Company Of One: Why Staying Small Is the Next Big Thing for Business

by Paul Jarvis

It’s assumed that hard work and smart thinking always result in business growth. But the opposite is often true: not all growth is beneficial, and some growth can actually reduce your resilience and your autonomy.

Want more customers? Hire more employees. Need more revenue? Spend more. Fielding more support requests? Build a bigger support team. But scaling up might not be the best or smartest solution to the basic problem. As a means to generating higher profits, what if you acquired more customers simply by creating more efficiency, so you didn’t have to hire more people?

A company of one questions growth and stays small on purpose. A company of one isn’t simply a practicing freelancer either.

Typically, when a company does well, it hires more people, builds more infrastructure, and works at increasing its bottom line. There’s a core assumption that growth is always good, is always unlimited, and is required for success. Anything else is pushed aside as not being a top priority.

Sometimes “enough” or even less is all we need, since “more” too often equates to more stress, more problems, and more responsibilities in both life and business.

I’ve personally seen the most success in my life when I’ve figured out solutions to problems without having to do what traditional businesses do to solve problems—hire more people, throw more money at the problem, or build complex infrastructures to support the extra employees. Basically, I’m not interested in addressing problems by throwing “more” at them. Solving with “more” means more complexity, more costs, more responsibilities, and typically more expenses. More is generally the easiest answer, but not the smartest. I’ve found both delight and financial benefits in working out solutions to problems without growing.

Companies of one within organizations don’t need to be managers or create products—they simply need to find suitable ways to become better and more productive, without more resources or team members.

It was a hackathon that led to the creation of Facebook’s “Like” button, which arguably connects its ecosystem to the rest of the internet.

As much as I enjoy growing my wealth, I also realize that there’s a point of diminishing returns if I don’t also take care of myself and my well-being.

A company of one questions growth first, and then resists it if there’s a better, smarter way forward. Next, let’s look at the four typical traits of all companies of one: resilience, autonomy, speed, and simplicity.

The first trait that resilient people have is an acceptance of reality. They don’t need for things to be a certain way and don’t engage in wishful thinking. Instead of imagining “if only this changed, I could thrive,” they have a down-to-earth view that most of what happens in our lives is not entirely within our control and the best we can do is to steer the boat a little

The second characteristic of resilient people is a sense of purpose—being motivated by a sense of meaning rather than by just money. 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.

The last trait of resilient people in a company of one is the ability to adapt when things change—because they invariably do.

Basically, you have to be good at your skill set before you can expect to achieve autonomy from using it. Typically, you can’t acquire this mastery without putting in some time at the beginning of your career in a job that’s less autonomous, offers less control, and requires less resilience, since you’re managed by the whims of someone higher up.

Companies like Basecamp have a four-day workweek during the summer (no work on Fridays) because it helps them prioritize what’s important to work on and what they can let go of. The key for their employees is to figure out how to work smarter to accomplish tasks with the time they’ve got, not just harder.

On the company intranet, Basecamp has a “weekend check-in” where employees can post photos of what they did on their three days off from work. This helps this remote-based company build connections between its employees, who are spread all over the globe.

For a company of one at any size, simple rules, simple processes, and simple solutions typically win. Complexity is often well intentioned, especially at large corporations, where, as complicated processes are added to other complicated processes and systems, accomplishing any task requires more and more work on the job and not toward finishing the task.

Having too many products or services, too many layers of management, and/or too many rules and processes for completing tasks leads to atrophy. Simplicity has to be a mandate.

Often, complexity can creep in right from the beginning—when you’re just thinking about starting a new business. You begin to assume that your business requires “essentials” like office space, websites, business cards, computers, fax machines (just kidding), and custom software solutions. In reality, it’s usually possible to start a business—especially the freelance or startup kind—just by finding and then helping a single paying customer. Then doing it again, and again. And only adding new items or processes to the mix when they’re absolutely required.

If you have an idea for starting a business that requires a lot of money, time, or resources, you’re most likely thinking too big. Your idea can be scaled down to the basics—do it now, do it on the cheap, and do it quickly—and then iterated upon. Start without automation or infrastructure or overhead. Start by helping one customer. Then another. This puts your focus on helping people immediately with what you’ve got available to you right now.

The problem here is mistaking “simple” for “easy.” Often we try to be simpler and end up more complicated. We add more tools, more software, more devices to the mix to make things easier, without testing or questioning how easy they’ll be to use on a daily basis.

Sean’s goal of achieving a target profit and not exceeding it comes from shaping his business around an optimal life he wants to lead—complete with taking a three-month vacation each year with his wife and spending hours walking, cooking, and teaching and tutoring his two young nieces each day.

Too often businesses forget about their current audience—the people who are already listening, buying, and engaging. These should be the most important people to your business—far more so than anyone you wish you were reaching. Whether your audience is ten people, a hundred people, or even a thousand people, if you’re not doing right by them, right now, nothing you do regarding growth or marketing will make a lick of difference. Make sure you’re listening to, communicating with, and helping the people who are already paying attention to you.

companies need to focus on becoming better instead of simply growing bigger.

stop growth from there in order to turn the focus away from getting bigger and toward getting better instead.

Growth, as a primary focus, is not only a bad business strategy, but an entirely harmful one. In failing—as defined in the study—these high-growth startups had massive layoffs, closed shop completely, or sold off their business for pennies on the dollar. Putting growth over profit as a strategy, however trendy as business advice, was their downfall.

company’s interests may not always align with the interests of its backers. Worse, investor interests may not always align with what’s best for a business’s end customers. Capital infusion can also leave a business with less control, resilience, speed, and simplicity—the main traits required for companies of one.

For companies of one, the question is always what can I do to make my business better?, instead of what can I do to grow my business larger?

In business, the hungry ghost is the quest for more growth, more profit, more followers, more likes.

Of course, economies of scale can sometimes be required for success in certain markets and for some products, but often they aren’t required and it is ego, not a strong business strategy, that is forcing growth where growth isn’t necessary. When you feel like you have to start out competing with the largest player in the market, you end up chasing your competitor’s growth instead of bettering your own offering.

When you focus on doing business and serving customers in better and better ways, your company of one can end up profiting more from the same amount of work because you can raise the prices until your demand flattens out to where you can handle

For example, I can run a 30,000-person mailing list that generates the bulk of my income by spending approximately an hour a week on it. I can create a document that’s both editable and shareable around the world for free with Google Documents or share any file, of any size, using a service like Dropbox. I can replace an entire IT department with one on-contract systems administrator in Berlin who works one to two hours a month for me, and I can learn everything I need to know about the visitors to the websites that run my business with free analytics software.

When you hire employees, you’re responsible for them. You’re their source of income that goes toward paying their mortgages, feeding their families, and even sending their children to college. That’s a heavy responsibility. But keeping people on contract as freelancers makes you responsible for them only for a specific project, and you know that what you’re getting paid includes what you’ll pay them.

What if we set upper limits to our goals instead? For instance, “I want to make at least $1 million this quarter, but not more than $1.4 million,” or, “We need to grow our list by 2,000 people per day, but not more than 2,200”? In most areas of business, there’s a magic zone for sustainability that relates to the concept brought up at the start of this book about having “enough.” If growth happens too quickly, problems can arise—like not being able to hire fast enough to keep up, or not having enough infrastructure to handle increased volume.

Sure, Southwest’s executives wanted to grow each year, but they didn’t want to grow too much.

Even very transparent companies typically share only their gross numbers or MRR (monthly recurring revenue), which is only a small part of the picture and doesn’t account for what their actual profit or margins are. A business that’s making $500,000 a month could be hemorrhaging key staff due to overworking, and its burn rate could be $550,000 a month—making

Envy is also based on a false comparison, like comparing uncooked ingredients to a delicious baked pie. Envying others, we see only the end result or the final product—the delicious dessert. But in ourselves, we see all the not-so-tasty starting ingredients and are aware of all the real work required to combine them into a successful end product. We too often compare our sometimes messy selves to only the best and shiniest part of others and come up short.

introverted leaders, especially when they are managing skilled and proactive teams, can be highly successful. That’s because a quieter, calmer leader is more likely to listen carefully, stay very focused, and not be afraid to work for long stretches of time without interruption. And they are able to lead a team of people who can do the same.

Since my practically nonexistent ability to lead could easily be a detriment to my company of one, I only work with freelancers and contractors who don’t require management of any kind. They’re A-players who know exactly how to get their work done. I simply need to provide them with the parameters and let them do their work. I give the people I hire full autonomy to do their jobs so I can do mine, with no need for meetings, or check-ins, or management. I ask them to let me know if a problem comes up; if I don’t hear from them, I assume that their silence means they’re accomplishing their tasks.

Autonomy can also be badly abused. The problem is not so much employees taking advantage of perks like flex hours or remote work, but leaders assuming that they need to give less direction. A leader’s job is to provide clear direction and then get out of the way.

“knowledge is knowing that a tomato is a fruit. Wisdom is not putting it in a fruit salad.” We should never assume that having an abundance of knowledge is the same as having an abundance of wisdom.

When hustling turns sleeplessness into a badge of honor and work demands push health, family, and friends to the back burner, it’s definitely time to take a break.

Crew, a company that connects freelance designers and developers with companies that need contract work done, doesn’t believe in set hours for its employees. The company doesn’t expect employees to work eight hours a day, or to work between 9:00 AM and 5:00 PM. Crew lets its employees schedule work time when they are more energetic and focused—working

A lot of “growth-hacking” (a Silicon Valley term for the kind of exponential growth that tech folks salivate over) employs pushy and even sometimes shady tactics to keep growing in spite of the excessive churn that’s produced. For example, by adding a pop-up message offering access to a free report on every page on your website, you might increase the number of subscribers to your company’s mailing list, but you might also end up with a list that has few email opens and more unsubscribes, making your net-net growth very low or even negative. A company of one would have a mind-set more in line with providing a great newsletter with lots of valuable content of interest to the people it wants to attract; its overall subscription rate might be lower, but the open-rate and retention would be higher.

They prioritize attracting customers, not determining the type of customers they want or the experience they want to give people once they become customers. She has found that growth as a one-dimensional metric for success is useless in the absence of real reasons for it or ways to support customers once they’re acquired.

Previously, the strategy had been to grow right away to gain more customers, the thinking being that simply adding more customers would lead to more revenue. In looking at the collected data, however, Kate realized that user growth would cost more than user retention. By decreasing the number of subscription cancellations, Magazines.com would see better profits and gains than it would by trying to increase the number of subscribers.

Kate showed the company that the number of renewing customers was a far more important metric for success (and far cheaper) than the number of new customers acquired.

Most companies grow for four reasons: inflation, investors, churn, and ego.

Investors, even if they own the company, are the biggest reason businesses want to grow. If a VC firm puts $1 million into your company today, it will want to see a return at least three times that much (and more if they’re early-stage investors) within a few years. To hit those goals, growth has to be excessive.

According to the Econsultancy/Responsys Cross-Channel Marketing Report, adding a new customer costs five times as much as keeping an existing one. So while prioritizing acquisition over retention can aid growth, it’s also extremely expensive.