Company of One: Why Should Your Business Stay Small
And why growth doesn't always make sense.
As an entrepreneur, I’ve always been fascinated by managers who can set up quasi-autonomous businesses.
In contrast to the “startup culture” that encourages excess, these companies are content to focus on the essentials to generate profits that can be reinvested in thoughtful, controlled growth.
Author Paul Jarvis calls these contrarian companies “Company of One,” the title of the book he has dedicated to this entrepreneurship model.
The book defends the thesis that a business doesn’t need to grow at all costs to succeed.
On the contrary, by focusing first on the quality of the service offered to the customer and making a profit, startups can build a more solid foundation for the long term.
In this article, I’ll summarize the key points of Company of One, to help you design businesses based on healthy growth.
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Company of One, the resilient business model
A Company of One is a company that challenges the paradigm of growth at all costs.
Unlike many companies whose sole aim seems to be to get bigger and bigger, a Company of One prefers to grow at the rate of its generated profits without seeking external funding that will only serve to push artificial growth.
Although the name is confusing, a Company of One may have more than one employee.
The term is more of a philosophy, and can be applied to a handful of individuals or a team of hundreds.
This philosophy can be summed up simply by three mechanisms:
These three mechanisms form the basis of a contrarian entrepreneurship model that challenges our understanding of business growth.
The pursuit of growth is the standard behavior of entrepreneurs, so much so that today we admire companies capable of “scaling up” very quickly by swallowing up millions in investments from Venture Capital.
But despite popular belief, ultra-growth is rarely synonymous with success.
As a company grows, it comes with its own set of problems, because with more people to manage, more infrastructure costs to pay, and more complexity in the organization, new problems arise that are not necessarily related to the company’s original mission, but rather to administrative issues.
As a result, ultra-growth startups often exhibit an organizational complexity that resembles that of large corporations.
Driven by ever-increasing amounts of capital, the company’s growth is self-sustaining, generating a kind of insatiable monster - a concept that some authors call “the hungry ghost” or “the beast.”
Faced with the new problems generated by growth (the need for more hierarchy, more infrastructure, etc.), the default solution is to invest more to solve these new problems.
It’s like fanning the flames of growth with gasoline, hoping it will dry them out.
And as the figures show, ultra-growth is a significant factor in business failure!
A study by the Startup Genome Project organization on 3,200 high-growth companies showed that 74% failed because they grew too fast.
A second study, carried out by the Kauffman Foundation and Inc. magazine on 5,000 companies, also showed that 86% of businesses considered successful (i.e., still active after eight years without having suffered massive lay-offs or significant devaluation) did so without recourse to Venture Capital.
A Company of One recognizes that success is not linked to growth and prefers to generate real profits rather than relying on hypothetical ones.
To achieve this goal, a Company of One must have four characteristics:
resilience: dealing with and adapting to the ups and downs of business
autonomy: not depending on external resources to survive
speed: developing solutions quickly, going straight to the point
simplicity: continually questioning the efficiency of processes and keeping them to a strict minimum.
A Company of One sets its own profit limits and doesn’t try to exceed them. As Paul Jarvis writes in his book:
"If you have a business idea that requires a lot of money, time or resources, you're probably thinking too big".
Scaling up your business at launch is a mistake and a waste of time for most digital businesses.
The most important thing is to find customers quickly and help them with a quality solution.
Once a good customer relationship has been established, and revenues are flowing in, the choice is yours to define your success.
Putting customers first
In this book, Paul Jarvis introduces the concept of “Minimal Viable Profits.”
The concept of Minimal Viable Profits is simple: when you create a business, you must aim to generate profits right from the start.
And to generate profits, you have to start by finding customers!
Rather than developing a solution that costs millions of euros in investment, a Company of One offers a solution that may be simpler but meets an existing need.
Thanks to the initial profits generated, it will then be possible to incrementally improve the solution, thereby enhancing the quality of the product or service.
The second point differentiating a Company of One from the classic startup concerns acquiring new customers.
To scale up, a startup financed by external capital often focuses on the number of new customers acquired, spending fortunes on marketing.
The idea is simple: capture as much attention as possible in the hope of converting a certain percentage of consumers into new customers.
With this method comes the concept of “churn,” i.e., the percentage of customers lost over time.
A Company of One spends little or no resources on marketing because it understands that churn is not a viable long-term solution since keeping an existing customer always costs less than acquiring a new one!
A Company of One understands this difference and has the advantage of being able to implement processes that would be inconceivable for competitors seeking growth at any price.
For example, a Company of One can take the time to thank each customer with a personalized note or develop a service specially designed for a customer’s specific needs.
The company 37signals, which develops the Basecamp project management software, made a name for itself by producing a personalized video for each new customer.
It’s a time-consuming and costly process, but it doesn’t matter when the priority is to establish a relationship with the customer, not to acquire as many as possible in a short time.
What’s more, a Company of One doesn’t need to invest millions in marketing campaigns, because by providing a quality service, these existing customers will take it upon themselves to promote it through the most effective acquisition mechanism: word of mouth.
Word of mouth is the most reliable and least expensive acquisition method, yet it is often under-utilized because it is difficult to “scale.”
Since its objective is not growth, a Company of One can even afford to choose its customers and develop a long-term relationship based on trust.
A Company of One also attaches great importance to educating its customers and does not hesitate to offer time, sometimes free of charge.
As a study of 1,200 customers of financial advisor Goldman Sachs JBWere Pty Ltd. shows, the more educated a customer is, the higher the level of trust and loyalty towards the company that provided the knowledge.
When setting up a business, being helpful to customers is the best way to build loyalty and encourage them to promote the company.
Such a solution inevitably requires more time, but a Company of One needn’t worry about the downside since in the long run, such a philosophy will ensure more stable profits.
Based on these methods, a Company of One develops the three factors needed to build trust between a customer and a company:
Managing a Company of One
A Company of One is not run in the same way as a traditional business.
To run a Company of One, you need to be a good generalist, i.e., to know a little about many things.
The manager of a Company of One must know how to give instructions while allowing their team to work autonomously.
So there’s a balance to be struck between management that’s too intrusive (where the manager himself forms a bottleneck) and management that’s too lax (which would lead to anarchy).
To achieve this, the manager of a Company of One must be organized, preferring asynchronous communication and deep concentration.
For companies seeking to establish such a model, a “productivity audit” may be necessary.
This involves recording the time spent on each activity over a week, and then identifying which tasks or activities take up the most time without actually being beneficial to the company.
This exercise should be repeated regularly (at least twice a year) to continually question the state of operations and how a Company of One uses its most important resource: its staff’s time.
Paul Jarvis also lists a few examples of how he has put in place in his company to make the best use of his time:
When developing a new project or writing a new book, Paul Jarvis spends several months without any communication (e-mail, telephone, etc.), enabling him to concentrate fully on the task at hand. Because he offers clear instructions and autonomy to his teams, operations can continue without his presence.
Monday and Friday are communication-free days, for the sake of concentration and to avoid constant interruptions.
Paul Jarvis reserves Thursday for meetings and interviews. It’s the only purpose reserved for these days, so he can consider his day productive even if he does nothing but spend his time in meetings.
His secret to achieving this balance is simple: first, he asks himself, “How do I want to spend my time during the day?”
Once this question has been answered, he defines a system for achieving this goal.
Rather than letting others define his time, Paul Jarvis decides how his day is structured, even if this means challenging the standard corporate model.
Finally, the leader of a Company of One knows how to put his ego aside to focus on his mission.
Entrepreneurial circles are increasingly infested with “hustle culture” or “workaholism” - a culture that encourages people to work as hard as possible, to the detriment of their personal lives.
Yet, as psychologist Wayne Oates shows in a research article dedicated to the subject, workaholics are no better than more moderate workers.
On the contrary, they exhibit elevated signs of stress, significant personal conflicts, and even health problems linked to this behavior.
The leader of a Company of One recognizes that work is not an end in itself and puts in place systems that enable people to live life to the full while enjoying a fulfilling professional activity.
This is the case, for example, of Sean D’Souza, founder of the psychotactics.com website and renowned for taking three months’ vacation every year.
Of course, this limits his company’s growth, but that’s of little importance since he himself has set limits on his profits and doesn’t want to exceed them.
It’s just a question of priorities!
Towards a new business model
Entrepreneurship has never been more accessible.
The administrative system has never been more straightforward, and the tools at our disposal have never been more plentiful.
Yet entrepreneurship is still too often associated with the “hip” startup that raises millions to disrupt an entire industry.
But is this really the only way to operate?
And is it the lifestyle all entrepreneurs aspire to?
I think it isn’t and that we’d all benefit from reviving the image of the SME inspired by the Company of One model.
No need to chase investors if you have an idea that convinces a customer.
No need to hire a huge team when you can accomplish so much with just one or two people.
And finally, there’s no need for financial pressure when you can base your growth on actual profits.
If you want to get started in entrepreneurship without sacrificing your independence and your ideas, the Company of One method may be just what you’re looking for.
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