A Business that Questions Growth: The Company of One

According to Paul Jarvis, as mentioned in his book The Company of One, “most companies grow for 4 reasons: inflation, investors, churn, and ego.”

Inflation may push your company to seek growth for survival reasons: if things are more expensive due to inflation, you need to earn more income to pay those expenses.

Investors may push your company to grow because that’s in their best interest: growing organizations in order to get a return on their investment.

Churn is the rate at which you lose customers over a specific period of time. A high churn rate creates a downward spiral of losing profit, which may push you to invest more in customer acquisition. As Paul Jarvis points out, however, customer acquisition is much more expensive than investing in retaining existing customers. Your ultimate goal is to reduce the churn rate as much as possible.

Ego is the enemy, as the book title of author Ryan Holiday states boldly. Ego is the inflated sense of self that may push you to grow because it feels more impressive to own a $10,000,000 business compared to a $1,000,000 business. Controlling the ego is a personal choice you may commit to. If you set a clear purpose for yourself and the size of your business, you can stick to it and let go of egoic pursuits.

An additional valid argument for growing a business that an effective altruist may make is this: the more you grow a business, the more social impact you can have. That is seemingly true: when you own a big business, you create many jobs, generate higher profits, and can invest those profits into the community around you or charitable associations.

It is also true that the more you grow a business, the more layers of complexity you are adding to the game. The levels of bureaucracy and approval layers may also make your social impact slower and more underwhelming than you may think. Overall, growing a business to have a greater social impact is a rational argument that can apply to those individuals who want to maximize social impact rather than their own tranquility and peace of existence. Tranquility and peace of existence are more likely to be a byproduct of operating a small company instead of a large one with many employees.