Yes, once, and with a pen in your hand. Gerber's diagnosis of why small businesses stall is the best short account of it we know. Most of them are started by someone who is good at the work, and being good at the work is a poor qualification for owning the company that does it. His cure is that you build the business as though it were the prototype for a franchise chain, and take the discretion out of the front line, which is where a firm that sells judgment has to stop following him. The failure statistics he opens with do not survive a look at the government's own survival table either. Read it for the diagnosis, argue with the cure, and do not repeat the numbers.
This is the second book review we have written, after Goldratt's The Goal, and it is by some distance the more famous book. We work inside firms of three to twenty people where the owner is still on the tools, which is exactly the reader Gerber wrote for.
What the book is
The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It was published by Harper Business on 3 March 1995 and runs 288 pages. It is a rewrite of Gerber's The E-Myth from 1986, and both dates are worth holding on to while you read, because the world the examples live in is three decades old. His publisher calls him "a small business guru, best-selling author (over 8 million copies combined sales worldwide)", counting all of his titles together.
The teaching runs through a single character. Sarah owns a pie shop called All About Pies, she is worn out by it, and Gerber takes her through his method in a sequence of conversations. Every idea arrives twice, once as a principle and once as something Sarah has to face on a Tuesday.
The idea that pays for the book
The title comes from what Gerber calls the Entrepreneurial Myth: the belief that small businesses are started by entrepreneurs. Mostly they are not. They are started by a Technician, someone good at doing the work who decides one day to do it for himself. The plumber opens a plumbing company. The bookkeeper takes on her first three clients.
What the Technician discovers on the first morning is that the company needs three different people. An Entrepreneur decides where the business is going. A Manager keeps order and holds the plan together. A Technician does the work sitting in front of him today. All three are the owner, and the Technician wins nearly every argument between them, because his work is the only one with a customer waiting and a date attached to it.
So the owner has not bought a business. He has bought a job, with a more demanding boss than the one he quit. The line still lands, because it names a specific misery instead of a general one.
Exhibit 1
The Technician wins nearly every day, because only his work has a customer waiting.
Working on it, not in it
The instruction that follows is the one everybody quotes. You go "to work on your business, rather than in it", which means the owner spends part of every week on the business itself: how work is priced, how it is delivered, who does what, what happens when a client goes quiet for a month. It reads as obvious. Almost nobody does it, because that hour has no client attached and therefore no deadline.
The smallest honest version of it is an appointment with yourself that nothing is allowed to move. An hour a week is enough to start, and a weekly review of thirty minutes is the shape we use for it. The first thing worth doing in that hour is finding the one place where work sits and waits, because that is where the business loses its time, and it is rarely where the owner assumes it is.
Where the argument stops working
Gerber's cure is to treat the business as a Franchise Prototype, and this is where we get off. Pretend that the business you own is the model "for 5,000 more just like it", and build it so that ordinary people can run it without you. The engine underneath is what he calls the Business Development Process, three activities he names Innovation, Quantification, Orchestration. Innovation is finding a better way of doing the thing, and he borrows Theodore Levitt's line that creativity thinks up new things while innovation does new things. Quantification is measuring what the change actually did. Orchestration is where the trouble starts. He defines it as "the elimination of discretion, or choice, at the operating level of your business."
For a pie shop that is correct. The customer wants the same pie. Discretion at the counter is a defect, and a business whose output depends on which member of staff is on shift cannot grow and cannot be sold.
For a firm of three to twenty people selling judgment, it aims at the wrong thing. When a client pays you to decide something, discretion at the operating level is the product. An accountant who follows the script into a situation the script did not anticipate has failed at the thing the client is paying for. What you can systematize is everything around the judgment: how work arrives, what gets asked before a price is given, what a file has to contain, what happens on the day something goes wrong. The judgment itself has to stay judgment.
The second problem with the prototype is less obvious and more expensive. The method assumes you intend to replicate, and most small firms never will. Writing the manual for 5,000 imaginary copies of a business that will only ever be one is real work, paid for in evenings, and it is the part that quietly does not get done. Read it, believe it, and the likely result is a folder of half-written procedures.
Exhibit 2
Two of the book's three activities survive the trip to a firm that sells judgment, and the third does not.
The fair version of Gerber's point survives all of that. The repeatable half of the work should be written down, and in most small firms none of it is. Client onboarding is the clearest case, because it runs nearly identically every time and it is where the money leaks. A written onboarding checklist does the thing Gerber is asking for, at a size you will finish.
The numbers on page one do not hold
Gerber opens the book by saying that "by the end of the first year at least 40 percent" of new businesses will be out of business, and that "within five years, more than 80 percent of them" will have failed. That is a pair of figures you will have seen quoted, and the official record does not support it.
The US Bureau of Labor Statistics follows every private-sector establishment from the year it opens. Of the establishments that opened in the year to March 2020, 80.9% were still trading a year later and 51.4% were still trading five years later. So about one in five closes inside the first year where the book says two in five, and about half are still open at five years where the book says one in five. The most recent one-year figure in the same table is 77.9%, for establishments that opened in the year to March 2024.
The sentence in the book carries a footnote marker, and we could not establish what sat behind it. The claim is far stronger than the government's own series, and the book loses nothing by giving it up. Gerber's argument works perfectly well on the real numbers. All it needs is for owners to be stuck, and they are.
Exhibit 3
Gerber's opening claim and the official survival table disagree in the same direction twice.
How it reads three decades on
The dated parts of the book are all on the surface. Sarah's pie shop belongs to a world of walk-in trade and a telephone, and the book says nothing about how a customer finds a business now, which for most readers is half the problem. Gerber also writes with total certainty and repeats himself, and the middle of the book can be read fast without losing anything.
How to read it
Two evenings. Read the early chapters, the ones about the Technician and the three roles, slowly. Take the prototype chapters for the principle and ignore the instruction to document everything.
Then do one thing before the book goes back on the shelf. Pick the process that goes wrong most often, and write it down at the level of detail a competent new person could follow, with every judgment call left as a question they are expected to answer. One process, finished, is worth more than a manual nobody gets to the end of. Working out which half of a business is repeatable, and being straight about which half never will be, is a good part of what our management consulting work is.
Who should read it
Read it if you are the owner who cannot take a week off without the business stopping, or who has never once written down how anything in it gets done. That reader gets a diagnosis and enough discomfort to act on it, which is a great deal for two evenings.
Skip it if the repeatable work is already written down and your problem is that too little work is coming in. The E-Myth Revisited has almost nothing to say about demand. It assumes the phone rings, and starts the story after that.
Read it sceptically whatever your situation. The confidence is the book's selling point and its weakness, because it offers one answer to a question that has several, and the answer fits a franchise better than it fits you. Take the Technician, take "work on your business, rather than in it", and leave the 5,000 copies of your business on the page where you found them.