Starting a business is a daunting task. Running a business is a daunting task. Selling a business, closing a business, expanding a business, and everything in between and around these phases is difficult. These five books can help you:
- Better structure your business to give you a better chance of success
- Help you run your business more effectively everyday
- Give you a leg up on your competition
I would recommend each of these books to anyone hoping to start or grow any type of business in today’s market. They’re presented here in chronological order, based on the steps you’ll take from business creation to management.
The E-Myth Revisited, by Michael Gerber
A classic and a great place to start before you start your business. The “E” in “E-Myth” doesn’t refer to electronic, it refers to entrepreneurs. The basic premise is that not every business owner is an entrepreneur and that not every technician is cut out for business management.
It’s a great cautionary tale for people looking to turn their passion into a business. I’m looking at you, chef who’s never used an accounting package before. Or coder who’s never worked in sales. Or salesman who’s never managed an HR employee. There are plenty of places where passion without practical knowhow result in catastrophe.
Michael Gerber covers both the skillsets required to run a successful business and the phases that a business passes through before it comes into maturity. This is a great read before you start gathering resources and thinking about how you’ll structure your business.
Legal Guide for Starting & Running a Small Business, by Fred Steingold
After you’ve decided that you’re going to make a go of it, you need to get all your ducks in a row. Fred Steingold is an Ann Arbor-based attorney, focusing on real estate and business law. In this guide, he walks you through the entire business startup process, helping you navigate all the legal hurdles that you’ll encounter along the way.
Should you setup an LLC, an S corp, or a partnership? If you have no idea which one you’re looking for – or don’t even recognize some of those options – you’re going to need some help. Steingold also gives pointers on negotiating a lease, insuring your business, and cutting down your tax liability.
I’ve said it a dozen times and I’ll say it a dozen more – when in doubt, work with an expert. If you don’t have your own lawyer, this is a great place to get a lay of the land before you jump into dark water.
Accounting and Finance for Your Small Business, by Steven Bragg and Edwin Burton
Your business needs an accountant. For a while, that accountant is likely going to be you or one of your early employees. As with your legal footing, this is no place to muck about. Braggs and Burton have written a 300+ page tome on running a sound – financially, at least – business.
You’ll get details on budgeting, accounting, product management, fraud, cash flow, and financing. Even if you’ve got a real accountant on your side, this can be a great tool for businesses in the process of considering a fundraising opportunity.
Finally, Accounting and Finance covers financial analysis, giving you the tools you’ll need to understand where your business is headed and what you can do to change its course. The one caveat to all this is that the information in here is dry. It is an in-depth look at how business are run and managed, not a south-of-the-border, Clive Cussler adventure romp. Buy some coffee and get into it.
Good to Great: Why Some Companies Leap … And Others Don’t, by Jim Collins
Now that you’re up and running on a solid financial foundation you can worry about why no one is buying what you’re selling. Jim Collins’ Good to Great is a management classic and can help you figure out how to make your business a success.
Collins focuses on some major businesses, and how they beat out their competitors. One of the book’s main focuses is how the best businesses don’t figure out which people they need to solve a problem, they figure out which people they want and then address the problems as they pop up.
This is such a classic – and a 15-year-old classic, at that – that some of the advice is now going to seem obvious or dated, but there’s a lot of goodness left in here. Even if the only thing you get out of it are the tips on keeping the entrepreneurial spirit alive, you’ll be better off than when you started.
Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay
This is an old favorite of mine and a book that gets all kinds of press every decade or so when things go from fantastic to horrific. In today’s market, that usually means that people pull it out when a bubble bursts.
Mackay was a Scottish man-about-town living in the mid-1800s. His observations on the cyclical nature of popularity and economics has been a foundation for reports and financiers alike. For a budding business, there are plenty of lessons here about cautious optimism.
This is the last book on the list because it has the least immediate application to business, but anyone interested in understanding markets should dive into this. Some of the bubbles are simply fantastic – notably, the Dutch tulip mania of 1637 – and they end up being chock full of useful information regarding the nature of demand and trends.
How to use what you’ve learned
The goal of these five books it twofold. First, even in Madness of Crowds, you should be able to pull out nuggets of wisdom to apply to your everyday business. Second, you should gain a better understanding of how the business you operate fits into the larger marketplace.
You can read these in any order – and some may be more reference than cover-to-cover reads – but you should at least peek into and skim all of them. You’re going to find something that you didn’t know, and more importantly, something that your competitors have overlooked.
If you’ve got other suggestions, drop a line in the comments and let me know what you recommend.