Why Staying Small Is the Next Big Thing for Business
Life gets busy. Has Company of One by Paul Jarvis been on your reading list? Learn the key insights now.
Have you ever wanted to start a business, but felt like it was a Herculean undertaking without a big financial backer? In his best-selling book, Company of One, Paul Jarvis challenges this notion and more.
Company of One explains how you can achieve the success of a large enterprise without having to grow your business. The book argues that success is not necessarily defined by the volume or pace of growth. By remaining small, you can build your company around your lifestyle needs and preferences through ‘scalable systems’. Ultimately, this focus on developing scalable systems facilitates growth without the need for additional employees, and promotes long-term satisfaction.
“Business success does not lie in growing something quickly and massively, but rather in building something that’s both remarkable and resilient over the long term.”– Paul Jarvis
About Paul Jarvis
Paul Jarvis is a former Silicon Valley professional turned author. Company of One is his first book, but he also writes for some of the world’s leading publications, including Inc.com, Fast Company, and Huffington Post. Jarvis also wrote a popular, newsletter, Sunday Dispatches, a newsletter he established.
Besides his work as an author, Jarvis hosts classes on how to be a successful freelancer, where he has advocated for the contrarian idea that businesses don’t need growth to be profitable.
Jarvis is also the founder of the website analytics company Fathom Analytics. Fathom is a real-life example of a company of one – that doesn’t need growth to be profitable. Jarvis and his co-founder, Jack Ellis, are the sole employees. They have fully bootstrapped the company through the reinvestment of customer profits.
How did they do it? Join us to find out.
StoryShot #1: Lack of Growth Defines a Company of One
Jarvis uses the first third of Company of One to define what “company of one” means. A company of one isn’t a startup business. Nor is it another word for a freelancer.
What is the difference between a startup and a company of one? Startups have one primary goal: to grow. Companies of one, on the other hand, purposefully remain small.
However, unlike a freelancer, companies of one don’t work to earn. Freelancers make active income. The second they stop working, the money stops flowing in. Meanwhile, companies of one make both active and passive income.
One person doesn’t have to run a company of one. You could start up a company of one with your partner, your closest friends, or your most brilliant colleagues. The only feature that it must have is that it needs to be kept small.
The Benefits of a Company of One
A company of one doesn’t grow progressively larger or require constant work. But this isn’t necessarily on principle. Instead, rejecting traditional growth mechanisms can get you the following benefits:
A company of one is small, which makes these micro-businesses extremely agile. As a result, they can often adapt rapidly to changing realities and have a consistent sense of purpose. Another benefit of this agility is less bureaucracy. For example, you don’t have to run your decisions by a board of executives or shareholders.
As a sole proprietor, you have complete control over the brand vision. That doesn’t just mean you only get autonomy over business decisions. You also get to decide how much of your life you want to spend at work in the first place.
Innately, larger companies are more complex than smaller ones. But for a company of one to be successful, the foundational principle is that it must remain simple. This means a simple customer base, simple product offerings, and a simple business structure.
StoryShot #2: Running a Company of One Requires the Right Mindset
Jarvis spends a lot of time talking about why everyone should aspire to be a company of one. The main idea is this: running a company of one allows you to build your business around your lifestyle.
“If you’re a company of one, your mindset is to build your business around your life, not the other way around.”– Paul Jarvis
In the modern day, most people do the opposite. Work is the primary driver of daily schedules. As a result, we often plan life events around when we’re working or the project deadlines we need to hit.
Instead, the book inspires us to fund our lifestyles with our passions and reminds us that a busy life isn’t a good life. Working more productively can help reduce the time and energy it takes to earn your living.
Another aspect of the company of one mindset is the difference between passion and purpose. You must have more than passion alone to succeed.
“Although purpose and money are not mutually exclusive, you’re more likely to be resilient when you know that even in awful or stressful situations, you’re working toward a greater and larger good. This sense of purpose comes from values that are unchangeable and central to both individuals and companies as a whole. Companies of one know that they can enjoy their work without always enjoying every aspect of it.”– Paul Jarvis
Have a clear purpose guiding your business decisions. A key tenet of that purpose is that you must decide you want to remain small, even in the face of an opportunity to grow.
For the owner of a company of one, growth equals decline. Success, on the other hand, means sustaining a particular income level. That income level is something you get to define.
Here’s how: first, you must outline the type of life you want to live. Think about what kind of home you want to live in, the type of car you hope to drive, and the number of vacations you wish to take each year.
Next, you work backward to figure out exactly how much money you need to live your desired lifestyle. Then, you build your business around this figure, and once you reach your goal, you get to take a much-deserved break.
Earning More Isn’t Always Better
What if you hit your income figure but want to keep working? Jarvis warns you to expect tougher times ahead because more profit often equals more problems.
Working more may mean you acquire more customers. At that point, you’ll need to spend more time on tasks like customer service to satisfy this greater customer volume. You’ll have to hire more workers to meet that demand. This will effectively eliminate your company-of-one status.
That type of work environment is the antithesis of a company of one. For this reason, Jarvis recommends saying, “enough is enough” once you hit your pre-designated income figure.
StoryShot #3: Don’t Quit Your Day Job (Yet)
By now, you should understand what a company of one is and what type of mindset you need to run one. But it isn’t time to quit your nine to five just yet. First, you must build up your side hustle.
This point may seem counterintuitive at first. After all, how are you supposed to build an entire business while you’re working?
The book doesn’t encourage building just any business, though. Instead, it enables you to build a successful one. Your business won’t be successful if you need quick cash to fund your lifestyle.
Instead, build your passion project during your free hours. Start by coming up with your business idea. Then try to land your first few customers to gauge traction and interest in your idea.
Once you have determined that there is a clear demand in the market for your product or service, you can finally think about quitting your day job.
A Real-Life Company of One
Company of One offers several instances of the type of business it describes. The first example in the book is cartoonist Tom Fishburne. Fishburne built a cartoon company of one before leaving his corporate job.
Fishburne only left his Vice President role after winning a handful of clients. He wanted to ensure he had a stable income to support his family before making his company-of-one dream a reality.
Fishburne is an obvious success story. He and his wife have run their company of one, Marketoonist, since day one. Today, he reports that he makes more from Marketoonist than in his corporate VP role.
StoryShot #4: Passion Isn’t Enough When Choosing Your Product Idea
So, you quit your job and are on your way to growing your company of one without getting bigger. How do you get started?
Obviously, the first thing you need is an idea for a product or service. Jarvis suggests using a passion project, side hustle, or freelance gig to inspire you. The more passionate you feel about the idea, the better.
However, you should also understand the downfalls of turning a passion into a business. Studies show most people are passionate about arts, music, or sports.
If your passion lies in one of these areas, you may have an uphill battle ahead. After all, everyone who wants to be an athlete won’t be a sporting superstar.
Instead of relying solely on your passions to inform your company-of-one idea, you need to dig deeper. Be realistic about which of your passions people will pay for.
For example, say you’re into making digital art for your Instagram. You can’t create a business out of posting your art on social media. But you may come up with a business idea of transforming your art into NFTs that can be sold on a marketplace such as OpenSea for a profit.
Iterate on Your Product Using Customer Feedback
Once you’ve determined your product or service idea, it’s time for launch. But you may think: shouldn’t you perfect your product before launching it? The answer to this question is no.
Launch a product in its early stages. That way, you can receive valuable feedback from your customers. This feedback can then help you hone your product, figure out the right pricing, and more.
Why should you do this? Because when you launch your product as early as possible, you can start earning money immediately.
“Companies of one need to continually iterate on their products to keep them useful, fresh, and relevant to the market they serve. So, launch your company quickly, but then immediately start to refine your product and make it better. When you launch a first version of a product, you’re guessing at a lot of things — how it’s positioned in its market, how easy or difficult it will be to reach your target audience and get its attention, and how willing people will be to buy it and at what price. But the good news is that once you launch the first version, data immediately starts to pour in. How are sales going? How are the reviews? How is customer retention? Are they so excited about your product that they are telling others? You can and must use this data to further refine your product to be an even better and more useful solution to the problem you set out to solve.” – Paul Jarvis.
StoryShot #5: Defining Your Audience Is Key to Success
Here’s another tip to help you identify the best idea for your company of one. Start with your audience. Defining your target audience will help you understand how to market your product(s) and customize your brand.
Ideally, you want to define a niche audience. A niche market is a subgroup of a larger market. For example, you may opt to target first-time home buyers or existing homeowners. Each of these audiences is a niche subgroup that makes up the homeowner market.
Don’t be afraid to be specific, either. Identify your target audience’s age, interests, and shopping habits. Work to understand how you can reach this audience.
Once you’ve identified how to market to your niche, start thinking about how to keep that audience. A big goal of a company of one is to retain customers instead of having to acquire new ones, which requires more effort.
Instead, when you keep your existing customer base, you can enjoy the benefits of a loyal clientele that will market your products and services via word of mouth.
Why You Want Referrals
Companies of one can benefit from referral marketing through their focus on retention instead of acquisition. Referral marketing is when your customers tell other people about your products or services. Those people then buy your product or service based on their contact’s positive opinion of your brand.
Studies show that customers who come to brands via referrals are 37% more likely to keep buying from you. Referrals also contribute 18% less churn than customers you acquire from other channels. Best of all, the average referral generates over 16% more revenue than traditional customers.
StoryShot #6: Grow without Getting Bigger
By now, you may be wondering: how exactly do you grow a business that has the one goal of not growing? You can scale your business without needing to hire more employees. Instead, the goal is to drive business development by growing your customer base, profits, or reach.
You need to leverage what Jarvis calls scalable systems to pull this off. These systems will allow you to grow your profits while also keeping a lean business model.
What is a scalable system? A scalable system is a system that is flexible enough to accommodate rapid changes. These changes can come about because of customer demand or the competitive landscape.
Jarvis says you need scalable systems for at least three areas of business. These three areas include:
- Product creation
- Business connections
- Collaborative partners
When you put these scalable systems in place, your company of one can handle the challenges and changes of the business without hiring an army of employees.
Scalable Systems in Practice
Need/Want is a multi-million dollar business that started as a company of one. The company has fewer than ten employees. Yet, it still increases its revenue every year.
How does Need/Want do it? The company’s founder, Marshall Haas, deploys scalable systems to help increase its bottom line. He uses products like Shopify to scale Need/Want and an online-only advertising strategy to save on extraneous marketing expenses.
Need/Want outsources its functions where possible. For example, a third-party vendor handles manufacturing and logistics. That way, the company doesn’t need to increase its employee base to turn a higher profit.
StoryShot #7: Set Your Business Apart with a Brand Personality
You’ve perfected your product idea (or are close to it) and deployed some scalable systems to keep your profits growing. What now? It’s time to focus on branding your company of one.
Successful businesses aren’t just about their products or services. Customers return to popular businesses repeatedly because of their unique brand personalities.
Take Starbucks as an example. Starbucks started as a coffee company for hip young people. Today, it has grown its brand as the #1 coffee shop in the nation, and its name is almost synonymous with coffee.
You want to do the same for your brand. Identify what sets your company apart from the competition. Then, lean into that identity and use it to determine what you say and do online and in the real world.
Why Your Brand Should Be Polarizing
In the modern day, you hear polarizing opinions and viewpoints everywhere. Whether it’s politics or vaccines, it is difficult to gain consensus. The good news for you is that you can harness this phenomenon as free marketing.
For example, a mayonnaise company used polarization in its ads. It showcased people arguing about the value of Mayo. This strategy resulted in a 14% increase in sales but a whopping 631% rise in social media attention.
As a company of one, you don’t have the staff to execute big marketing campaigns. So instead of running an ad campaign, get your audience to talk about your product for you. Creating polarization around your brand or product(s) can do exactly that.
StoryShot #8: Retain Your Customer Base Instead of Growing It
Company of One alludes to this point several times. However, the book doesn’t address this idea fully until the final chapter, and for a good reason. Learning how to keep customers should be the primary goal of any successful company of one.
Why does retention matter so much for companies of one? You want to simplify business processes as much as possible, and it’s always easier to market to customers already familiar with your brand.
Failure to retain customers is one of the biggest problems of growth-minded companies. Enterprises focus all their attention on acquiring new customers. The changes these companies must make often alienate their existing customer base, leading to high levels of churn.
Companies of one are different. They should focus solely on retention by creating personalized customer relationships and experiences. They should understand what customers like about the brand and keep giving them what they love.
But how do you earn your customers’ loyalty? One way is to address their pain points. We have different types of pain points, but the most important ones are lack of time and money.
Strive to use your business to help customers save money or time. That way, they’ll feel grateful for and continue to buy from your brand.
An additional tip from the book is to build trust through transparency. You increase transparency when you teach your customers what you know. This is a primary reason why Jarvis hosts classes for freelancers (his customer base) alongside pursuing his writing business.
“When you teach customers about how products like yours can be used or can benefit their own businesses or lives, trust is the natural outcome.”– Paul Jarvis
Final Summary and Review of Company of One
Company of One by Paul Jarvis challenges the traditional ‘growth at all costs’ mindset that most entrepreneurs believe they need.
Instead, this book encourages people to start up a company of one that doesn’t grow in size, but does grow in profits. To run a successful company, you have to have the right mindset: you have to want to work to live, not live to work.
If you are tired of your nine to five and looking for career development advice, then this is one of our favorite book recommendations for you.
Here’s a recap of the key takeaways from Company of One:
- Lack of Growth Defines a Company of One.
- Running a Company of One Requires the Right Mindset.
- Don’t Quit Your Day Job (Yet).
- Passion Isn’t Enough When Choosing Your Product Idea.
- Defining Your Audience Is Key to Success.
- Grow without Getting Bigger.
- Set Your Business Apart with a Brand Personality.
- Retain Your Customer Base Instead of Growing It.
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