The Real Reason Businesses Fail (And How to Avoid It)

The Misconception About Starting a Business

Many people believe only entrepreneurs start businesses. But in reality, most businesses are started by employees who get frustrated working for others. They believe that just because they know the technical work, they can run a business around it. However, this belief often leads to failure.

The Technician Trap

Jake’s failure stemmed from a common mistake: assuming that being good a
t the technical work is enough to run a business. According to Michael Gerber, this is a classic case of a technician suffering from an "entrepreneurial seizure."

The Three Personalities of a Business

Michael Gerber says that a successful business needs three personalities:

• Entrepreneur – Thinks about the future and brings vision.

• Manager – Organizes and maintains order using past experience.

• Technician – Works in the present, handling the technical tasks.

Most people, like Jake, are 70% technician, 20% manager, and only 10% entrepreneur—which is an imbalanced recipe for failure.

The Life Cycle of a Business

Every successful business goes through three stages:

• Infancy Stage
  The owner does everything. With growth, they become overwhelmed.

• Adolescence Stage
  The owner hires help, but without proper systems, quality drops. If the owner takes back control, the business regresses.

• Maturity Stage
  The business runs with minimal owner involvement, supported by systems and delegated responsibilities.

System vs People Dependency

A people-dependent business collapses when good employees leave. But a system-dependent business thrives regardless of staff changes. McDonald's and Starbucks operate on clear systems and checklists, allowing them to function consistently across 30,000+ locations.

Think Franchise Model From Day One

Even if you’re running a single shop, build it like a franchise—where everything from recipes to customer service is documented in a system. This approach ensures that any new person can quickly learn and maintain quality.

Work ON Your Business, Not IN It

Most people start a business to enjoy freedom but end up becoming slaves to it. True financial freedom comes when the business can function without your daily involvement. Like Zuckerberg moved from coder to strategist, business owners must step back from technical tasks and build systems that allow operations to run without them.

Conclusion

Success in business isn’t about how good you are at the technical work. It’s about how well you design the system. Think like McDonald’s. Be an entrepreneur, a manager, and a technician—or build a team that covers all three. And always remember: work on your business, not in it.