The ‘E-myth’

Michael E Gerber, in his book on the E-Myth (E-myth Revisited), points out that there is a fundamental difference between knowing a technical skill or trade (eg as a designer, mechanic, chef) and running a business based on that skill (a design agency, a workshop or a restaraunt).

Many would-be entrepreneurs who break away from paid employment to set up their own businesses become trapped, not liberated. They end up working as a cog in a machine of their own making, rather than setting up a money-making machine that they are in control of. This is the Entrepreneur Myth. These people are workers, not true Entrepreneurs, according to Gerber.

Many people have a dream of building up a business so that they can eventually sell it and secure a significant financial reward, maybe for retirement or reinvestment. In order to be able to do this, however, the business must ultimately be independent of the ongoing labour of the owner. Many businesses become virtually worthless once the owner retires and therefore have no value to a potential buyer.

A true entrepreneur will work ‘on’ a business rather than ‘in’ it. In other words, they will set up money-generating business, which ultimately makes money for the owner without his/her direct involvement.

This is the difference between being a ‘worker’ (or labourer) on the one hand, or a true ‘entrepreneur’ on the other.

Even if you have your own creative business, are you in fact a ‘creative labourer’ – or a true entrepreneur?

In short, the ‘acid-test’ question is this: have you set up a business which can generate income even when you sleep – or is your income totally dependent on your ongoing labour?

In the creative industries, the key to building a business which generates income independent of your ongoing labour, is the management of intellectual property.

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