MBA1183 Guest Teacher: Paul Jarvis- Why growth might be the worst thing for your business.

Let me tell you about Intuit QuickBooks. When I was starting out my business, I remember sitting at my desk late at night, not working on my business but cleaning up numbers, tracking and reconciling payments and wondering how this became my life. But once I automated the admin side of things, of my finances, those nights had disappeared and I felt a whole lot better. Outdo it with Intuit QuickBooks. QuickBooks is the trusted end to end solution that businesses rely on for getting paid, managing finances, paying employees, finding new customers and more. QuickBooks provides a team of AI agents and trusted experts. So doing it yourself no longer means doing it alone. Their payment agent gets you paid faster, their customer agent finds leads, follows up and secures more sales, and the accounting agent automates and categorizes transactions. Get your critical business jobs done with QuickBooks on the Intuit platform.

Ready to save on new tech? It's time for Dell Tech Day's annual sales event celebrating our customers with fantastic deals and benefits. Product perks include Dell Rewards, free shipping, premium Support and more. PCs like the Dell 14 with Intel Core Ultra processors will help you do more faster and with a premium suite of monitors and accessories, you can upgrade your whole setup with amazing savings. Visit Dell.com deals.

Hey O. Welcome to the Hundred Dollars RMBA Show. Because business is never as usual. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of $100 MBA, a complete business training and community online and today's episode is a guest teacher episode. Today's guest teacher is Paul Jarvis, best selling author and entrepreneur and one of our very first guest teachers on the show. He was on one of our first hundred lessons. Pretty amazing. But he's back here today to teach you a very important lesson on why growth may be the worst thing for your business. When we think of successful businesses or companies, we think of these massive companies that grow to 500 to 1,000 to 10,000 employees. What we don't see is how many of those types of companies don't make it through the long haul. How many of them fail and go out of business after five or 10 years. In today's lesson, Paul is going to be sharing with you some research he's done and why staying small might be the best thing for your business to stay alive for as long as possible. And Paul Jarvis is teaching from experience. He runs a highly successful business essentially by himself. Yes, he gets some help from freelancers and some virtual assistants, but essentially he's a company of one. This is going to be a lesson that's going to make you think differently about how you grow your business. And so let's get into it. Let's get down to business. I first discovered Paul Jarvis back in 2013. I stumbled upon his website and I loved his blog and just the overall aesthetics of the site. Then I picked up his book, Everything I Know. It's a fantastic book that I've reviewed here on the show. There's a great manual if you're getting started with business. Now, Paul just authored a new book called Company of One. Why Staying Small Is the Next Big Thing in Business. The book is quite contrarian and it discusses why growth isn't essential, or more importantly, isn't always a good idea. If you're intrigued, you should be, because Paul's going to deliver a lesson today to back up these claims and to explain to you you have options when it comes to the size of your business. It's not big or bust. So I'm going to hand it over to Paul to take over. But I'll be back with my takeaways and to wrap it up. But for now, take it away, Paul.

Hey everybody, I'm Paul Jarvis. Thanks so much for taking a listen to this. Today I'm going to be talking about why growth may not be the best thing for your company. So let's get down to business. I'm going to start with two studies and then get into a story that I feel perfectly illustrates these studies. So the current business paradigm teaches us that to make a lot of money or to have lasting success, we need to scale up our businesses as if larger businesses are less prone to fail or become unprofitable, which I don't think is true. In fact, according to this view, before our imagined businesses are even off the ground, we need to create them with the sole purpose of growth and possible eventual sale for a huge profit if we follow the way startups can work. This paradigm, however, isn't actually rooted in truth, nor does it hold up against critical investigation. So a study done by the Startup Genome Project, which analyzed more than 3,200 high growth startups, found that 74%, 74% of those businesses failed, not because of competition or bad business plans, but because they scaled up too quickly. So growth as a primary focus is not only a bad business strategy, but it can be harmful. In fact, failing as defined in that study, these startups, these high growth companies, had massive layoffs, closed shop completely, or were Sold off for pennies on the dollar. So putting growth over profit as a strategy. However, trendy business advice was kind of their downfall. So when the Kaufman foundation and Inc. Magazine did a follow up study on the list of the 5,000 fastest growing companies five to eight years later, they found that 2/3 of them had gone out of business, had undergone massive layoffs, or had been sold off below market value. Pretty much confirming the findings of that first study, the Startup Genome project. So these companies weren't able to become self sustaining because. Because they spent and grew based on where they thought their revenue would hit, or they grew based on venture capital injections of funds, not where revenue was at. So these studies can kind of highlight the fact that growth is not always beneficial and growth is not always required to create a durable business. One of the best stories I found when doing research for my book Company of One was this story of these two Japanese companies that are ridiculously old in terms of how long they've existed. And I apologize in advance because I don't know Japanese, so I'm probably mispronouncing the company names. So there's this hotel. It's nestled in the picturesque countryside of Japan's Yemenashi prefecture, the Nishiyama Onsen Kyunkin. This is the oldest continuously run hotel in the entire world. It's been in existence for about 1300 years and has been managed by 52 generations of the same family. So empires have risen and fallen around this Onsen Kyunkin. Great wars have ravaged it, Massive economic booms and busts have come and gone. Still, this hotel has endured and remained profitable enough to stay open for business. The hotel's focus here since the beginning has been on customer service, not on growth or acquisition or expansion. It stayed small because the top priority has always been making guests comfortable. So how the Onsen Kyunkin has succeeded by not choosing exponential growth is actually a story best told by looking at its peer. The oldest continuously run business in the world, Kongo Gumi, a Buddhist temple construction company. So the founder saw an incredible opportunity way, way, way back when. So Buddhism was catching on quickly. So temples were needed. So for the next 14 centuries, the company was busy building temples like their hotel pier that I told you about a minute ago. Kongo Gumi kept a relentless focus on serving customers and being absolute experts at their craft. And that focus enabled the construction company to be resilient enough to endure. So for 1428 years, Congo Gumi hummed along and as a construction company. But then things suddenly changed. They decided to Expand and grow. Because the real estate boom was happening in Japan in the 1980s due to an artificial economic bubble and unconstrained credit growth. So for a while, Kongo Gumi reaped the rewards of this fast and exponential growth. But as so often happens, that growth was not sustainable. So by the 1990s, the financial bubble had burst in Japan. Companies that had taken on vast amounts of borrowed money with artificially suppressed interest rates were left with nothing but debt. Debt was like a popular drug. Everyone was doing it, and every business seemed to have access to it. So Kongagumi ended up with close to $343 million in debt. It ended up having to be sold to a larger company and then was liquidated, bringing its extremely long run of a company to an. The temple construction company had survived political crises, two atomic detonations, and even a period where the Japanese government tried to eradicate Buddhism from Japan. And remember, they were Buddhist temple builders. But ironically, the only thing that Kongo Gumi couldn't survive was the cost of rapid growth. Their downfall was putting growth above stability and profit. So in Japanese shinzi, which I'm sure I'm mispronouncing, is a word for a long lasting company. So, interestingly, about 90% of businesses worldwide that are more than 100 years old are Japanese. They all have fewer than 300 employees. And the ones that still exist never grow quickly or without great reason. So remember that hotel the story started with the Onsen Kyunkin. By contrast, they have barely grown at all. They're still operating with fewer than 40 rooms and the six hot springs. And they've survived by recognizing that growth is not required for long term success. So what they do instead is they make every customer feel like they are the one and only customer. And the hotel has been dedicated to this type of service. And it's drawn intergenerational patronage, which, can you imagine that for your own business? That's pretty awesome. So the Onsen Kyunkin has survived, not in spite of being small, but because of it. They didn't expand into a hotel chain. They didn't turn their interest to real estate or investing, or fall victims to the whims of market booms. They've never taken on investors, They've never gone public. So to put this all in perspective, Richard Foster, who's a lecturer at the Yale School of Management, found that the average lifespan of a business on The S&P 500 is only 15 years total. The Onsen Kyunkin, on the other hand, has been in business and operating for 1300 years. So I truly think that business success does not lie in growing a company quickly and massively, but rather in building something that's both remarkable and resilient over the long term. This isn't to say that success will only happen after, say, your first millennia has passed, but that success is about finding a way to sustain a business as long as it needs to be sustained. As I found time and time again through research and writing Company of one Nothing is too big to fail. With bigger scale comes bigger dangers, bigger risks, and much more work to become and remain profitable. Instead, I think that we can focus on building something that in effect is too small to fail. So we can adapt a small company to ride out recessions, adjust to changing customer motivations, and ignore competition just by being smaller, more focused, and in need of much less to turn a profit. So success then ought not to be measured by quarterly profit increases or ever growing customer acquisition, or even by your ability to create an exit strategy and leave with more than you entered with. Instead, as Natasha Lampard of the popular Internet conference Webstock says, we should maybe focus on our exist strategy. So sticking around, profiting, serving our customers as best we can. And then our success can be measured by being profitable quickly as we stay small and build real relationships with our customers. Not because we're all altruistic hippies sitting around singing Kumbaya, but because this strategy actually pays off. So long term loyal customers. In this case, we'll hang around for generations continuing to financially support our business. So a better problem to solve here, one that requires real ingenuity, is how to avoid dealing with everything that comes up in our business simply by adding more to the mix. Solving problems by simply adding more is like putting a band aid on a cut. Yes, it may stop the bleeding, but covering it up doesn't help you deal with the fact that the cut happened in the first place. To simply add more is basically an effort to fix an existing problem or without looking at the cause. And this is what I think growth is for business. So friend, let's sum this up. So first, not all growth is good. So growth doesn't have to be the byproduct of business success. Instead, what can we do to ensure our business continues to exist? So, to challenge growth, I think we can ask ourselves a few questions. So first, why do we want more? No, really, why do we want more? Is it just because our ego says that's a good thing? So how much is enough? How will we know when we've reached enough. And what will change in our business when we do reach that enough? How does being bigger or more or growing server help our existing customers? Because remember, they're the ones who are paying us right now. And then finally the final question we can ask ourselves is how does growth affect our responsibilities and how we want to spend our days? Because growth can sometimes mean growing out of the job we actually like to do and into a job of managing other people who are doing the job that we actually really like to do. Alright folks, you've been listening to me. I'm Paul Jarvis and if you want to continue learning about challenging growth or staying small in business as an end goal, you can visit of one co to find out more about my book Company of One why Staying Small Is the Next Big Thing in Business. Thanks for joining me today. Back to Omar Dear McDonald's, your breakfast menu fire tens across the board. I could be happy with anything even though I order the same thing every time. Thanks for not judging me. I'll try something new next time.

Maybe score a two for five dollar deal on a sausage McMuffin with egg and more limited time only. Price and participation may vary. Cannot be combined with any other offer single item at regular price.

Ba da ba ba ba.

ClickUp just solved AI's biggest problem and it's saving 4 million teams from productivity loss every day. Unlike ChatGPT and other AI tools, ClickUp converges all your work into one platform so your AI super agents have full context to prioritize tasks, execute workflows, and draft documents instantly. Teams using ClickUp finish work 30% faster and cut meetings in half. Try ClickUp for free today and get 15% off AI upgrades@ClickUp.com podcast that's C-L-C-K-U P.com podcast.

What a powerful lesson by Paul Jarvis. Bringing home the facts, bringing home the research, and bringing home the idea that you don't need to be this huge, huge business to be successful. What's success anyway? What's success in your book? You have to define that. For most of us, success is to live a comfortable lifestyle doing what we love, running our business, and you don't have to be huge to do that. You can be profitable, be very niche and serve a very specific audience and not have the headaches and the risk that he mentions of having a huge company. Most of us don't take the time to actually write down what are all the things we want in life? What kind of money do we need to make to have these things? Whether it's to travel. Whether it's to buy a house or some security or some retirement, you might be surprised the number is not as high as you think and plenty of small businesses can make that money. If you're interested in this topic, if this really piqued your interest, check out Paul Jarvis new book company of one. All you gotta do is go to of1co. What an amazing domain name there. Of1co. I highly recommend it. I really love Paul Jarvis writing. His books are easy reads, down to earth, and very practical. Thanks Paul for the great, great lesson. That's it for me guys. Make sure you hit subscribe on whatever you listen to to listen to this podcast, whether it's Spotify, itunes, Stitcher, Radio Overcast. By hitting subscribe you get all our episodes automatically so you don't miss a beat. Also, if you have two minutes, just leave us an iTunes rating and review so we can hear what you think of the show. It helps us improve and give you what you want and keep doing the things you love. Before I go, I want to leave you with this many people start these huge startups, these huge businesses get funding and they crash and burn and they burn out and the next business they run is a small business. They realize, hey, maybe having a huge business with hundreds or thousands employees is great for my ego. Maybe it's not good for my health or my lifestyle. And actually for many, it's not good for their wallet either. I always say when it comes to business, check your ego at the door. Make sure you're not being led by factors that really have nothing to do with you being happy. It just has to do with you maybe feeling significant or important in the world. Nest of Fates what you got to deal with every day is running your business and living the life that you built. So thanks for that amazing reminder, Paul, and thank you for listening to the show. I'll check you in tomorrow's episode. I'll see you then. Take care. Of.

Is it time to reimagine your future? The right business skills may make a difference in your career. At Capella University, we offer a relevant education that's designed to focus on what you need to know in the business world. We'll teach professional skills to help you pursue your goals like business management, strategic planning, and effective communication, and you can apply these skills right away. A different future is closer than you think with Capella University. Learn more at Capella Eduardo.