Part 4: The Turn Key Revolution
We at Launch Leadership Development are continuing our exploration of Michael Gerber’s book The E Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It.
Last week in Part 3 we covered the the Entrepreneurial Perspective. It required the Technician-minded business owner to see his business as it would work, function, and look when mature, and then work backwards to create the steps and systems needed to get there.
Gerber says that the best way to create a business that works with consistency without the owner having to manage every aspect of it is to use principles from the Turn Key Revolution.
Today we will explore the Turn Key Revolution:
- Turn Key Revolution defined
- How Ray Kroc pioneered the Turn Key Revolution
- Steps to using the model
Turn Key Revolution defined
Gerber says we are now in the Turn Key Revolution, meaning that a franchise system called the Business Format Franchise has made starting and growing a mature business nearly foolproof. He provides these statistics:
- Over the course of a year, the Business Format Franchise has a 95% success rate compared to over 50% failure rate of independently owned businesses.
- In 5 years, whereas 80% of all businesses fail, 75% of franchises succeed.
This happens because of a franchise protype being the testing ground to figure everything out. The system is developed, the system runs the business, the owner runs the system.
How Ray Kroc pioneered the Turn Key Revolution Ray Kroc took McDonald’s from a small hamburger stand to one of the largest successful franchises in the world by painstakingly creating a system for every aspect of the business and making the business his product. He made McDonald’s a system dependent business, not people dependent.
- He had a protype restaurant as his proving lab to develop systems for every aspect of the business
- He took out discrepancies and developed an Operations Manual detailing every step of the business to be done in the same way no matter who he sold the franchise to. This ensured consistency in quality and performance.
- This system made the franchise attractive to buyers
Gerber says he is not saying you should franchise your business. He is saying act as if you were. Develop the systems. Disidentify yourself from your business- see it as a product independent of you. Your business is NOT your life. Design the system so it runs perfectly without you.
Steps to using the model
- 1. Develop your model that will deliver consistent value to customers, venders, employees.
- 2. The model will be operated by people with the lowest possible skill level.
- 3. The model will stand out as a place of impeccable order.
- 4. All work done in the model will be documented in the Operations Manual.
- 5. The model will provide a uniformly predictable service to the customer.
- 6. The model will utilize a uniform color, dress, and facilities code.
The book devotes a chapter to strategies for each aspect of your business, outlining in detail how to proceed.
Our Technician-minded business owner did indeed decide to follow the Business Format Franchise model and gained a successful business and his life back.
This concludes our 4 Part series. If you have contemplated owning your own business, this book is well worth the study and a place in your professional library.