Thursday, September 14, 2006

The E-Myth Approach For Fitness Pros

Michael Gerber's classic book, The E-Myth, sets out a series of steps that every personal trainer needs to take to grow a business. Gerber's fundamental belief is that most businesses fail because most business owners are not really entrepreneurs. Instead, they are what he calls "technicians suffering from an entrepreneurial seizure." In other words, they don't own a business; they own a job.

For that reason, these so-called entrepreneurs start businesses that enslave them, causing them to do every job without a break, 24/7. They move from one project to the next, and make no time to step back and think.

Sound familiar?

The way out of this hole is to figure out how to get your business to run without you. That way, you don't have to worry about being in two different places at once!

Gerber breaks down the following steps for shifting from a technician to a true entrepreneur:

Step 1: Think differently about money.

Money has four aspects in his model:

1. Income
2. Profit
3. Flow
4. Equity

Most trainers (technicians) think predominantly about income -- the money you get paid for going to work every day. Income is what you get when you operate as a contractor-as-employee. When you want to shift to a contractor-as-owner, income becomes perhaps the least important of the four aspects.

Meanwhile, profit is investment capital that feeds and supports your growth, rewards people, shores up capital shortfalls, and rewards the owner for taking risks. Thinking about profit instead of income is an essential shift you have to make if you are to move from being an independent contractor to a business owner.

Flow is the way money moves through your business; when you manage the flow of money appropriately, you have the power to grow your business more effectively and efficiently. Every entrepreneur needs to control the way money flows in and out of his or her business.

Finally, equity is the value a buyer would place on your business. Entrepreneurs need to think about creating equity in their business by making it a sustainable, valuable operation -- with or without the current owner. This means having systems, products, processes, and solid marketing methods.

Step 2: Develop processes so that you replace yourself with others.
You have to stop working in the business and start working on it. The best way to do that is to become aware of when you're filling an owner's shoes vs. an employee's shoes.

For jobs that could be delegated to an employee or another trainer, your role is to find the best way to do that job, and then document it. Next, replace yourself with someone who (after being trained on the system you've just created) can do the job and teach it to others. Finally, manage the system by quantifying its success, and improving upon it. Repeat this process every time you find yourself being an employee rather than an owner.

Step 3: Develop a plan.

Gerber introduces what he calls the Planning Triangle, or three types of plans every entrepreneur needs to have. The first is a business plan, which determines what the business is, including its purpose and vision. The second is a "job plan" that documents everything your employees need to know, have, and do in order to get a job done on time, every time, as promised. This is a detailed set of job/process descriptions that rivals a franchise system like McDonald's (a company that Gerber refers to often). Finally, you need a "completion plan," which is a set of benchmarks or standards that tells you that you have completed the job with the budget, quality, and time frame promised.

So you need not one, but three plans. The first tells you who you are. The second tells you what you do. The third tells you how you do it.

Step 4: Understand what it means to manage.

Gerber wisely notes that you don't manage people, but processes. As a business owner, you should develop step-by-step ways of doing things in order to create a consistent system that gets results. As a trainer, you should have metrics for success and processes for the following tasks, among many others:

• Sales presentations
• Assessments
• Communicating with clients
• Program design
• Delivering or supervising the workouts
• Asking for re-signs and referrals
• Upselling the client
• Tracking progress
• Transitioning clients from one trainer to another

A good process allows you to measure whether you're getting the same results every time and, if not, how to change to process to improve it.

Step 5: Change the way you work with people.

Gerber asserts that, without people, you don't have a company. You have a job. To effectively work with others, especially employees and sub-contractors, it is essential to add them in a systematic way.

You need a system that explicitly communicates the talent and skills you seek, a system to teach new trainers so that they know what to do, a set of standards so that you can set expectations, and a process to help them improve over time. Without these systems in place, your people will do more harm than good.

Step 6: Develop a system to understand, communicate with, and delight clients.

Without a marketing system, you won't be able to grow your business effectively.

Step 7: Keep growing.

According to Gerber, a business that stops growing will die. One of your primary roles as business owner is to infuse your business with purpose, passion, will, belief, personality and method (systems again!).

The E-Myth model is simple but surprisingly underutilized in our industry...but it's comprehensive and it works. I'll be discussing it more over the next couple of days.