Have you ever heard the phrase, “work on your business instead of in it?” Michael Gerber (he of the E-Myth book notoriety) popularized this concept if he didn’t invent the phrase. Gerber chastises business owners for trying to do everything instead of doing the strategic things that will grow the business. He points out that the “jack of all trades,” “chief cook and bottlewasher,” etc epithets are crutches and should not be celebrated. Instead, he recommends systems over personalities and methodologies in lieu of gut instinct. 

Many years after writing the E-Myth, Gerber is still speaking, writing, and training. A blog post earlier today at Inc.com addressed what he considers to be the 8 Essential Parts to a Business (And How They Work Together.) He begins by saying that one “must understand that a small business is a system in which all parts contribute to the success or failure of the whole:”

Like Henry Ford understood the relationship between the Ford Motor Car and the Ford Motor Company (which manufactures, sells and services the car), you must understand the connection between all the parts in your business and how your company relates to the world.

Here are the essential parts of your business:

1. Consumer

Perhaps you’ve spent your life working in an industry. You know all about that industry from the inside. But building a business requires going outside. You must consider your customer’s needs first and foremost.

2. Competitor

Every customer is being pursued by other companies in competition to yours. They are all making offers to solve the same problem your business solves. Your job is to analyze those solutions, and know how yours is better.

3. Channels of Distribution

There are numerous channels of distribution available to you, but you need to know which ones are most effective for your business. The channels you ultimately choose will determine your reach and your cost.

4. Media

How will you get the word out about your business? You could get on the news by doing something newsworthy, or by buying advertising. Get yourself out there as often as you can.

5. Financial

This involves capitalizing your new venture. Likely, your first steps will be bootstrapping–or financing through yourself and those you know. Down the road, investors may be a possibility, but all the pieces of your business must be running smoothly.

6. Strategic

The strategic part of your business is what happens inside it. They include Strategy, Marketing, Operations and Finance–the four essential functions in your business.

7. Tactical

The tactical aspect of your business overlaps into Marketing, Operations and Finance. This is the execution of the strategy that you have created.

8. Incremental

All the work done by the workers in your business falls into this category. The tactical part lays out the tactics, the incremental part performs them.

You can tell that Michael Gerber is no novice when it comes to entrepreneurial matters. He has a keen ability to cut through words and phrases that are over used, and therefore meaningless, to succinctly get a point across. His entire hypothesis is that a business is an organization of many individual parts that work together in processes not unlike the human body and its respective systems.

When one component part is malfunctioning or misguided, it affects the other parts. Collaboration, synergy, and harmony arise when we achieve coordination of effort. Such clarity masterfully improves operating performance!