E-MYTH MASTERY

The Seven Essential Disciplines for

Building a World Class Company
MICHAEL GERBER

MICHAEL GERBER is the founder and chairman of his own consulting company, E-Myth Worldwide. He is an
accomplished public speaker and is the author of several business bestsellers including The E-Myth
Revisited, The E-Myth Manager and The E-Myth Contractor.
The Web site for this book is at www.emythmastery.com.

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 E-Myth Mastery - Page 1

MAIN IDEA
The e-myth credo is: “Don’t spend all your time working in your business; work on your building your business as well”.To do that in
practice and to build a world class business around entrepreneurial principles, there are seven essential disciplines to master:

1 Leadership Good leaders make their vision a reality and think objectively

2 Marketing Leaders identify target markets and position their enterprise

3 Financial Leaders make financial decisions and harness cash flows

The Seven Essential
Disciplines of World 4 Management Leaders develop the culture and build operations manuals
Class Businesses
5 Fulfillment Leaders analyze and improve all the systems of the business

6 Lead conversion Leaders give existing and new customers opportunities to buy

7 Lead generation Leaders focus on reaching and impacting their target markets

Discipline #1 – Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 2

An entrepreneur has to be willing to wear the mantle of a leader. You have to be willing to get out front and
make decisions, even if that entails making some mistakes along the way. The only way to create a world
class company is to lead your people in the right direction. Specifically, leaders do two key things:
1. They turn their vision into reality by developing a business plan that works.
2. They develop indicators which show how the business is performing over time.
Discipline #2 – Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 3
Marketing is all about building a brand or a franchise. A world class business leader creates strong
connections between his or her firm and each individual customer by doing two key things:
1. Identify your organization’s most profitable and probable customers – your target market.
2. Position and differentiate your business so as to set it apart from everyone else.
Discipline #3 – Financial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4
A world class business leader has to build a viable financial model of the vision, create the financial
systems that will be required and ensure accountability is put in place. Specifically, an entrepreneurial
leader must:
1. Have the right tools in place so effective financial decisions can be made.
2. Understand the importance of maximizing the firm’s cash flows.
Discipline #4 – Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 5
The transition of a business enterprise from ordinary to world class doesn’t happen by chance. Instead, it
needs to be directed by management that has made a similar transition itself. Accordingly, an aspiring
entrepreneur has to do two things:
1. Build a high-performance culture which embraces and welcomes change in the marketplace.
2. Develop and then keep upgrading the organization’s operational manuals.
Discipline #5 – Fulfillment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6
At the heart of commercial success lies your organization’s ability to generate satisfied customers. World
class companies build an ongoing relationship with clients based on an exchange of value. A small
business leader does two things:
1. Regularly evaluate on a systematic basis where you are now in terms of creating satisfied customers.
2. Develop systems to improve and enhance your client fulfillment performance.
Discipline #6 – Lead conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 7
Lead conversion means to convert every possible contact with existing or potential customers into
revenue. To be world class, a business leader has to maximize the results from all these opportunities in
two ways:
1. Give potential customers every conceivable opportunity to say yes to doing business with you.
2. Make the most of your absolute best market – your existing customers.
Discipline #7 – Lead generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 8
Lead generation must be ongoing and continuous. Whenever a business stops generating leads for new
business, the company grinds to a halt. In practical terms, this means two things:
1. Keep reaching your target markets week-in and week-out to generate awareness and visibility.
2. Generate some genuine impact within your established sales channels.

Discipline #1 Leadership
An entrepreneur has to be willing to wear the mantle of a leader.
You have to be willing to get out front and make decisions, even if
that entails making some mistakes along the way. The only way
to create a world class company is to lead your people in the right
direction. Specifically, as a leader you need to do two key things:
1. Turn your vision into reality by developing a business plan
that works.
2. Develop indicators which will show how your business is
performing over time.
Leaders develop business plans
n Create a mental picture of the plan’s impact.
n Outline your business plan.
n Prepare a binder and gather materials.
n Identify what you need to produce.
n Run some planning meetings to develop
what you require to round out your plan.
n Produce a “final” version of your plan.
n Develop an ongoing change mechanism.
A business plan provides direction, clarity and relevance for what
happens on a day-to-day basis. A good business plan will link the
work of your business with your vision, and bring everything into
reality. The plan will generate relevance for everything you do.
The key steps in developing a robust business plan are:
1. Have a clear mental image of the passion and enthusiasm
you need your plan to generate for your people.
2. Create a draft outline of the business plan you need to
develop. Most likely, your business plan will have a section
on each of the seven disciplines of world class companies.
3. Take a ring binder and start assembling your business plan.
This way you can move sections easily, rewrite sections one
at a time and make improvements.
4. Once you’ve gathered all the materials you do have, you
need to identify what you need to produce and decide who
will be responsible to get the information that’s required.
5. Now you can run a planning meeting where everyone gets
together and discusses what’s required. This is also your
opportunity to ensure there is consistency throughout.
6. To keep things moving forward, set dates by which each
section of the business plan will be bedded down and
finalized. Stress you can always change and adapt further in
the future, but you do want to avoid “paralysis analysis” –
where people never get around to finishing things off.
Produce your final version of the business plan.
7. Create a mechanism by which ongoing changes and updates
can be made to your business plan. Unexpected
developments will crop up. Changes in the marketplace will
mean that you need to update your business plan
periodically. Make it easy for the plan to be updated quarterly,
monthly or even more frequently. That way, the business
plan will retain its relevance rather than being seen as
something that is hopelessly out of touch with current
demands and requirements.
E-Myth Mastery - Page 2
In addition to developing a business plan which brings the
organization’s vision into the real world, the other essential
function a business leader needs to fill is to help everyone look at
the business operations objectively rather than subjectively. The
effective leaders do this is by developing a set of key indicators
which measure how the business is doing.
Leaders provide business indicators
n Identify all the activities and results which
need to be measured.
n Establish a stable management reporting
structure and format.
n Create robust data collection systems.
n Design management reports as required.
n Create the systems needed to produce the
management reports on a regular basis.
n Keep refining and enhancing the reports.
The key steps in quantifying the business objectively are:
1. Identify which business activities accurately reflect your
organization’s progress.
2. For each activity, decide how this data can be collected
consistently, who will be responsible to do that and how the
information should be reported to management.
3. Put in place a system for collecting this data and set
guidelines for frequency, timing, presentation format,
compilation of accompanying narratives, etc.
4. Decide who are the people who can do something productive
and responsive with the information being collected and get
the information to the right people on time. Check the data is
being followed through on.
5. Make certain the frequency and timing of your reports are
helpful. You have to hit the right balance here – too much
information can be as confusing as too little.
6. Once you generate your first set of management reports,
obtain some feedback and keep working to improve your
reporting process as a whole. Keep tweaking the system until
your managers love it and live by it.
“Quantification is the magnifying glass, the X-ray machine, the
telescope, and the microscope that allows you to see into every
corner of your business and, at the same time, enables you to
see the integrated whole of it. Quantification isn’t just numbers.
It’s insight. It’s understanding. It’s the path to a business that
works.”
– Michael Gerber
“The seven essential disciplines are first and foremost about
leadership. They are the practices, processes, and perspectives
that establish the inextricable connection betw een
entreprenurship and leadership. Entrepreneurship is the
strength to lead. And the disciplines are about the leadership
every entrepreneur needs to possess through understanding if
his vision is to become a world class reality. An entrepreneur
must possess a kind of leadership resonance. Leadership
resonance describes the connection between an entrepreneur
and the leadership he is called to bring to everyone around him.
The leader moves the organization’s energy forward.”
– Michael Gerber
 E-Myth Mastery - Page 3

To build your brand, you have to set your business apart from the
Discipline #2 Marketing
rest. You have to position your enterprise effectively so the right
kind of customers know about you and are drawn to you.
Marketing is all about building a brand or a franchise. A world Positioning helps your business be viewed favorably in the minds
class business leader creates strong connections between his or of prospective customers.
her firm and each individual customer by doing two key things:
Leaders position their firms advantageously
1. Identifying your organization’s most profitable and probable
customers – your target market. n Decide whether you’re a product, a brand or
a commodity.
2. Positioning and differentiating your business so as to set it
apart from everyone else. n Determine how you are viewed by
comparison to your competitors.
n Analyze the characteristics of your target
market.
Leaders identify target markets
n Differentiate your product or service and
n Set up a product-market grid for your
write a positioning strategy.
business with:
• Products or services on one axis. n Develop a USP and positioning statement.
• Customer types on the other axis.
Start your positioning efforts by deciding whether you’re selling:
n Fill in sales, units sold and profit margin for
n A product which is one-of-a-kind and has no competition. In
each segment.
that case, your positioning is functional and attribute based.
n Identify your most profitable customers and
n A commodity sold by a number of vendors. Here, your
fringe customers.
positioning will need to be differentiation based.
n Create your demographic models.
n A brand which has unique product attributes. In this case,
To accurately determine who your current customers are, set up your positioning would involve further strengthening and
your own product-market grid. For example a doughnut shop’s enhancing those key strong attributes.
grid would look something like this: Your relative standing in the market will also be a factor to
consider. If you’re already perceived as the market leader, your
Markets
positioning will reinforce that perception. When combined with
Products an analysis of the demographic characteristics of your target
Walk-Ins Grocery Stores Local Business market, your positioning should create a “mental marriage” of
positive perceptions between your product or service and your
$1 Doughnut
& Coffee
38,000 sold
Nil
70,000 sold key target markets.
($38,000) ($70,000)
(200% profit) Positioning requires that you differentiate your product or service
Packaged
in terms of the key attributes that you want customers to think of
10,000 120,000 15,000 when they use your product. This will be a unique mix of several
12-for-$5
($34,000) ($408,000) ($51,000)
(68% profit) key product attributes:
• Functionality – something specific your product does.
Bulk sale
1,000 80,000 60,000 • Sensory impact – what it’s like to use your product.
24-for-$8
($2,880) ($230,400) ($172,800)
(36% profit) • Emotional responses – which come from product use.
• Rational judgement and conclusions – about functionality.
• Price/value.
The left axis lists your product and service offerings. Along the • Access/convenience.
other axis is the various markets you serve. You then fill in how
Once you develop your positioning strategy, everything you do in
many sales you made in each segment of the market and the
your selling and marketing should be consistent with this
actual amount of profits generated from those sales. This gives
positioning. You can develop a Unique Selling Proposition (USP)
you the ability to determine which is your most important
which will be a short phrase conveying what your business is all
segment at the current time, and which segments contribute little
about and how you have positioned your product or service. You
or nothing to overall profits.
can also expand this further into a positioning statement which
Once you know where your greatest chances of success actually will encapsulate what your product is, what problem you are
lie, you can target your sales and marketing efforts towards attempting to solve and the result a customer can expect. For
attracting more of those customers in the future. You can also example, a positioning statement might be: “We’re experts in the
spend more time and resources on getting to know how development and custom manufacture of widgets, and we’ve
customers in that segment think and make decisions. By developed a way to help you meet your production deadlines
enhancing their purchase motivation and avoiding any false with lower costs and less effort than you’re probably expending
assumptions or inaccurate information you’re working with, you at present.”
can progressively move more of these prospective customers
towards buying what you offer. The better you understand your “It’s your positioning that first turns a customer’s head in your
customer’s purchase decision making process, the greater your direction. Positioning also creates the groundwork for
opportunities will become to attract more of these customers in successfully moving the customer through every link of the
the future. purchase decision chain.”
– Michael Gerber
 E-Myth Mastery - Page 4

The pricing grid allows a business leader to establish a baseline

Discipline #3 Financial
for current pricing, and then to evaluate what would be the
financial impact of the various “what-if” scenarios that can be
A world class business leader has to build a viable financial envisaged. The flow-on consequences of changes in different
model of the vision, create the financial systems that will be parts of the business model can be tracked and forecast with
required and ensure accountability is put in place. Specifically, accuracy. A pricing grid can be developed for each separate
an entrepreneurial leader must: product line and then integrated into one overall enterprise grid
to compare different business strategies moving forward.
1. Have the right tools in place so effective financial decisions
can be made.
Leaders maximize business cash flow
2. Understand the importance of maximizing the firm’s cash
flows. n Decrease non-essential assets.
n Increase liabilities or company capital.
A small business owner has two sometimes conflicting but n Increase revenues.
distinct financial objectives: n Decrease cash expenses.
1. To optimize the long-term payouts from the business. n Improve productivity.
2. To maximize the value of the company.
n Optimize timing of accounts payable.
Both of these objectives are of equal importance and will require
the close attention of entrepreneurs.
One of the key indicators of business success is your cash flow.
Leaders maximize company value Cash is not only a reflection of how well your business is running
but it also provides financial momentum. The more cash you
n Enhance long-term profitability by
have available, and the faster cash flows through your business,
minimizing expenses, borrowing
the greater your financial momentum becomes.
appropriately and optimizing operating
revenues. To optimize and enhance cash flows, astute business leaders:
n Learn the craft of pricing your goods and n Look carefully and deliberately at all assets to ensure they are
services effectively so as to maximize your being utilized efficiently. Non-core or non-essential assets are
firm’s ongoing profitability. then sold to free cash to be used more productively.
n Consider whether it makes sense to bring in new investors,
new lenders or new vendors. This can effectively reduce your
To build the financial value of their company, leaders need to control of the business to some degree, but there may be
ensure working capital is being used to greatest effect. times when this is desirable.
Revenues and borrowings also need to be optimized – that is,
n Do everything possible to grow revenues by selling more, by
they need to be matched with the need to fund enterprise growth
increasing prices, by speeding up the collection of payment or
at a manageable level. Taxes also must be paid, expenses
even by arranging for payment in advance.
minimized and the unpredictable events which sometimes crop
up in business need to be prepared for. n Make arrangements to slow payments to vendors or spread
out payments over longer negotiated periods.
One area where small business leaders need to become
especially skilled in is learning how to price products and n Stay on the lookout for ways to improve your business
services for maximum profitability. This is more of a craft than a systems so as to enhance the efficiency and productivity of
science. Pricing is where marketing and finance meet at the your people.
customer level. Pricing is a critical driver of your profitability and n Reduce your need to finance and carry large inventories of
cash flow. A useful tool for thinking about pricing decisions raw materials by developing just-in-time systems matching
systematically is to develop a pricing grid along these lines: material needs with supplies more closely.
In all, the name of the game is really to try and wring as much
Pricing Grid cash as possible out of your balance sheet without shutting down
future growth.
Price per unit $50.00
“It’s time to look at your financial strategy and, if you haven’t
Units Sold 30,000 Percentages Per Unit
already begun to do so, make it a conscious part of the everyday
Variable cost /unit $40.00 management of your business. You’ll soon see how your
financial strategy, or more accurately strategies, fit into the
Sales Revenue $1,500,000 100.0% $50.00 overall scheme of things on the path to your Strategic Objective,
Variable Costs $1,200,000 80.0% $40.00 and how a clear set of financial strategies helps make all your
other decision making more effective and less clouded with
Contribution $300,000 20.0% $10.00 uncertainty.”
– Michael Gerber
Fixed Expenses $165,000 11.0% $5.50

Profit $135,000 9.0% $4.50

“Building a world class company calls for a world class
commitment to your own personal growth.”
Break-even sales revenue = $825,000 – Michael Gerber
Break-even sales units = 16,500

Discipline #4 Management
The transition of a business enterprise from ordinary to world
class doesn’t happen by chance. Instead, it needs to be directed
by management that has made a similar transition itself.
Accordingly, an aspiring entrepreneur has to do two things:
1. Build a high-performance culture which embraces and
welcomes change in the marketplace.
2. Develop and then keep upgrading the organization’s
operational manuals.
Leaders build a high-performance culture
n Integrate the vision into the culture of your
organization.
n Build a corporate structure which will
positively influence ongoing performance.
n Train and provide the right tools.
n Stay calibrated and on target by regularly
quantifying and evaluating.
A high-performance organization sees change as a welcome
resource – as an opportunity to test assumptions, add to the
collective knowledge and to grow the business. Change moves
everyone out of their comfort zones and should be viewed as an
opportunity to move forward rather than a threat to the status
quo. High-performance organizations use change to drive
innovation and growth.
To build a high-performance culture:
n Take every opportunity to reinforce your vision and your
values whenever you interact or meet with your people. With
every face-to-face communication, articulate your vision.
n Remove the obstacles to high performance by building a
corporate structure which will facilitate achievement. Develop
reporting relationships, accountabilities, rewards and
incentives which are aligned with your vision. Encourage
people to take risks and try new things.
n Provide the training and tools everyone will need to achieve
peak performance. Make it possible for employees to learn
everything they need to know. Provide the wherewithal for
them to learn how to use their training in practical situations.
Make available the tools that people require to get the job
done. Act as a facilitator rather than a road block when it
comes to high performance.
n Develop some key indicators of performance and then track
those indicators continuously. Keep everything calibrated and
aligned. Develop reporting mechanisms that will track
changes in these indicators so you can catch emerging trends
before they become embedded into your culture.
Another aspect of developing a high-performance culture is to
systemize how things get done rather than leave it up to the
whims and preferences of each individual to decide. By writing
an operations manual for each position in your organization, you
make it possible for new people to get up to speed quickly and
efficiently. This also builds confidence because people will feel
like they’re in the loop about what should be done and how. And,
if ever you decide to sell the business, these manuals will be very
helpful for the new owner as well.
E-Myth Mastery - Page 5
Leaders develop operations manuals
n Make a list of all the positions in your
company.
n Develop a company-wide section with
corporate policies and information on
products and services everyone needs.
n Add the position-specific information.
n Distribute and discuss the operations
manuals with employees.
n Create an ongoing update mechanism.
To set up your operations manuals for the first time:
n Start by listing all the positions in your company and the
number of people in each position.
n Assemble your company-wide information that will be a part of
each operations manual. In practice, this will usually consist of
a policies section, information about the company’s objective,
history and organization as well as information about your
products and services, positioning and so forth. The policies
section will also spell out working hours, dress code,
procedures for complaints, health and safety issues.
n Next, you put together all the information that relates to the
specific position. This will include a generic employment
agreement, details on compensation plans, reporting
requirements, metrics on which performance will be
measured and whatever else is appropriate. Typically, the
employee’s own actual employment contract and
compensation agreement is not included but is stored in a
more confidential place.
n Once you have your operations manuals assembled, you
then need to distribute them and discuss them with your
people. Introduce the manuals to your employees and get
them up to speed. Let them shape the final format of your
manuals so they become a worthwhile tool rather than an
impediment to success. Ideally, you want people to be using
their manuals daily rather than leaving them on the shelf to
gather dust.
n Your operations manuals will start to go out of date as soon as
everything is written down. Therefore, you need to keep
updating them regularly to enhance their relevance. Decide
who will be responsible for updating the company-wide
information in each operations manual when changes occur.
Determine who will keep the position-specific information
current. Nominate who will be responsible to generate a new
operations manual when a new employee is hired. Create a
written plan for updating the operations manuals with clear
lines of responsibility, and then follow through to ensure this is
not being overlooked. Have your managers physically go
through the operations manuals of their direct reports at least
twice a year to make sure everyone has current rather than
outdated information to work with.
n Use your operations manuals at every opportunity to show
they are an authoritative source of information.
“High-performance environments create a game worth playing.
They engage people fully and create an environment where they
can use all their skills and abilities to reach higher levels of
personal and professional competence with each new
challenge. Building a high-performance organization is the best
thing you can do to keep everyone in your game.”
– Michael Gerber
 E-Myth Mastery - Page 6

Discipline #5 Fulfillment
Leaders analyze and improve processes
n Pick a client fulfillment system, diagram it,
At the heart of commercial success lies your organization’s observe it in action and establish a baseline.
ability to generate satisfied customers. World class companies n Analyze the work flow and look for ways to
build an ongoing relationship with clients based on an exchange innovate individual components.
of value. A small business leader does two things:
n Document your new system.
1. Regularly evaluate on a systematic basis where you are now
in terms of creating satisfied customers. n Evaluate for performance enhancements
and then install and test the new process.
2. Develop systems to improve and enhance your client
fulfillment performance.
Customers are never satisfied with the status quo. They’re
always looking for more value. Therefore, effective business
leaders do something similar. They keep on fine-tuning their
Leaders determine “where we are now” client fulfillment systems. To become a world class leader, you
n Identify your inputs, outputs and costs for all also need to be doing the same. To be more specific:
of your client fulfillment systems. n Pick a specific fulfillment system to focus on.
n Select key indicators to track. n Determine exactly how well that system is performing at the
n Establish and document your baseline present time.
performance. n Break the system down into smaller components and look for
n Track and review how your indicators are ways to improve each individual component:
changing over time. • Can you reduce the waste products?
• Can your physical asset layout be improved?
• Can new and better technology be used?
Average enterprises assume all their customers are happy. A
• Can the process sequence be changed for better results?
world class enterprise evaluates all its production, delivery and
• Can this process be outsourced more efficiently?
customer service processes consistently so it can give client
• Can manpower be used in better ways?
fulfillment the attention it deserves. All of this information needs
• Are there other economies of scale available?
to be documented so progress can be measured.
n Once you’ve come up with some ideas, get everything down
In practical terms, the best way to determine where you are at
in writing. Document the system’s current baseline
present is by developing a customer fulfillment grid:
performance. Specify what you’re suggesting changing and
why. Forecast the performance of the improved process and
Customer Fulfillment Grid compare with current baseline performance.
Process Outline Inputs Outputs Costs n Take the time to ask some of the people who use the “old”
process for their suggestions and ideas. They will probably
• Staff have loads of ideas that may or may not be worth integrating
Identify here all
• Facilities • Results • Direct costs
the steps which
• Materials • By-products • Indirect Costs
into your “new and improved” process.
are involved in
• Supplies • Waste • Total Costs n Develop your tracking indicators and measure baseline
this process.
• Information
performance before and after implementation of your
Key Indicators suggestions. Have an opportunity to look at quantitative
measures rather than relying on more subjective input.
Indicator Baseline Prev. Period Current Period
“Don’t jump to premature conclusions and innovations!
• Volume A performance The previous The current Discipline yourself to thoroughly understand the system, the
• Total cost baseline is month’s month’s
• Inventory established for performance in performance in complete system. As you begin to look at the details of the
• Rejections each indicator this indicator each indicator system, you’re likely to see immediate opportunities for
improvement, but don’t rush the process. Don’t make ‘fixes’ as
they occur to you. Go through every step of the work flow
By documenting all your fulfillment processes in this way, you analysis. Get the whole picture. Then, and not before then, move
then have all the information needed in one place. After you’ve on to the innovation work. That way you’ll avoid false starts,
established your baseline performance and developed key impulsive tinkering that you’ll have to reverse later on, partially
indicators, you can then track whether new initiatives are making effective solutions to problems, and low-yield innovations.”
tangible improvements. If you also document your rationale and – Michael Gerber
the key assumptions you’re working from, over a period of time
you’ll gather objective data on the effectiveness of your “Client fulfillment is not an easy task. Customers can be fickle
management. Progressively, you’ll gain a better sense of what to and they’re not always going to tell you when and why they’re
do in the future to generate the most “bang for your buck”. As you unhappy. It’s up to you to do the groundwork to determine how
track your leading indicators, you can also get early warning of well you’re meeting and hopefully exceeding their expectations.
potential problems that are developing. With any luck, tracking You can’t afford the luxury of not providing exactly what your
these indicators will also enhance the consistency of all your customers want, need, or expect.”
customer fulfillment processes. – Michael Gerber

Discipline #6 Lead conversion
Lead conversion means to convert every possible contact with
existing or potential customers into revenue. To be world class, a
business leader has to maximize the results from all these
opportunities in two ways:
1. Give potential customers every conceivable opportunity to
say yes to doing business with you.
2. Make the most of your absolute best market – your existing
customers.
Leaders provide opportunities to say “yes”
n Engage prospective customers.
n Determine their real needs.
n Develop and deliver an emotional appeal.
n Provide a solution.
n Offer your product openly and honestly.
world class enterprises don’t do any selling as such. Instead,
they develop products and services prospective customers
actually need. They then offer prospective customers those
solutions with emotional impact and credibility. The end result is
people make a decision to buy rather than needing to be
pressured into acting.
To create new customers rather than merely attempting to make
new sales:
n Express genuine interest in the customer’s needs and
engage them. Demonstrate that you’re committed to forming
a win-win partnership with them.
n Find out exactly what the customer wants and needs.
Determine whether your products and services will actually fit
their needs. To maintain credibility, if you know of an
alternative offering that is a better fit, steer the customer in
that direction, even if it is offered by another vendor.
n Reinforce the emotional appeal you’re making to the
customer. Provide the customer confidence you understand
what they need and will provide them with a tailored solution.
n Go into more detail about the solution you propose. Reinforce
their positive perceptions and provide whatever other
information they require to make a good decision. Educate
the customer about your product or service offering.
n If customers accept your solution proposal, make it easy for
them to move forward with the purchase transaction. If they
don’t want to move forward, then build the foundation for more
business in the future if their needs change.
This generic sales process can then be adapted and molded to fit
the unique needs of your customers and your marketplace. Over
time, you can progressively optimize the way your sales people
sell and the channels you use to generate new leads and
opportunities. By focusing more on understanding and meeting
your customer’s actual needs and less on making a “sale”, you
build a relationship with prospective customers. That
relationship can form the foundation for future business, for
referrals to friends and associates, or to many other
opportunities in the future.
E-Myth Mastery - Page 7
For most businesses, however, your perfect target market is
your existing customers. You should be doing everything
possible to sell more to the people who have brought from you in
the past.
Leaders sell more to existing customers
n Designate existing customers as your most
important target market.
n Gather more information and get to know
their needs in fine detail.
n Create specific value-added programs.
n Communicate and follow through.
Average businesses focus solely on generating new customers.
The leaders of world class enterprises know that it’s always
much better to sell more to existing customers. Not only are
customer acquisition costs lower but more information about
them is already available and accessible. Your existing
customers can give you repeat business, referrals and
word-of-mouth endorsements that will build your reputation and
create buzz.
To sell more to your existing customers:
n Designate your existing customers as key market #1.
n Use your internal and external resources to gather more
information about what your customers need. Don’t rely on
third-hand accounts – get out and visit with your customers
and learn how to see your products or services through their
eyes. Build a database of information.
n Next, consider how you can add value to what they have
already purchase. This might be in the form of more
information, additional products, integrated services, special
emotional rewards or recognition – the possibilities are
unlimited. Focus intensively on adding genuine value and
you’re certain to be heading in the right direction.
n Once you have something credible to offer, communicate with
your customers. Be nonintrusive with the way this is handled,
but let them know something new is available that will fit their
needs like a glove. Establish a tracking system, so you can tell
which customers have responded and which have not. That
way, over an extended period, you can keep fine-tuning and
enhancing what you’re offering.
“Everybody everywhere wants to be treated with a certain basic
amount of respect. It’s human nature. We’re all that way. There’s
a special feeling to being a customer, but it’s fragile. There’s an
expectation of trust, however faint. There’s an expectation for
service, value, quality. So if you treat them like ‘professional’
marketers do, your customers will be a bit reluctant about you,
and their connection to you will be weak. They’ll leave you in a
nanosecond for someone who treats them better, more
respectfully.”
– Michael Gerber
“If your communications with your customers have the impact of
‘sales’ communications, they will be perceived as being in the
interests of your business, and will be seen as less important,
maybe even undesirable. If your communications have the
impact of ‘service’ or ‘administrative’ communications, they will
be perceived as being in the customer’s best interests, and will
have far greater effectiveness.”
– Michael Gerber

Discipline #7 Lead generation
Lead generation must be ongoing and continuous. Whenever a
business stops generating leads for new business, the company
grinds to a halt. In practical terms, this means two things:
1. Keep reaching your target markets week-in and week-out to
generate awareness and visibility.
2. Generate some genuine impact within your established sales
channels.
Lead generation is the lifeblood of any firm’s marketing program.
It’s very easy to think this is an activity which involves cloning
what everyone else does, doing things the traditional way or
even taking a stab in the dark and seeing how it goes. This isn’t
the way a world class enterprise operates, however. Instead,
lead generation needs to be approached systematically and with
the end objective front of mind.
Leaders keep reaching target markets
n Identify and prioritize your most effective and
appropriate channels.
n Evaluate cost, coverage and any subjective
criteria you may wish to use.
n Determine your budget and plan
accordingly.
n The first challenge is to decide which of all the channels
available are best suited to reaching your enterprise’s target
customers. This will be a function of:
• The exact nature of your product or service.
• Your company’s image and strategic objective.
• The interests of your prospective customers.
• Your company’s ability to use the channel effectively.
• Impact, credibility and ability to make a personal connection.
n Based on your preferences and the channel’s reach and cost,
you can then rank all the options in order of preference. Come
up with your own personalized best-to-worst list.
n Decide how much money you have available and allocate that
over a 1-year planning cycle. Keep in mind you can update
this later if necessary, but decide which channels you’ll use,
when you’ll use them, how much you’ll spend, what result
you’re expecting and who will be accountable for following
through on this plan.
Note, however, that on a daily basis, your prospective customers
will be exposed to a vast array of business offers, marketing
communications and other information. It’s not enough simply to
make them aware you exist. You also have to stimulate their
interest and motivate them to ask for more specific information.
For this to happen, everything the advertiser does has to be in
sync with all the other elements. The prospective customer has
to do a few different things:
• Make a connection with the product at an emotional level.
• Have that connection reinforced.
• Make the transition from awareness to acting on the offer.
Once again, some advertisers and small business leaders leave
this to chance or hope for the best, but a far more powerful
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E-Myth Mastery - Page 8
approach is to actually keep these transitions in mind when
developing your advertising materials.
Leaders generate leads, not just awareness
n Follow a specific 10-step process when
creating your advertising materials.
n Focus on appealing to the people who need
your product or service first and foremost.
So how do you achieve all that? world class leaders follow a
10-step process when developing advertising materials that will
generate leads:
1. Specify your desired results – whether you want to create a
favorable impression, make a sale or motivate people to buy
at a later time.
2. Think about the context of the channel you’re using – and
whether that will impose some constraints or not.
3. Create your “instant of connection” – the visual image which
will appeal to the emotions of prospective customers.
4. Define the logic you’ll use – whether you’re using preexisting
knowledge, presenting a complete line of reasoning,
providing evidence or testimonials.
5. Determine what essential information must be included – and
establish what format would be best suited to delivering that
information persuasively.
6. Establish how you’ll qualify prospects – so you don’t end up
spending resources attempting to sell to people who can’t
buy.
7. Incorporate your brand identifiers – usually your logo and
other elements.
8. Explain what people need to do next – so it’s easy for people
to make the transition from being contacted to whatever is
your next step. Make this next step obvious and low risk to
enhance results.
9. Integrate all the elements – so you end up with a smooth
piece which flows rather than something jerky which has the
effect of being a collection of odd parts.
10. Produce your advertising materials, place them in the
channel you’ve selected and measure the results you
achieve.
“At its most basic level, lead generation is identifying people with
needs you can satisfy, and telling them so in ways they can
understand quickly and easily. It’s getting their attention and
talking to them. Keep that in mind and the rest is detail. Important
detail – people can be amazingly complex and subtle – but detail
nonetheless.”
– Michael Gerber
“Every world class company, every company marching to the
tune of entrepreneurial wisdom and magic, must continually
learn to reinvent itself. And with it, its people. And with its people,
the place that it holds in the heart and mind of the world. As Ray
Kroc did at McDonald’s, over and over again. As Fred Smith did
at Federal Express. With every epiphany, with every new
possibility, life became infused with more passion and a deeper
sense of purpose. Welcome to the world of the entrepreneur.”
– Michael Gerber