Every week as SmallBizLady, I conduct interviews with experts on my Twitter talk show #SmallBizChat. The show takes place every Wed. on Twitter from 8-9pm ET. This is excerpted from my recent interview with @MichaelEGerber Michael E. Gerber is founder/chairman of Michael E. Gerber Companies and E-Myth Worldwide. He has published 13 books including the international best seller The E-Myth Revisited and his latest book The Most Successful Small Business In The World (Wiley, 2010). He has been dubbed World’s #1 Small Business Guru by Inc. Magazine. For more information http://www.inthedreamingroom.com/

Smallbizlady: Michael, many of my readers are looking for viable alternatives to corporate work life. You have counseled tens of thousands of post-corporate entrepreneurs caught in what you call the “Entrepreneurial Seizure,” or what you consider to be the fatal mistake that most small businesses make. Can you tell my readers more about this fatal mistake and how to avoid it?

Michael E. Gerber: Great question. The “entrepreneurial seizure” lies at the heart of most failures in judgment when someone decides to leave his or her job to go out on their own.  The excitement of independence associated with getting rid of the Boss is almost always fueled by a flawed understanding of what being on your own means, and how it successfully can work.  Most small businesses are started by technicians suffering from an entrepreneurial seizure, rather than by true entrepreneurs.  The Technician believes in the fatal assumption that because he or she knows how to do the work…graphic design, technology of all kinds, cooking a great dinner, repairing an automobile, snowboarding…they can turn what they know into a business that frees them from the Boss.  The Graphic Designer creates a Graphic Design business. The Technology Guy creates a technology business.  The Cook creates a restaurant.  The Mechanic creates an Auto Repair business.  The Snow Boarder creates a Snow Boarding business.

But instead of getting free of the Boss, they have become their own boss, and they’re now, with absolutely no understanding about how it happened, working for a lunatic, doing it, doing it, doing it, doing what they know how to do.  Snowboarding, cooking, fixing a car, making a website.  Entrepreneurs make the transition from working for someone else to going out on their own much differently.  Entrepreneurs invent businesses that work without them.  Technicians, as we’ve already said, create businesses that work because of them.  And in the process, the Entrepreneur is liberated from what I call The Tyranny of Routine, and the Technician becomes a slave to it.  In the Entrepreneur’s case, the business works.  In the Technician’s case, the Technician works. And that’s why of the 500,000 new businesses that are started every month in the U.S.A. most will fail. According to a recent study done by the Kauffman Foundation, 81% of all businesses in the US employ no people, other than the owner.  They’re sole proprietorships.  True Entrepreneurs are never sole proprietors.

Smallbizlady: So many people out of work are starting businesses. I call them pink-slip entrepreneurs, what advice do you have for them?

Michael E. Gerber: How you start a business is even more important than what you do after you’ve started it.  The most important advice I can give to your “pink slip entrepreneurs” is to join me in The Dreaming Room, where we address the opportunity to start a new life through the judicious use of a “blank piece of paper and beginner’s mind.”   In short, what’s your Dream, your Vision, your Purpose, and your Mission?

The worst thing that can happen once you launch your new company is that it turns out as badly as the one you used to work for.  And I can guarantee you, it will, unless you begin with a true sense of the meaning underlying your company’s launch, growth and sustenance.  In short, this is The Age of The New Entrepreneur, where meaning is everything, and money is what follows.  Most important for the New Entrepreneur is to know that there is a way to create a company, and to create one without being aware of, and understand, that way, is to create a disaster.  My purpose in life is to teach that way to those ready and willing to learn it, just as I have done over the past 35 years to more than 70,000 small business owners throughout the world, and millions of my readers.

Smallbizlady: There’s been lots of talk in mass media about saving the US economy by making this the year of Start-up America.  What are the ingredients that foster entrepreneurship?

First, an immense desire to create a company that does something important. Second, a true commitment to stay the course, no matter how difficult it will be. Third, a truly religious need to live the independent life and to teach others how to do that as well.  And, finally, unbridled passion for inventing the original something that others need to transform their lives, and to deliver that something in the form of a company that can grow to reach all those some-bodies the business is intended to serve.

Smallbizlady: Much of the model you laid out in The E-Myth Revisited has to do with the importance of systems in building a franchiseable business. What is the shape of the process and the practical steps for business development in your model?

Michael E. Gerber: As I say in The E-Myth books, the system is the solution.  The System I’m talking about is first and finally The Core Operating System of your business.  It comprises three essential functions that must work in a completely integrated way.  These are Lead Generation, Lead Conversion, and Client Fulfillment.  Whether the business is McDonalds or Starbucks, FedEx or Dell Computer, or Manny, Mo & Jack’s, these three systems are critical to the success of that company.

The building these systems is the process we teach at E-Myth.  They are really arranged in a very simple, three-step approach.  Step One: Intentional Dreaming–The Dream, The Vision, The Purpose, and The Mission. Step Two: Intentional Organization–Conceiving, Building and Perfecting the Turnkey Client Fulfillment systems that comprise the operating reality of the company. Step Three: Intentional Growth–Conceiving, Building, and Perfecting the Lead Generation and Lead Conversion operating systems of the company.  Every business under the sun is conceived, built, and perfected in identically the same way, using identically the same processes.  There is no magic in this, there is simply the intentionality of all this, in the form of The Great Result the entrepreneur has set out to produce through the unique company he or she has set out to invent.

Smallbizlady: Do you think that the Internet era has changed the game for small business?

Michael E. Gerber: The internet era has of course changed the game for small business, but not as dramatically as most would profess.  After all is said and done, the internet is simply a medium through which the business of business is transacted, a conduit through which one can communicate and deliver the results one has set out to deliver, again, in the form of the Great Result I spoke of earlier.  As many or more companies fail on the internet as anywhere else.  And many, many more businesses (especially sole proprietors) stumble along without every making an impact on anyone, and most without selling anything to anyone.  In short, if an internet business fails to follow the three step development process I just outlined, it will fail just like any other business will.   So, I must say frankly that I am not a great believer in the internet as the be all and end all of business opportunity that others see it to be.

Maybe I’m simply too old, but I think not.  In short, I think that given my experience of internet entrepreneurs as being very much the same as any other types of entrepreneurs: if they are absent, the entrepreneurial fundamentals that are absolutely essential for any new company to grow, the result will be the same: lack of direction, lack of intention, lack of execution, and diminished results.

Smallbizlady: In your new book you write–very counter-intuitively to most of the received wisdom out there–that the reason most small businesses fail is not that they dream too big, but that they dream too small to create a truly thriving enterprise. What do you mean by dreaming big?

Michael E. Gerber: By “dreaming big” I mean conceptualizing a result greater than anything you have ever experienced.  When I started my first company, now E-Myth Worldwide, I had absolutely no business experience.  All I had was an idea bigger than life itself.  My idea, my Dream, was to transform small business worldwide.  That Dream was the energizer for everything that was to follow.  That dream for me was the realization of a picture I had formed in my mind of the typical small business I walked into every day, where the owner lived for sweat equity, worked 18-hour days, and had no idea that his or her life could be any different than the overwhelming life he experienced, and that all of his or her peers experienced in the day to day hell of doing it, doing it, doing it.  I knew, don’t ask me how, I just knew it didn’t have to be that way.  Then I saw McDonalds and the impression I walked away with was huge.  I suddenly realized exactly how the tragic condition of small business could be turned on its ear.  All I had to do was to McDonaldize every small business by teaching the owner how to think like the founder of McDonalds, Ray Kroc, did.  That led to the invention of my company E-Myth worldwide.  That’s what I mean when I say Dream Big.

Dream about Great Results.  Dream about a world that works, rather than one that doesn’t.  Think of one thing you wish to transform and then go to work ON it, rather than IN it, which quickly became my E-Myth Mantra. The result of that will be something bigger than you ever imagined. Dreaming small is not dreaming at all.  Dreaming small, which is what most small business owners do, is really the act of shrinking yourself to live a life that you can imagine because it fits your perception of what you know and are able to do.  There is no imagination in that.  And a life without imagination is already dead.  In my book, “Awakening the Entrepreneur Within,” I am focused on awakening the soul of my reader to enable him or her to discover the entrepreneur within.  And, once discovered, to put his or her imagination to work to invent a new life beyond anything he or she has ever done before.  Just like I have done.  Just like you have done.  Just like every entrepreneur does.

Smallbizlady: So, in your view, the real startup when approaching the creation of a company is YOU–the entrepreneurial personality in each of us. Tell me more about that and why it’s so vital.

Michael E. Gerber: Yes, the startup is you and nothing but you.  The startup isn’t the business.  The business is nothing more or less than a product of your imagination.  Your imagination is nothing more or less than the energy flowing through the entrepreneur as he or she looks at the world with the question: What’s missing in this picture?  When you begin to experience that energy, the realization that before you experienced it you, the entrepreneur, were actually asleep, you suddenly come to the realization that you’ve been living a life significantly smaller than the one you are entitled to live. When that happens – and it’s happened to you, exactly as it has happened to me – you suddenly come to the realization that you will never go back to living your life that way again.  Then, just as suddenly, you are almost assaulted by a rush of new perceptions, new ideas, new insights, so dramatic, that at times you can’t even deal with them they are so flush with excitement and promise.  But, remember, that’s simply the beginning of the process that participants in my Dreaming Room begin to experience.

As time wears on, the awakened entrepreneur morphs into the new entrepreneur, and the new entrepreneur morphs into the enlightened entrepreneur, and the product of all that is stunning to see.  People like Muhammad Yunis, the founder of the micro lending phenomenon which became Grameen Bank know exactly what I’m talking about. First he wasn’t an entrepreneur, and then he was.  First he was a professor of economics, and then he was transforming the economic reality of the world.  That’s what I mean when I say the Start Up is you.

Smallbizlady: It’s interesting to me that in your view of a truly awakened entrepreneur, they would not ever buy in to a franchise. Does this go against the E-Myth point of view? Don’t franchises bring freedom to those who own them?

Michael E. Gerber: Of course the truly awakened entrepreneur wouldn’t buy a franchise.  Why would she? The franchise is someone else’s Dream.  Not the entrepreneur’s.  The entrepreneur is the one who invents a franchise company, not the one who buys a franchise.  If the entrepreneur were to buy the franchise, he would immediately set about the task of taking it apart and turning it into something else.  And, in the process, he would destroy the franchise.  No, the one who buys a franchise is either the Technician – he buys a system that works and then he works it – or a Manager – he buys a system that works and then manages it.  And that’s the way it ought to be.

Smallbizlady: My readers are very interested in the intersection of business and lifestyle design. What does an “Awakened Entrepreneur” know about getting this balance right?

Michael E. Gerber: An Awakened Entrepreneur isn’t interested in balance.  An Awakening Entrepreneur is passionate about creating.  Creating is, by its very nature, unbalanced.  But, to the Creator, it doesn’t at all feel that way.  It feels like the optimal flow of life.  Creating is a power all its own.  It takes you where it wants to take you, and the creator simply follows where it takes him.  Just like joy.  Joy is not balanced either.  Joy is explosive; it is the intense experience of life’s purpose all happening at once.  So, if you want balance, don’t become Walt Disney.  Don’t become Michael Dell.  Don’t become anyone who seeks the unknown.  Balance is a figment of our known reality.  Balance has never been something that people who are disinterested in control ever pursue.  The only people who crave balance are people who are desperately out of balance.  When you’re living the creative life, you achieve a balance all its own.

Smallbizlady: After 30 years of working with entrepreneurs, do you see a fundamental change in Entrepreneurship today? If so, what is different now and why?

Michael E. Gerber: Actually, no.  I don’t see a fundamental difference between the entrepreneurs of 30 years ago and the entrepreneurs I meet today.  Other than this: today’s entrepreneur is more likely to be interested in meaning rather than money. Not that he’s not interested in money; he obviously is.  But money that comes with the absence of meaning is too big a price to pay for the new entrepreneur I’m engaging today.  Understand, I’m not saying that everyone I meet today has the question of meaning in mind.  But, when I begin the conversation about meaning, more people I meet today are interested in having the conversation than ever before.

Smallbizlady: How do you feel about people being called to their entrepreneurial journey or completely compelled to run their businesses?

Michael E. Gerber: So, there’s something going on today in the world of the entrepreneur.  And that’s why I call it The Age of The New Entrepreneur. By asking the question as I’ve been doing, something interesting is beginning to wake up, not only in the people I’m talking to, but in me as well.  So, Welcome to The Age of The New Entrepreneur.  Let’s kick ass and take names.

Smallbizlady: I understand you have a new venture launching Thursday 4/22/10 called “Origination.” Can you give us a sneak peak as to what exactly Origination is and will become?

Michael E. Gerber: At Origination, we have invented the process essential to awaken the spirit, inspire her to grow, and then to teach her the skills she requires to create a New Venture that can transform the world. At Origination we believe that every individual can create a New Venture born out of his or her own inspiration and imagination to do something uniquely through a company of his or her own invention and passion, and that, by so doing, he or she can transform the world.

The process created to achieve this result by Origination begins in what we have come to call, The Dreaming Room.

If you found this interview helpful, join us on Wednesdays 8-9pm ET follow @SmallBizChat on Twitter.

Melinda Emerson, known to many as “SmallBizLady,” is a Veteran Entrepreneur, Small Business Coach and Social Media Strategist who hosts #Smallbizchat weekly on Twitter for emerging entrepreneurs.  Her first book Become Your Own Boss in 12 Months was released in March 2010.