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

by Paul Jarvis

Where a service-based business can really capitalize on making word of mouth happen is by simply following up. Talking to clients a few weeks after a project is finished can yield two massive benefits.

If you ask for a testimonial as soon as a project is finished, the client has rarely had enough time to collect any results-based data. By following up a few weeks or a few months later (depending on how long it will take to measure results), you can garner far better stories from clients to use in your marketing efforts.

Marketing is also no longer a silo job function within a larger organization—it’s embedded in every role and aspect of a business, from customer support to product design. It’s also not a single event—focused on a launch, for example. It’s the sum total of everything your company does that a potential or actual customer sees or interacts with, from emails to casual conversations to tweets.

Having 100 passionate fans of your business who are eager to buy anything you release is exponentially more effective than having 100,000 followers who simply follow your business to win something like a free iPad.

Jason Fried told me that Basecamp recently flirted with paid acquisition by spending around $1 million on social media ads. They quickly stopped because they found that these ads weren’t as effective as what they were doing already: creating and sharing educational content.

By working to become profitable as quickly as possible in tiny steps and not waiting for tremendous scale to happen, Jeff got a bonus: scale happened anyway.

While growing this way wasn’t Jeff’s initial plan, it served him well by letting him figure out how to make money at a small scale first, then grow iteratively, based on customer demand.

Although Ugmonk was profitable from the beginning, Jeff has been careful not to scale too quickly. He moves slowly, iterating in small steps, slowly increasing production, the number of products, and what the company takes on.

The first version of a product doesn’t need to be huge—it simply needs to solve one problem well and leave your customers feeling better than before they purchased it.

Focusing on profit down the road doesn’t work for a company of one. A company of one begins quite small (one person, no office required) and spends only when profits allow it.

you don’t learn anything until you launch. It might sound obvious, but a product is built to solve a specific problem. But as Dan points out, you won’t know how well your product solves that problem until people are actually paying for it and using

Every minute you spend as a company of one in the ongoing development of a new product is a minute you aren’t seeing how well it solves a problem, and even worse, you aren’t making money from it or building toward your MVPr.

Not surprisingly, crowdfunding, as an alternative to raising capital from investors, is a growing trend in new businesses. It’s far easier to access than VC money, and it puts your idea directly into the hands of potential customers—if they agree with your idea, they’ll pledge money as a preorder.

your crowdfunding is done right, it can be extremely beneficial, but bear in mind that crowdfunding isn’t always a surefire way to raise money: typically, only 35 percent of Kickstarter campaigns are successfully funded. Nevertheless, though crowdfunding is still a niche, it was responsible for about $6 billion in money raised in 2016.

WD-40, the well-known everyday lubricant, is literally named after its thirty-nine failures and one success. Originally it was created for the aerospace industry, but it became so popular with employees using it for other tasks that it was brought to retail, where it thrived.

Launching isn’t a onetime, singular event, but a continual process of launch, measure, adjust, repeat. The cofounder of LinkedIn, Reid Hoffman, has said that if you aren’t embarrassed by the first version of your product, you’ve launched too late.

“Every company now is a technology company,” says Anil Dash. In the past it made sense to separate out tech companies from all others, but now every company, even a company of one, relies heavily on technology.

The idea that winners never quit is both overly simplistic and completely false. Most successful founders of companies have quit several times. In fact, it’s their quitting that led them to the success they found after they failed.

Where some businesses (of any size) get relationships wrong, Chris says, is in laying claim to ownership of their audience, using phrases like “our audience.” While this might seem a trivial point, it’s an important one, because no audience or consumer group is solely one business’s property. You can’t own an audience, because they support, buy from, and enjoy many other products from companies besides your own. They rarely think 24/7 just about your business. Implied in community ownership is a company’s assumption that it’s okay to use that relationship to sell them more. That kind of mentality can easily turn an audience or community against a company.

Metrics produced only by growth aren’t always good indicators of a healthy, sustainable, profitable business, and they certainly can’t compete over the long haul with customer satisfaction from an empathetic company and a well-developed product.

Measuring profit or customer retention can lead to more sustainability because, as the adage goes, “What gets measured gets done.” So if you’re focusing on growth, growth is what will happen. But if you focus instead on relationships that turn into long-term customers and sales, that’s what will happen instead.

Chris Brogan believes that real connections are built when companies share a simple message, repeatedly, through their actions. Long before they ask for a sale, these companies articulate their message by sharing who they serve, and why.

The third type of capital required is social capital. While financial and human capital are important, social capital tends to be what makes or breaks a business, as it’s the piece that relates to how a market or audience sees the value in what you’re offering.

The premise of social capital as the term is used today is that our social networks indeed have value. The people in those networks do things for each other, such as buying products, sharing articles, and helping each other. Relationships are currency.

If you’re always asking people to buy your products or doing nothing but promoting your business and its products on social media, your balance will hit zero or you may even be quickly overdrawn. People don’t want to buy something from someone who is constantly bothering them on social media with “Buy my stuff!” tweets and posts or newsletters extolling the virtues of their products every week. No matter how often you ask, you won’t make any sales, and no conversion tactics or growth-hacking will help.

build up your balance well before you ask your audience to buy what you’re selling. Do this by being helpful and creating value for as many people in your audience as possible. At the core, your social capital depends on what you can provide for your audience that educates and builds trust, value, and reputation. Social capital is built on mutually beneficial relationships, not one-sided sales-pitch-fests.

Sam suggests that one-third of your updates should be about your business or your content, one-third should be sharing content from others, and one-third should be personal interactions that build relationships with your audience.

Customers have to admire your work, what you offer, and how your company behaves. You build respect by doing things like following up, competently segmenting customers on your list (i.e., not pitching them products they’ve already purchased), and working to be the best at what you offer. Next, customers need to admire your “whole person”—not just how you act when you’re trying to sell them something. What charities do you support? How do you act outside of work?

Finally, it’s important that you maintain the relationship over time, even with customers who haven’t financially supported your business in a while with a purchase. Consistency and longevity are key. Dougherty has found that this is where most businesses fail with relationships—that is, they drop off because they can’t “find the time” when the business benefit seems to disappear. This is the exact time, however, when the relationship becomes most valuable,

In fact, even though I’ve worked for myself longer than most people, I still don’t think it’s the best option for everyone. Not because some people aren’t talented enough to start their own company of one, but because it just doesn’t make sense for everyone. It all depends on what you want to do and how you want to do it.

The people I know with their own company of one spend approximately half of their time, or less, doing their core skill (writing, designing, programming, etc.). They spend the rest of their time on the business—chasing leads, doing their books, communicating with clients or customers, marketing, and so forth.

The harder—much harder—part is making the dream happen every day. Some days you’re buried in accounting spreadsheets; other days, you’re on the third round of revisions from a client, or dealing with an irate customer. The daily slog is what separates wannabe business owners from those who make it a reality.

So ego is involved, not in a bad way but in a “I know I can do this better” sort of way. If you don’t think it’s possible to do better, or you don’t care if it is, there’s no point doing your own thing. In that case, it’s fine to work for someone else—they’re already established and have people handling the jobs you probably don’t want to be doing anyway.

This freedom of choice is my north star. Yes, it’s taken some time to get here, and I had to be okay with not having nearly as much freedom in the beginning as I do now. After all, bills need to be paid and sometimes the best client isn’t the best fit but he’s the one who’s here right now and willing to pay you this month.

I’ve simply used my skills to help others, because I enjoy doing it. And I’ve offered this help for free, in small doses at first, and then later for good money in larger doses.

The best lawyer for a company of one is one who understands the type of business you do and is happy to work with a business of your size. And in general, I’ve found out the hard way that it’s never a smart idea to be either the biggest or the smallest client of anyone you hire for their professional services.

To find the best accountant for your company of one, look for a firm or individual who has knowledge of your type of work and familiarity with businesses of your size.

Since revenue from my work can sometimes be inconsistent, I’ve always figured my base salary as the average I’ve made in profit (not revenue) for the last twelve months, minus 25 to 30 percent (to set aside for taxes). Before raising my salary if my profits increase, I also take into consideration the minimum amount I need each month to live on and be comfortable. With my twelve-month average profit in mind, and not going too far past my minimum living expenses, I can set myself a fairly steady salary.

And just as I do with my salary, I have an automatic withdrawal set up to transfer money from my bank account into my investment account each month—in an amount that’s high enough to matter long-term but low enough not to affect my liquid assets.

With bigger scale come bigger dangers, bigger risks, and much work to become and remain profitable.

Instead, you can focus on building something that, in effect, is too small to fail. You can adapt a small company of one to ride out recessions, adjust to changing customer motivations, and ignore competition by being smaller, more focused, and in need of much less to turn a profit.