Who doesn’t want to live the BIG dream? The Amazons, Apples, and Microsofts of the world are truly shining beacons that beckon every entrepreneur and charm them enough to want to pursue BIG successes.
At the same time, it isn’t everyone’s cup of tea. And it shouldn’t be. While it’s true that reaching out for the moon is a goal that every entrepreneur aims for, thinking about success this way can be daunting. Playing in the big markets, managing an ever-increasing large organization, and spending a life pursuing the ‘bigger is better’ dream is indeed, the sacrifice of a lifetime.
Company Of One (2019) by Paul Jarvis looks at an alternative to the conventional pursuits of success. The philosophy places a higher value on having less over more, staying small rather than making it big and prizing niche over the mass. It shows how small-scale business enterprises today, trump being a global giant, offer more freedom, independence, and enough wealth to live a life where friends, family, hobbies, and quality time are equally important.
A Holistic View Of Life
The mantra of modern capitalism is ‘more’. Consumers want more products, businesses want to sell more products, make more money, and have more profit. It’s a never-ending, insatiable desire for growth and consumption.
There is, however, small, a shift in this trend. Many consumers are focusing on limited consumption. Businesses too are now seeking a more sustainable, stable, and satiable approach to growth. These exceptions are focusing on earning just enough to enable employees and owners to live comfortably, with autonomy, and freedom to do what they want along with their work. They revolve around the employees, rather than making their employees revolve around the goals of the business.
Such companies, whether they are single owner-operator enterprises, or have a strength of a few hundred employees, are called companies of one. These are the companies that make the individual the unit of measure of the business.
Companies of one set growth limits as opposed to conventional businesses that have an ever-escalating scale of growth. For instance, Psychotactics, a consultancy services firm run by Sean D’Souza, limits itself to a $ 500,000 per year profit. While it could make more money, D’Souza purposefully restricts its growth.
Why??
An ever-escalating scale of growth needs more production, more customer sales lead to more employees, bureaucracy, and infrastructure. This inadvertently translates to more exhaustion, more work time and oversight. With more growth, one has less autonomy, lesser free time, and even lesser comfort. After all, rapper Notorious B.I.G. got it right – more money, more problems!!
And that defeats the purpose of the ideology of the company of one.
D’Souza would rather be spending more time with his kids on vacations and making enough to keep comfortable and keep taking those vacations!!
Not Free-lance Employment, Neither A Traditional Small Business
Companies of one differ from both, traditional small businesses and free-lance self-employment. For example, most small businesses are limited successes and want to aim higher. They want to grow, expand and, they, by definition, believe in the ‘bigger is better’ mantra, seizing any given opportunity for growth and profits.
Companies of one, on the other hand, don’t leap at opportunities for growth if they have met their profit targets. Achieving, and sustaining their self-defined levels of income are v the very definitions of their success.
However, both, small businesses, and companies of one have a similarity. They both look for profit by investing a certain amount of time and money, once. For instance, the investment could mean an upfront expense of labour into making a product or service. Once done, they reap the benefits and profits from that product without needing to do much further, thus repeatedly earning from it.
Freelancers, on the other hand, stop generating income as soon as they stop working. Their income depends on work per hour, or per piece. A freelancer’s income depends on the time put in. They have a one-time contract with their clients, and unlike companies of one, they do not repeatedly earn from one project. The owner of a company of one could be vacationing while still reaping the benefits of a project that was done months ago.
However, freelancing is often a stepping-stone to becoming a company of one.
Starting A Company Of One
Let us now get into the process of starting a company of one – step-by-step – and discuss goals, strategies, and distinguishing features.
1. Not Quitting The Day Job
It is often seen that companies of one emerge from side gigs. That said, quitting one’s day job isn’t really a good idea. Before the company of one becomes a sustainable success, one must be able to sustain oneself. Diving headlong into the company of one before it becomes a full-fledged business could get excruciatingly expensive, and defeat the purpose of starting a company of one altogether.
Take, for example, Tom Fishburne, a marketing executive of 20 years and owner of Marketoonist, his company of one based out of his Marin County, California home.
He started pursuing his childhood hobby of cartooning for fun. Soon, he started taking on small gigs, drawing for clients during his free time. He built a solid roster of clients and built a runway buffer (saved up enough to sustain living expenses in case he had a few slow months). Only after he achieved that, did he finally dive headlong into cartooning and quit his marketing job.
Seven years into pursuing small gigs, he started making 2-3 times more than he did as a marketing executive. Furthermore, he not only changed a hobby he loved into a business but also enjoyed plenty of time with his family.
Today, Fishburne runs Marketoonist with his wife. They do employ freelancers, but only on an ‘as-needed’ basis. While they have a waiting list of clients too, they prefer to keep it comfortable. They do not want to expand into a giant with satellite offices.
We can learn a very important fact from Tom. The point where growth means to make unacceptable sacrifices in life is the point where the company of one has reached its growth limit.
2. Work Should Be Passion
Most business writers and speakers advise budding entrepreneurs to follow their passions. However, it isn’t always the case that one finds their passion easily. Additionally, not everyone’s passion is an ‘in-demand’, financially viable, and marketable skill. In fact, most passions are often out of sync with market demands.
How does one then, find the side gig that can become a company if one?
A study conducted by Robert Vallerand, a professor of psychology at the University of Quebec in 2003, asked a few students, “What’s your passion?” Most of the students answered music, art, or sports instead of their majors. Considering that these three fields make up only 3% of all the jobs available, pursuing them as passions is futile for starting a company of one.
What most of these students needed to keep in mind, is that while football might be a passion, becoming the next Ronaldo would be a distant dream. It is the same for other passions that make up minuscule percentages of the successful ‘company of one’ markets.
The questions that need to be answered then, are – “What is it that I’m already good at, that people would be willing to pay for?”, or “What could I get better at and make it a marketable skill?”
Paul Jarvis, though not feeling passion for web designing, had become extremely good at it, and sharpened his skill sets to start a company of one. In due course, he got better at it, began to feel satisfied with his work, and was enthusiastic to do more. That feeling was a form of passion.
Hence, it is vital that one understands the marketability of one’s passion and can turn work (or something one is decently good at) into a passion.
3. Finding A Niche
There are two common assumptions made in the business. First, the larger the number of people who want the product or service, the better it is. Secondly, people often believe that the bigger the market, the number of potential customers will be bigger.
However, the catch with that is – while appealing to a larger target audience, the product or service needs to be more generic. This can end up diminishing the allure of the product or service.
For instance, when Starbucks initially started out, they positioned themselves as a chain of coffee shops that gave people the experience of a local coffee boutique. However, by the mid-2000s, that experience became bland as they started expanding with coffee shops on every street, sandwiches, fancy beverages, CDs and more. The high-quality coffee experience suffered, and they had to scale back shutting about 900 stores. They had to refocus on their niche, original branding.
What is important to remember is that the number of competitors increases in larger markets. Finding a niche thus is essential. It is easier to connect with, and gain the trust of a select few with specific needs, and create a tailored product that customers will be willing to pay a premium for.
4. Personality And Simplicity Have Power
Simplicity and personality are extremely important when one wants to narrow their focus and appeal to the niche.
Consider Casper – a small company that sells mattresses. While they have tapped into a huge market, what sets them apart is the fact that they,
a. Target only the younger audience, who prefer to buy online rather than go through the hassles of physically visiting the store, and
b. They only offer 3 styles of mattresses.
This has helped them to do both, narrow their target audience as well as offer their customers simplified options. Their proposition is straightforward – buy online, without hassles, and if one doesn’t like the product after using it for 100 days, it can be returned with a full refund.
The second strategy – personality – involves using the uniqueness of personality and integrating it with the message that surrounds the service or product. That involves everything from communication with customers, advertising, branding, right down to the designing. The trick is to keep it simple, yet unique. For example, an entrepreneur could take a simple adjective like ‘loyal’ that best describes himself, and then put a unique spin on it that brings out an authentic expression of what the product stands for.
This helps when despite the niche market one targets, there could be bigger, more established players in the field. Personality is unique. Hence, even though a competitor can replicate the product, they can’t replicate their personality.
5. Establishing A Relationship With The Audience
Once the product is developed with a unique personality, the next step is to reach out to the audience and convince them that the service or product is worth their money.
While it’s easier said than done, there is a lot that goes into establishing a relationship with the customer. Understanding what the customers need is a vital step towards being able to fulfil those needs.
One of the ways to reach out to potential customers is to offer them a no-strings-attached, free consultancy. For example, a web designer looking to start a company of one should start by looking for people who need a web designer and understand exactly what they want. Additionally, one can learn about their past experiences with web designers they have worked with before. This helps in getting vital information about the current market, how and where customers look for web designers, why they hire particular people, and what objectives do they want fulfilled from the web designer they hire. It also gives an insight into what accounts for a bad experience, and what do customers expect.
This information can then be analyzed and used to position one’s own product. However, at this point, the aim is still to get to know the customer market and to build a relationship, not to make money. Moreover, one should remember that having collected the information, the aim at this point is to answer questions and help in small meaningful ways, and not to design the website for free altogether.
Such ‘mini’ consultations work in two ways.
a. By helping the customers understand what they should look for, what’s good and what’s not, and
b. At the same time, gathering information about the customers’ needs, wants, and experiences.
It’s a give and takes relationship, where both parties end up helping each other, without the need for any monetary transaction. Indeed, when the time comes for the customer to actually look for paid web-designing services, the customer is going to turn to someone they already know is an authority on the subject – the web designer who helped them with ‘free’ consultancy in the first place!
6. Inexpensive, Quick Profit, Without Large Investment
With the passion found, the product design, and the relationship with the audience established, it is time to think about spending, and making money. So ideally, one starts to look for office space, make business cards and quit that day job.
However, the company of one is still at its embryonic stage, and it is too early to start thinking about making ‘real’ money.
The most important thing budding entrepreneurs should think of is how to avoid large investments. Technology, today, has made it easier to bypass many large investments that were earlier necessary. For example, several free analytics software available has made it easier to collate valuable data without the need of hiring a cyber guru. Similarly, remote contractors can help in providing services that an entire IT department could do.
The idea is to think small. If the plan needs larger investments, it defeats the purpose of a company of one. Expensive investments are features of small traditional start-ups that aim for ever-increasing profits in the future. Companies of one aim at getting profits as cost-effectively and as quickly as possible, without the need to increase the returns year on year.
Once the entrepreneur falls into the trap of wanting ever-increasing profits, it becomes difficult to avoid external investors’ money, which leads to loss of freedom, autonomy, and independence.
In fact, not needing large investments is good for a company of one. That is because the more money one invests to set up the company, the larger are the upfront costs, making it necessary that the revenue generated is higher and faster to break even. Similarly, if the company spends more time setting up, it takes the company more time to start generating revenue faster.
Instead, the company of one should focus on spending just enough for a saleable product or service, which is just enough to set the ball rolling. The profits then grow through the snowball effect, gradually.
7. The Snowball Effect
With a few projects or sales in hand, the company of one begins its first steps towards its goal. These few clients or sales, lead to a few more, who in turn start recommending the services or products to other customers. This gradual build of a customer base called is the snowball effect.
Consider the case of Ugmonk, a highly successful yet small clothing company started by Jeff Sheldon. He started the company on a $2000 loan, making about 200 T-shirts of only 4 designs. These T-shirts sold out quickly, encouraging a second and the third run of sales. Sheldon paid back his loan and almost immediately started making a profit.
While continuing his day job, Sheldon re-invested his profit into the production of more garments, at absolutely zero investment. He ran Ugmonk out of the apartment for 2 years, and only invested in a warehouse much later when he really needed to.
The point is, it’s ok to make large investments, but it is vital to make them at the right time, only if they are essential, and only if the revenue allows it. Trying to anticipate everything that the company might need in the future and jumping towards those purchases and investments defeats the purpose of keeping it small, capping expenditure and growth.
An owner of a company of one additionally needs to be a jack-of-all, often doing the jobs that customer support, marketing, and accounts do, if the snowball effect must work.
8. Customer Retention And Service
The small size of a company of one is its competitive edge. It makes room for adding a personal touch to a service or product, especially when it comes to communicating with customers and clients. It is this personal touch that keeps them coming back.
When it comes to customer service, it is the most important mantra of running a successful company – big or small. People value good customer service and are willing to drop a product if they have a bad experience with it.
Some large companies, while also at risk of losing their personal touch due to customer service, don’t mind it at times. They follow a churn and burn strategy, wherein they aim at getting as many customers as possible, wring as much revenue out of them as fast as they can; and if the customer is dissatisfied, well, they move on to getting the next set of customers, without bothering about why the previous ones were dissatisfied.
The churn and burn strategy, however, doesn’t serve the purpose for a company of one. Apart from it being a question of ethics, it also is a matter of cost. According to research by Econsultancy and Responsys, it cost five times more to bring in new customers than to keep old ones. Moreover, happy customers are more likely to refer the company to others. In fact, word-of-mouth referrals are the most important way companies of one acquire new customers. Burning those bridges is surely an expensive affair!
Conclusion
Companies of one are the smart way to run a business today. While the aim is to stay small and make manageable profits rather than ever-increasing ones, the upside is a higher level of independence and a better work-life balance.