made by many entrepreneurs, who often excel in technical work but struggle with the managerial and visionary aspects of running a business. The script introduces the concepts of the entrepreneur, manager, and technician within each business owner, and outlines the growth phases of a business: infancy, adolescence, and maturity. It emphasizes the importance of adopting a franchise prototype model to build a system-dependent business, and concludes with the business development process involving innovation, quantification, and orchestration to ensure a scalable and successful venture.

Takeaways

• 😨 High Failure Rates: 50% of small businesses fail within the first year, and 75% fail within the first five years.
• 🛠️ Technical Expertise Misconception: Being skilled in a trade doesn't equate to understanding how to run a business that specializes in that trade.
• 🔮 Entrepreneurial Vision: Entrepreneurs are visionaries who see opportunities and innovate, but they often struggle with the day-to-day operations of a business.
• 👨‍💼 Managerial Organization: Managers are practical, keeping the business running smoothly and organized, often cleaning up after the entrepreneur's chaos.
• 👷‍♂️ Technician's Execution: Technicians are the doers who focus on the immediate tasks at hand and may struggle with the broader vision of the business.
• 👶 Business Growth Phases: Businesses typically go through infancy, adolescence, and maturity phases, each with its own challenges and requirements.
• 🤹‍♂️ Overwhelmed Owner: In the infancy phase, the business owner often juggles multiple roles, leading to exhaustion and potential failure.
• 📉 Delegation Challenges: During adolescence, poor delegation and management can lead to business chaos and the owner feeling the need to retract control.
• 🚀 Maturity as a Starting Point: A business can be designed to operate as a mature entity from the outset, with clear systems and processes in place.
• 🔄 System Dependent, Not People Dependent: To achieve a mature business, create systems that ensure operation and success are not reliant on specific individuals.
• 📊 Business Development Process: The process involves innovation, quantification, and orchestration to refine and standardize business operations.

Q & A

What is the common misconception among people who start a small business based on their technical skills?

The common misconception is that understanding the technical work of a business is the same as understanding how to run a business that performs that technical work. Many fail to see that being skilled in a trade does not necessarily mean one knows how to manage or grow a business in that field.

Why do many small businesses fail within their first few years according to the transcript?

Many small businesses fail because the owners, often technicians by trade, do not realize the difference between doing the technical work and running a business. They often become overwhelmed with tasks they are not skilled in, leading to poor management, exhaustion, and ultimately, business failure.

What are the three roles that every business owner embodies, as described in the script?

Every business owner embodies the roles of an entrepreneur, a manager, and a technician. The entrepreneur is the visionary and innovator, the manager is concerned with smooth operation and order, and the technician focuses on immediate tasks and getting things done.

What is the 'fatal assumption' that the script refers to, and how can it lead to business failure?

The 'fatal assumption' is the belief that being good at a job within a company means one can successfully start and run a business in the same field. This can lead to failure because the skills required to be an employee are different from those needed to manage and grow a business.

What phase of business growth is characterized by the owner handling all tasks, often leading to exhaustion and failure?

The 'infancy' phase of business growth is characterized by the owner handling all tasks, which often leads to exhaustion and failure due to the overwhelming workload and lack of delegation.

What is the key difference between a business that is people-dependent and one that is system-dependent?

A people-dependent business relies heavily on the expertise and specific skills of its employees, making it hard to scale. In contrast, a system-dependent business is built on established processes and procedures that can be followed by anyone, regardless of their experience, allowing for easier replication and scalability.

How can a business owner avoid becoming the 'idiot boss' they once despised?

A business owner can avoid becoming the 'idiot boss' by understanding the importance of systems and delegation, and by not allowing their personal biases or lack of knowledge in certain areas to interfere with the efficient running of the business.

What is the 'franchise prototype model' and how does it help in creating a successful business?

The 'franchise prototype model' is a business model that focuses on creating a systematized business that can operate without the owner's constant involvement. It helps in creating a successful business by ensuring consistency, scalability, and the ability to replicate the business model across multiple locations.

What are the three steps of the business development process mentioned in the script?

The three steps of the business development process are innovation, quantification, and orchestration. Innovation involves seeking ways to improve business operations, quantification measures the effects of changes, and orchestration involves implementing successful innovations as standard operations.

Why is it important for a business owner to view their business as a product on the shelf?

Viewing the business as a product on the shelf helps the owner to focus on creating a system that can operate independently, ensuring consistency and quality regardless of who is working within the business. This perspective is crucial for scalability and creating a business that can be easily replicated or franchised.

What is the significance of the 'business development process' in building a mature business?

The 'business development process' is significant in building a mature business because it provides a structured approach to continuous improvement. It allows the business to adapt to changes, measure the success of new strategies, and solidify effective practices into standard operations, leading to a sustainable and successful business model.

Outlines

00:00

🚀 Starting a Business: The Reality and the Fatal Assumption

This paragraph addresses the daunting statistics about small business failures and introduces the concept of a 'fatal assumption' made by many entrepreneurs. It suggests that being good at a job does not equate to understanding how to run a business doing that job. The narrator shares a personal anecdote about the realization that starting a business is not just about escaping a bad boss, but understanding the business model. The paragraph sets the stage for discussing the three roles within an entrepreneur: the entrepreneur, manager, and technician.

05:01

👥 The Three Roles in Every Entrepreneur: Visionary, Manager, and Technician

The second paragraph delves into the internal conflict of running a business by describing the three distinct roles that every entrepreneur embodies: the entrepreneur as the visionary, the manager who maintains order, and the technician who gets the job done. It uses the analogy of a person on a diet to illustrate the struggle between these roles. The entrepreneur is always looking for opportunities, the manager organizes and plans, and the technician focuses on the immediate tasks. The paragraph emphasizes the importance of understanding these roles to avoid common pitfalls in business management.

10:03

🛠️ The Growth Phases of a Business: Infancy, Adolescence, and Maturity

This paragraph outlines the three stages of business growth: infancy, adolescence, and maturity. In infancy, the business owner juggles all tasks, leading to exhaustion and often failure. Adolescence is marked by the business owner seeking help, which can lead to poor management and a loss of control. Maturity, although not reached by all businesses, is characterized by a business that operates smoothly and can grow without the owner's constant intervention. The paragraph highlights the importance of understanding these phases to build a sustainable business.

15:04

🔄 The Transition from Technician to Manager: The Risks and Realizations

The third paragraph focuses on the transition from being a technician to becoming a manager, which is a critical phase in a business's growth. It discusses the risks of delegating tasks without clear direction and the realization that employees may not share the same level of commitment or understanding of the business as the owner does. The paragraph emphasizes the importance of having a clear vision and strategy to guide the business through growth and to avoid the trap of owning a job rather than a business.

20:07

🌟 The Entrepreneurial Perspective: Starting as a Mature Business from Day One

This paragraph introduces the concept of starting a business with a mature perspective from the outset. It uses examples of successful companies like McDonald's, Disney, IBM, and Apple to illustrate businesses that were designed to operate as mature entities from the beginning. The paragraph discusses the importance of having a clear vision and acting on it from day one, as well as the need to see the business as a system that produces results for customers.

25:07

🛑 The Importance of Systematization: Building a Business That Operates Independently

The fourth paragraph emphasizes the need for systematization in business to create a model that can be replicated and scaled. It suggests that businesses should be built to operate without the constant interference of the owner, much like a franchise. The paragraph discusses the necessity of creating checklists, manuals, and systems that allow even those with minimal qualifications to perform tasks effectively. It stresses the importance of building a system-dependent business to ensure success and scalability.

📈 The Business Development Process: Innovation, Quantification, and Orchestration

The final paragraph outlines the business development process, which consists of three steps: innovation, quantification, and orchestration. Innovation involves seeking ways to improve the business's service to customers. Quantification is about measuring the effects of changes to understand what enhances business performance. Orchestration is about implementing successful innovations as standard operations. The paragraph concludes by summarizing the key points discussed in the video and reiterating the importance of a systematic approach to business development.

Keywords

💡Small Business

Small businesses are independently owned and operated enterprises that are smaller in size and have limited resources compared to larger corporations. In the video's context, small businesses are highlighted for their high failure rates and the challenges they face in the initial years. The script discusses the common pitfalls and the importance of understanding the business model to beat the odds of failure.

💡Entrepreneur

An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The video emphasizes the role of the entrepreneur as a visionary and innovator, who is essential in driving the business forward but also faces the challenge of balancing this role with that of a manager and technician.

💡Technical Work

Technical work refers to the specialized tasks or activities that require specific skills or knowledge. The script points out the 'fatal assumption' that understanding the technical work of a business equates to understanding how to run a business, which often leads to failure as the managerial and entrepreneurial aspects are overlooked.

💡Manager

A manager is responsible for the efficient operation of a business, including organizing, planning, and overseeing tasks. The video script describes the manager as someone who wants to keep things orderly and clean up the 'mess' created by the entrepreneur, highlighting the importance of this role in maintaining business operations.

💡Technician

A technician is a skilled worker who specializes in a mechanical or technical craft. In the context of the video, technicians are depicted as individuals who love getting things done and prefer to focus on the immediate tasks at hand rather than the future vision of the business.

💡Business Phases

The video outlines three phases of business growth: infancy, adolescence, and maturity. Each phase represents a stage in the development of a business, with unique challenges and requirements. The script emphasizes the importance of understanding these phases to build a successful and sustainable business.

💡Franchise Prototype Model

The franchise prototype model is a business model where a successful business system is replicated across multiple locations. The video script uses McDonald's as an example to illustrate how a business can be systematized and standardized to ensure consistency and efficiency, which is a key to success in franchising.

💡Systematization

Systematization refers to the process of creating systems and procedures that allow a business to operate efficiently and consistently. The video script stresses the importance of systematization in building a business that can function without the constant presence of the owner, which is crucial for scalability and success.

💡Innovation

Innovation in the context of the video refers to the process of improving or creating new methods, ideas, or products. The script encourages entrepreneurs to continuously innovate within their business operations to better serve customers and stay competitive.

💡Quantification

Quantification is the process of measuring and quantifying the impact of changes or innovations within a business. The video script explains that by quantifying the results of business changes, entrepreneurs can make informed decisions on what strategies to keep or discard, ensuring data-driven business growth.

💡Orchestration

Orchestration in the video refers to the final step in the business development process, where successful innovations are implemented as standard operations. The script describes orchestration as the culmination of innovation and quantification, where the lessons learned are used to refine and optimize business systems.

Highlights

50% of small businesses fail within their first year, and 75% fail within the first five years.

The book 'The E-Myth Revisited' by Michael E. Gerber offers insights on why small businesses fail and solutions to avoid failure.

Many small business owners start their ventures based on technical skills rather than business acumen, leading to a 'fatal assumption'.

The transition from employee to entrepreneur often results in becoming an 'idiot boss' due to a lack of business management skills.

Small business owners are often three personas in one: entrepreneur, manager, and technician, each with different needs and perspectives.

The 'fat guy and skinny guy' analogy illustrates the internal conflict between immediate gratification and long-term goals in business.

Businesses typically go through three growth phases: infancy, adolescence, and maturity.

In the infancy phase, the business owner often handles all tasks, leading to exhaustion and potential failure.

Adolescence phase involves delegation but can lead to chaos if not managed properly.

Maturity can be achieved from the start of a business with the right entrepreneurial perspective and planning.

Successful businesses like McDonald's, Disney, IBM, and Apple started as mature companies with a clear business model.

The franchise prototype model is a systematized approach to running a business that can be replicated across multiple locations.

Building a system-dependent business, rather than one reliant on specific people, is key to scalability and success.

The business development process involves innovation, quantification, and orchestration to refine and standardize business operations.

Innovation in business is not about the product but about improving the systems that serve the customers.

Quantification involves measuring the effects of changes to understand what improves business performance.

Orchestration is about implementing successful innovations as standard operations across the business.

Transcripts

there's a scary reality about starting a

small business 50% of small businesses

fail within their first year 75% of

those that passed the first year fail in

the next 5 years how are you going to

beat those odds how can you create a

business that doesn't fail runs smoothly

and gives you the time and money to

enjoy life that was the question

spinning around my head until I found an

answer through Michael E Gerber's book

The emth Revisited why most small

businesses don't work and what to do

about it if you're thinking about

starting a business or if you have

started one but feel stressed and busy

all the time then this video is for you

this is one of those books that I wish I

had read before starting my business

okay let's get started part one the

Fatal

assumption this is you you work in a

company for somebody else you're good at

your job damn good you are one of the

best employees but things aren't going

well for you you might not feel

appreciated or you don't feel like you

are paid enough one day you're at work

and for some reason you don't like your

boss's Behavior maybe he said something

or did something the reason doesn't

matter much you just didn't like it

suddenly a voice in your head said why

am I working for this idiot guy I know

the job better than he does this

business would collapse if I weren't

working here why don't I start my own

business

and be my own boss from that day on you

just couldn't stop thinking about

creating your own business the

entrepreneur in you woke up and wasn't

going back to sleep the excitement of

being your own boss and becoming

independent was irresistible you had to

do it so you start your business but

here's the thing you didn't realize yet

you were about to go from hating the

idiot boss to becoming the idiot boss

yourself including myself most people

start a business this way before

starting they were doing some technical

work for a company and one day they

decided to start their own business but

this is a recipe for failure because the

person who starts a business this way

makes a fatal assumption and it's this

the technical work of a business and a

business that does the technical work

are two totally different things just

because you understand the technical

work of a business doesn't mean that you

understand a business that does that

technical work just because you are a

skilled video editor doesn't mean you

know how to create and run a video

editing business unfortunately most

people fail to see this this happens to

millions of technicians daily a barber

opens a barber shop a hairdresser opens

a beauty salon and a musician opens a

music store the tragedy is that when the

technician Falls prey to this fatal

assumption the business that was

supposed to free him enslaves him he

used to do one job when he was working

for somebody else but now besides that

job he has to do 10 other jobs that he

has no idea how to do one day you wake

up and realize that you don't have a

business you have a job and it is the

worst kind of job you were running away

from your boss but now your business is

your boss and it is the worst kind of

Boss soon the job you used to love

becomes the job you hate the journey

that started with excitement turns into

Terror exhaustion and failure in the

next part you will understand why this

happens and how to avoid it part two the

entrepreneur manager and the

technician everyone who goes into

business is really three people in one

an entrepreneur a manager and a

technician the easiest way to understand

this is if you've ever been on a diet

everyone who has tried dieting knows

there's a fat guy and a skinny guy

inside them skinny guy know what you

have to do to get skinny diet and

exercise all you have to do is chisel

skinny guy out of you like a marble

statue but fat guy doesn't want to go on

a run fat guy likes junk food you can

work out later maybe tomorrow or never

anyone who has ever experienced the

conflict between the fat guy and the

skinny guy knows what I mean you aren't

just skinny guy or fat guy you're both

when you're skinny guy you're always

making promises es for the fat guy to

keep and when you're the fat guy you're

always making promises for skinny guy to

keep if you've ever felt like fat guy

and skinny guy you know that you can't

be both someone has to lose and they

both know it well that's the kind of war

going on inside the owner of every small

business but it's even worse because

it's a three-way battle between the

entrepreneur the manager and the Technic

unfortunately it's a battle no one can

win understanding the differences

between them will quickly explain why

first is the entrepreneur the

entrepreneur is the Visionary the

dreamer this is who was inside you

daydreaming looking at the clock

imagining a better life they live in the

future never in the past and hardly ever

in the present they are your innovators

and always best at working with the

unknown engineering chaos into harmony

they have a strong need for control

because they need the control of people

and events in the present to make their

Vision or dreams come true

this causes a big problem they live in a

world made up of too many opportunities

and everyone around them is just slowing

them down this means they usually do

whatever it takes to make their projects

move forward even if they have to bully

harass or scream at their employees to

entrepreneurs most people are problems

that get in the way of their

dreams next is the manager the

entrepreneur has the Future Vision for

the business but the manager within you

keeps the business running smoothly in

the present they are practical the

manager wants to keep things organized

and in order it's their job to clean up

the mess of the

entrepreneur if you're like me you have

a junk drawer in your house it might be

in your kitchen in a desk or office but

there's a drawer that's just full of

random items you don't know how it got

there but one day you woke up and it was

full of junk rubber bands old mismatched

Keys a broken watch batteries that might

be dead and always some loose screws and

nails waiting to poke you when you reach

inside this is what the manager sees

when he sees an entrepreneur's business

they can't work in this mess he sees a

junk drawer that needs to be cleaned and

organized instead of everything being

shoved into a drawer or tossed into

piles a manager would go to work with a

label maker everything has a place and

everything should be put back in its

place keys are on a key ring screws and

nails are in plastic bins labeled screws

and nails batteries are tested and then

either thrown out if they are out of

power or put into clearly labeled bins

by size managers treat people and tasks

in a business the same way they handle

junk drawers they plan for problems to

happen everyone has their place and

their jobs to do and they make sure it

happens the technician if you're

watching this video and you want to quit

your job you are a technician

if you've ever thought to yourself if

you want it done right do it yourself

you are a technician technicians love

the feeling of getting things done

having their hands on projects and

living in the present they don't care

about the future of the business or the

problems of yesterday they just want to

get to work they want to know how to do

it and they want everyone to get out of

their way everyone gets in the

technician's way the entrepreneur

creates new and interesting work for the

technician but they are always

interrupting or distracting the manager

is also a problem because they want to

make technicians part of their system if

it were up to the technician they would

go to work every day and never worry

about the future this is the worst

mentality if a business is going to

survive for many years in your life you

can probably see these three characters

in action you can see how one part of

you craves a sense of order while

another part of you dreams about the

future you can see how another part of

you can't stand being ID and jumps into

work and feels guilty if he isn't doing

something all the time so to sum up this

part there are three people in you the

entrepreneur the manager and the

technician the entrepreneur dreams the

manager worries about everything and the

technician gets the job

done part three three phases of a

business businesses grow just like

people there are three stages that a

business will grow through infancy

adolescence and maturity infancy the

technicians phase this is how most

businesses start as a technician L

business you are finally free of the

boss it's an exciting start that's about

to be exhausting you are now going to be

a master juggler every day from now on

you will be juggling balls in the air

doing all of the work inside your

business one ball is managing the

business's money and the other ball is

selling your products and services all

while juggling advertising marketing

legal fees and taxes in the infancy

stage all you do is work work and more

work hours are long you might work 12 to

14 hour days you work every day 7 days a

week even at home you're working you are

totally invested in your business but

there's a big problem there's more work

than you can handle you work harder you

put in more time but you can't juggle at

all balls start to drop and hit the

floor you can only work so hard

alone infancy ends when the owner

realized es that the business cannot

continue to run the way it has been in

order for it to survive it will have to

change when that happens when the

reality sinks in most business failures

occur the technician locks the doors and

walks away the rest go on to

adolescence adolescence the manager's

phase this is the moment when you decide

to finally get help with your business

every business that lasts must grow into

the Adolescent phase every business

owner who survives needs help what kind

of help does an overloaded technician

get technical help someone who can do

the work that isn't getting done which

is usually the work you don't like to do

if you like sales you bring in someone

to build the product if you like

production you bring in a salesperson if

you don't know who to bring in it's

usually an accountant because most small

business owners hate accounting so you

hire your first employee Harry Harry

knows accounting he's an experienced

hard worker Harry has been crunching

numbers longer than you've been alive

he's worked in businesses just like

yours all his life and now Harry is

going to find out the deepest secret

you've been hiding he will soon discover

that you don't know what you are doing

day one on the job and Harry goes to

work on your books he's looking over the

mountain of spreadsheets printouts and

paperwork you've given him and in a

moment it hits you you don't have to do

that job anymore you can now be a

manager and not just a technician

a few weeks later you realize Harry can

do more than just accounting he can

answer the phone he can work with

customers he can tidy up the storefront

he can do a little bit of everything

life gets easier with Harry you start

taking longer lunch breaks and relax a

bit but there's a problem you let Harry

take over tasks inside your business

instead of telling Harry what to

do this is a dangerous game because if

you aren't telling Harry what to do he

does things his way this means your

business is slowly changing from the way

you did things to a new and

unrecognizable business Harry needs more

help so he hires new employees because

you are so busy working and growing the

business they answer to Harry instead of

you you keep this up because it frees

you up to do what you love until

problems start happening mistakes start

piling up unhappy customers start

complaining that things aren't the way

it used to be deadlines get missed this

poor management begins to take its toll

you begin to realize that no one cares

about your business the way you do you

begin to realize that you never should

have trusted Harry you never should have

trusted anyone you should have known

better as the balls continue to fall at

an overwhelming rate you

realize no one is willing to work as

hard as you work no one has your

judgment or your ability or your desire

or your interest if it's going to get

done right you're the one who will have

to do it walk into any adolescent

business and you'll find a busy owner

they are trying to do everything even

though they are paying workers to do it

the more the owner does the less the

workers do because you don't know how to

do it any other way every adolescent

business reaches a point where it pushes

Beyond its owner's comfort zone you lose

control over your business and can't

even manage your Harry when Harry came

you just threw things at him and ran

away but Harry has needs too he needs

more Direction he needs to know why he's

doing what he's doing he needs to know

where the business is going and what's

the overall strategy if you can't manage

Harry how are you going to grow instead

of growing the business you'll say

forget this we'll go back to the old way

when it was just you and you alone we

won't worry about all these employees

and expenses so you shrink down the

business where you feel comfortable but

you don't realize that you have already

been there you have already been small

and you couldn't do it so you shrink

down the business where you feel

comfortable things go fine for a while

but one day you wake up and realize I

don't want to do this anymore you're

lying in bed and don't have the energy

to get up then you turn to your partner

and say I'm not feeling well I think I'm

sick I don't want to go to work and your

partner says the quiet truth out

loud but if you don't go and work no one

else

will right at this moment you realize

you don't own a business you own a job

and it's the worst job in the world

because if you take a sick day you don't

get paid if you don't show up today

there's no one who will do the work for

you and you can't sell this business to

anyone because You' just be selling them

a job you hate when the dream is gone

the only thing left is work you might

ask what will happen if I don't go small

and keep

growing well you'll eventually

self-destruct let's say Against All Odds

you survive because you're stubborn and

determined to stay in business you do

whatever it takes to keep the lights on

and you have to be working all the time

you're consumed by the business day

after day is the same you never change

the business doesn't fail your body and

mind do you get sick you get hurt but

you keep going you're like a fan that's

been left on 24 hours a day and with one

final wee the fan blades stop spinning

this is how most small business business

owners feel today but it doesn't have to

be this way there's a better solution up

until this point we have described the

problems that cause most small

businesses to fail in the rest of the

video we'll talk about the solutions it

starts with the maturity phase maturity

how to create a business that doesn't

fail it's not guaranteed that all

businesses that go through infancy and

Adolescent end up at maturity if you're

lucky you might reach this stage but

here's the key point

maturity is not the final result of the

previous two phases you can skip them

and start as a mature company from day

one yes you heard it right you can start

as a mature company from day one famous

companies such as McDonald's Disney IBM

and apple didn't end up as mature

companies they started as mature

companies a company can start as mature

if the entrepreneur has an

entrepreneurial perspective let let me

explain this perspective with an example

Tom Watson of IBM said from the

beginning I had a clear picture of what

the company would look like when it was

finally done I had a model in my mind of

what it would look like a dream a

picture then I realized that unless we

acted that way from the beginning we'd

never get there IBM had to act like a

great company before it became a great

company the entrepreneurial perspective

asks the same question as Tom Watson of

IBM how must the business work from an

entrepreneurial perspective business is

the product not whatever the product is

produced in business this doesn't mean

the entrepreneur doesn't care about the

product they do but they have a more

holistic approach here is how the

technician and entrepreneur perspectives

differ the entrepreneur sees the

business as a system it produces results

for the customer the technician sees the

business as a place for him to work to

make him money the entrepreneur starts

with a Clear Vision and then Works

backwards words to make that Vision a

reality the technician doesn't have a

vision they just have work to do and

money to make today the entrepreneur

sees the business through their

customer's eyes the technician sees the

business through their own eyes to the

entrepreneur a new customer is a new

opportunity to the technician a new

customer is a problem because it means

more work here's the thing you can't

teach the entrepreneurial perspective to

a technician don't even try what you

need instead is a business model that

allows the entrepreneur within you to do

what needs to be done at the same time

that business model should satisfy the

needs of the technician and the manager

a business model that satisfies the

needs of all three is called a franchise

prototype in the next part I will

explain this business model in

detail part four franchise prototype

model the easiest way to understand this

business model is just to look at

McDonald's please keep in mind that I'm

not telling you to get into the

hamburger business we are talking about

their business model here now you can

say many things about McDonald's you can

say their food isn't healthy you can say

that people shouldn't eat junk food but

what you can't say is they don't deliver

on their promises because they do they

have a system that works like a Swiss

watch this is because every step of the

business was tested tweaked and improved

until it could be copied in every

McDonald's restaurant food is made and

served the same way across the globe

frozen meat patties are the same size

and shape pickles are put on buns in the

same patterns so they don't slip off the

sandwich fries are kept warm for 7

minutes before they get soggy and food

will be served to customers in 60

seconds or less basically every problem

has been thought through documented and

systematized in a way that you can take

any 18-year-old from the street and he

would be able to do the job now how can

you create such a system in your

business first you have to change your

perspective about what a business is the

problem isn't your business it never has

been the problem is you it has always

been you and it will always be you

nothing will change until you change

your perspective about what a business

is and how one works second every day

should be spent working on your business

not in it see your business as a product

on the Shelf see it as a machine with

interconnecting parts and ask yourself

how can I get my business to work

without me how can I get my people to

work without my constant

interference how can I systematize my

business in such a way that it could be

replicated

5,000 times so the 5,000th unit would

run as smoothly as the first pretend

that you are going to franchise your

business pretend your business is a

model that you will copy and create

5,000 more businesses like it not almost

like it but just like it perfect clones

after asking all these questions you

will realize that you need to create

systems for everything you need to

create a system dependent business not a

people dependent business if your

business success depends on hiring

experts it will be extremely hard for

you to succeed experts are hard to find

and are expensive instead set up systems

in such a way that even someone with the

lowest qualifications can do the job

effectively this doesn't mean you go and

hire just anybody from the street for

example if you need an accountant you

still need someone with accounting

knowledge however if your business

system is built well you will not need a

top expert a less experienced accountant

can also do the job well this is what

the author means by building a system

dependent business to build a system

dependent business you need checklists

for every task you need how-to manuals

with step-by-step instructions so that

anyone can do what you do I know this is

a boring part and I hate to do it but it

is absolutely necessary if you skip this

step you will waste so much time and

fail I have personally skipped it and

hired people and here is what happened

since I didn't have the proper system

they couldn't do the job 100% they could

only do 90% of it and I had to help with

the last 10% now imagine you have hired

10 people and have to help each of them

with the last 10% this will probably

consume all your time again I have made

this mistake and I've seen others hiring

a bunch of people and then after a short

while firing them all for the same

reason I just

described so you need to build the

system first now some of you watching

might might say what the hell is this

system you keep talking about so let me

give you an example imagine you're

opening a cake shop each position in

your shop would have a detailed job

description this Clarity ensures that

every worker knows exactly what to do

and how to do it from buying the

ingredients to keeping the shop clean

sweeping floors scrubbing pans and

handling transactions at the register

for Bakers there would be clear

guidelines on how to bake the cakes the

temperature settings for the ovens how

long each type of cake should bake and

the secret recipes that make your cakes

special after all it's not just any cake

shop it's your cake shop it's your

prototype you want your cake to look and

taste the same it should deliver a

consistent experience to the customers

building the Prototype of your business

is a continuous process it's not like

you do it once and finish the author

calls this a business development

process which we will cover in the next

part

part five business development process

this process consists of three steps

Innovation quantification and

orchestration Innovation is asking the

question what systems can we improve in

our business to help our customers

please keep in mind it's not the product

that requires Innovation but the way

your business operates and sells its

products and here's the thing you don't

need to implement big Innovations for

example what color suit should your

employees where to make the most sales

is it a brown blue or black suit for 2

weeks test it you might find that even

your best salesperson makes less money

when they wear a brown suit and your

worst salesperson sales almost doubled

when they wore a blue suit here's

another test to try instead of greeting

customers the old way by asking may I

help you say hi have you been here

before this simple change switches the

conversation from a yes or no question

to an invitation to talk if they say

they've been to your store before great

we're so glad to have you back here's a

special offer we're running for our

repeat customers if they haven't been to

your store before welcome we have a

special discount for new customers it's

small tweaks like these that can have

dramatic changes for your business but

how can you find out if the Innovations

and the tests you did are

working this is where the quantification

comes in which is the second step in the

process this means you're going to find

the data of your business instead of

vague feelings you'll know for a fact

how the business is performing after

making a change think back to the

different colored suits you can track

and see how much money was made by each

color if sales increased by 16% for

salespeople wearing blue suits this

becomes the new uniform the trick is to

track data for a short time to get a

baseline so you know what's normal in

your business then you make a change if

the data shows the business improves you

keep the change

otherwise keep things the way they were

or try another test after you're

finished with your tests you decide what

to keep this final step is called

orchestration you take all of the

Learned lessons from Innovation plus

proof from quantification and create a

new system for your business if you

found out that black suits and this new

greeting doubled your sales then your

standard uniform becomes a black suit

and you teach all of your employees to

greet customers asking if they've been

here before you didn't guess you tested

it you proved it you repeat this process

for every step of the business to create

a system that can work for

anyone this was the last part let me

recap everything we covered in this

video we started with the Fatal

assumption just because you understand

the technical work of a business doesn't

mean that you understand a business that

does that technical work every

entrepreneur is three people in one the

entrepreneur manager and the technician

each wants different things and they

pull you in different directions the

entrepreneur is the Visionary and

innovator the manager wants smooth

operation and Order and the technician

wants to focus on immediate tasks and

nothing else business phases infancy the

owner handles all tasks leading to

exhaustion and failure adolescence

delegation begins but poor management

leads to chaos and the owner is forced

to shrink down the business maturity

maturity isn't the end result of the

previous two phases you can start a

mature business from day one you have an

entrepreneurial

perspective franchise prototype model

this model focuses on creating a

business that can operate without you

like a franchise to build such a model

you need to build a systems dependent

business not a people dependent business

you need to see the business as a

product and work on your business not in

it finally we talked about the business

development process which consists of

three parts innovation continuously

seeking ways to improve how the business

serves its customers quantification

measuring the effects of changes to

understand what improves business

performance orchestration implementing

successful Innovations as standard

operations thanks for watching I hope it

was a useful video