Among the eCommerce companies I have recently recorded has many features of a systems based company. This absentee proprietor owns and operates highly profitable B2B and B2C eCommerce companies in the US that’s run by just few workers and generates millions of dollars in earnings. Products are sent to his warehouse from providers in US and Asia. Owner lives out of state and manages all operations using an integrated”cloud based” infrastructure offering ecommerce, ERP, Financials, and Customer Support applications under one architecture.
In his hugely successful book The EMyth Revisited — Why Most Small Businesses Don’t Work and What to Do About It, author Michael Gerber shares significance of Turn-Key Revolution. Turn-Key Revolution is a means of doing business that has the ability to radically transform any small business from a state of chaos and disease into a state of order, enthusiasm, and constant growth. It’s the Turn-Key Revolution that supplies us with that illusive key to the growth of an outstanding business; the finally balanced model of a company that works.
Michael Gerber goes on to explain the achievement of Business Format Franchise which offers the franchisee with an whole system of conducting business. Most company founders believe that the success of a company resides in the achievement of this product it sells. The Turn-Key Revolution and the Business Format Franchise is built on the belief that the **true product of a company isn’t what it sells but how it sells it.
Ray Kroc built the McDonald’s franchise according to a Business Format Franchise. Given the failure rate of most small companies, he realized that a vital reality: for McDonald’s to be a predictable success, the company would need to work, since the franchisee, if left to his own devices, most assuredly would not! Equipped with that understanding, he set about the task of making a foolproof, predictable company. A systems-dependent company, not a people-dependent enterprise.
A Company That could operate without him
The business-as-a-product would just sell at a high dollar if it could be shown that it functions with no substantial contribution from the owners. And the only way to produce the new owner 100% comfortable with buying your business is to build it from perfectly predictable components which have been tested and proven effective through the years. This is true for any company and not only the eCommerce business.
I feel the secrets for business owners that are considering building a business which may be sold at a premium really lie in after a franchise model which has revolutionized American organization. This version works really well that people purchase a franchise each eight minute of each and every weekday and just 15% of franchise neglect over a three year period when compared with the 80% failure rate in first few decades of independently owned companies.
Michael Gerber advises to operate on your company as opposed to in it. To consider it as something besides yourself, as a world of its own, as a product of your efforts, as a system designed to meet a very specific need, as a mechanism for providing you longer life, as a system of interconnecting components, as a bundle of cereal, as a can of beans, as a tool created to fulfill your customers’ deeply held perceived demands, as a solution to someone else’s problem.
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When you’ve built a business that’s system-dependent rather than person-dependent, you’ll have the ability to answer these questions positively and confidently. Hence, you would have built a business which may be sold for top evaluation.
- How do I get my company to operate, but without me?
- How do I get my people to work, but without my constant interference?
- How do I systematize my company in such a manner that it could be run by anybody even a school kid as easily as when it is under my possession?
- How do I own my business, and be free of it?
- How do I spend time doing the job I really like to do instead of the work I must do?
If you’re interested in learning how to construct such a system-based-business, I suggest reading Part III of this book The EMyth Revisited — Building a Small Business That Works.