Have you ever thought about challenging the grow-grow-grow mentality that dominates the business environment today? Where the main goal is to gain the highly coveted Unicorn Status; or perhaps double, triple or even quadruple revenue every quarter.
Insights from “Company of One” a book by Paul Jarvis challenge these common assumptions in today’s business environment which include the idea that growth at all costs is a given.
Inc. magazine carried out a study that followed about 5,000 of the fastest growing companies and made an outstanding discovery that two-thirds were out of business, had to lay off staff or had to accept buyouts below their market value after eight years. Another study of about 3,200 high-growth startups done by Startup Genome found that about 74% failed in the business arena not because of an aggressive and competitive market or poor business decisions but rather because of their inclination towards accelerated growth which the study defined as premature scaling.
This brings us to the core idea suggested by Jarvis: stay purposely small and become a “Company of One.”
A Company of One is a small-scale business that deliberately remains small in order to provide key stakeholders a sustainable income, high level independence and above all, a healthy work-life balance. Staying small and adopting this mentality could be the best thing you do for your business especially if you are starting out and need to learn how to handle the reigns and understand the market.
It is not necessary that you maintain a one-person company to qualify as a “Company of One.” In fact, Jarvis argues that you can be so with 5 or 50 people. The more important aspect in becoming a “Company of One” is to adopt and make three fundamental shifts:
Strive for Better and not Bigger
The idea here is that obsessive focus on growth can be a dangerous game especially when things such as delaying profits in favor of expansion come into play. Economic recessions or new technological innovations may come and send you out of business, quickly. From what we have seen in the past two years-the economy is not stable and new technologies are getting launched every day.
In many cases a “Company of One” is more likely to overcome a recession or pivot when a new technology enters the market because it aims to be profitable as soon as possible by building better products or services and increasing profit margins.
It focuses on customers by spending time with them to better understand their core business challenges, then finds creative and innovative ways to solve them with minimal input costs.
By lowering input costs, this means they use scalable, low‐cost technologies like Shopify or WooCommerce or perhaps finding high quality contractors on Fiverr and UpWork. The idea here is that when you focus on better, not bigger, you seek to make a profit on your 10th sale, not your 10,000th sale.
Focus on Customer retention and referrals, not mass marketing
Customers are your asset; it is better to keep the ones you have at minimal costs vs try to get new ones with expensive marketing campaigns that sometimes have little to no yield.
Take for example running ads on Facebook or YouTube to drive sales. A customer may get impressed with your product and make a purchase and that maybe it. You will never cross their mind again because the relationship does not last long in this case. But for a “Company of One,” the relationship is what matters. They tend to foster long-term relationships that lead to repeat sales and referrals. For them, they build education campaigns vs marketing campaigns.
Companies that use their expertise to foster free and accessible learning for their potential customers tend to do better than those which don’t. Jarvis gives an example of Casper, a mattress maker with a “Company of One” mentality that built a loyal customer base through educational campaigns that taught people the latest sleep science and good sleep hygiene through an online publication that did not include outbound links to their products or what is commonly referred to as push marketing.
This approach positions your company as an expert in your field by displaying competence and empathy which are core to gaining customer trust. There is nothing more for a business than gaining customer trust because this has a ripple effect that touches the bottom-line.
Strive for Autonomy, not ego
According to Jarvis, “Culturally, growth feeds our ego and social standing. The bigger the company you own, with more profits and more employees than the next person, the better you might feel.” However, this “better feeling” comes at a cost many business owners are familiar with: more people to manage, more business challenges due to risk and even less personal time that affects work-life balance.
That is why James Clear, author of Atomic Habits, says “Instead of thinking, ‘What product can I create?’ or ‘What service can I offer?’ Think: ‘What type of life do I want?’ and ‘How do I want to spend my days?’ Then you can work backwards from there into a business model that allows you to create scalable systems to deliver your product to your audience.”
To conclude “There’s only one rule for being a company of one: stay attentive to those opportunities that require growth and question them before taking them. That’s it—one rule. The rest is entirely up to you. But if you ever stop questioning the need for growth, you run the risk that the beast of growth will devour you and your business whole.” – Paul Jarvis