A Lack of Knowledge of the Business They Are In
In his book, The E-Myth Revisited Michael Gerber describes the roles played by different personalities within a business. The first is the technician, who actually does the work or delivers the service in the business. The second is the manager, who organizes and controls the business on a daily basis. The third is the entrepreneur who best understand the business environment and leads it though changes necessary for continued success. One might conclude that knowledge of actual working in the business or managing the operation of the business does not always lead to success. What leads to success is knowledge of how a business needs to operate within its competitive market place.
The Automobile Mechanic
Let’s consider the best automobile mechanic in town. This person has attended the best training programs and has continually updated his knowledge each year. He is familiar with a wide range of models and makes, including the best trouble shooting techniques for each. He can use all the latest electronic diagnostic tools and regarded as the fastest worker in the shop.
Over a period of time, he has concluded that he is ready to make the next big leap and open his own shop. Now he enters the world of business. He must directly interface with customers, decide on how to market his newly formed business, and determine how to place a financial value on his services. There is a quick realization on his part that there is more to business success than just being good at fixing cars. Unless he quickly makes the required transition his business will fail because he didn’t understand the business he was in.
The Business Idea
Several years ago, I conducted a class in marketing at Mount Olive College in Wilmington, NC. As part of the class each student was asked to select a business that either they were considering starting or one that they knew. Their assignment was to put together a marketing plan (Product, Promotion, Price, and Place) for the selected business. When it came to the product or service, they has some very unique ideas. For promotion they were all going to develop websites and go throughout the area personally telling potential customer about their great product. Because their product or service was so unique and desirable, they perceived that pricing was not going to be a problem. Those who chose to work on a retail business knew the importance of location. Service providers selected an appropriate means of delivery.
As we reviewed and discuss each plan, it became obvious that the students where outsiders to the businesses they had chosen. Liked the mechanic in the first example, they understood the function of the business, but did not have the knowledge of operating it is a competitive environment. It was a great educational exercise for college students, but it reflected the reality of the situation in many small business. Success is not only a function of a great idea, but also depends on knowledge of the operating the business in a competitive environment.