🚀 The Small Business Boom Continues

This is The Level Ups. Modern business news for the future business leader (in plain-Jane English).

Today:

• The small business boom is still going strong.

• Inflation, rising wages, and “quiet quitting” don’t make it easy.

• How are the winners getting around this? Full breakdown.

Today is a bit of a change-up. Less about the news, more about Levelling Up.

Let’s get into it.

Estimated reading time: Today's is on the longer side, but interesting.

Who Doesn’t Own A Business These Days?

The 2010s are considered one of the worst decades for entrepreneurship in history.

Fun twist: the 2010s were also one of the best decades for the economy.

You’d think more people would start businesses during the best of times. But no. Many of us waited until the pandemic or after.

FRED tells the whole story. There’s a sudden spike reaching over 550k new business applications in just one month. Almost double pre-pandemic numbers.

And things aren’t slowing down. Today’s new business applications are still ~50% more than pre-pandemic levels.

Is it because it’s easier to start and run a business now? Not quite.

Facing The Same Challenges:

I’ve covered “quiet quitting,” how managers don’t trust employees and the most recent CPI numbers.

New businesses have the same issues but fewer resources to deal with them. Plus, the market’s not what it used to be.

So in some ways, it’s harder to start/run a business.

Some say “macroeconomic factors,” but I’m about plain-Jane English.

"Big picture” issues that affect most businesses (some more than others).

New Opportunities

Existing companies have baggage.

• Set in their ways.

• Trouble with staff.

• A business model that only works in a good market.

Most of this comes down to one thing. They can’t change fast enough.

That’s how new businesses often end up winning. It’s why Netflix eventually crushed Blockbuster.

This creates opportunities for new businesses. They’re small enough to adapt quickly.

How Small Businesses Are Winning Today:

Let’s start with the obvious issues and why new businesses typically don’t have them.

Adapting to new technology.

• Even just 50 people learning new software is expensive. Not just because of the money. It’s so much time spent learning new tech that productivity drops like a sack of bricks. New companies can start with the latest best practices.

Rising costs.

• Salaries are going up, costs are going up, everything is going up. It’s hard to tell a customer, “we’re raising prices by 20%.” While some do, it’s risky. They might leave. New companies can adjust their pricing/costs to work within the current market (less to lose).

Competition.

• Some have thousands of employees (who work 2 hours & 53 minutes a day. It’s so inefficient. New companies can easily cut into their market share (and they do).

Can’t speak for every company, but I know a few things through my research.

There’s a blueprint, and I’m going to share it here.

It covers the system they use to operate, automation, and staffing.

A Blueprint For Running A Great Business.

The operating model (fancy way of saying the business “structure”) is the first major opportunity.

As companies grow, it becomes difficult to manage everything smoothly.

Sure, most know their numbers (revenue, expenses, etc.). But they struggle with a consistent approach to running the business.

Things like:

• “Did everyone do xyz?”

• “Are all the issues on the table?”

• “Are the people actually working a full day or “quiet quitting” on us?”

This is real. People don’t know these things as companies grow and get too comfortable.

So, what’s a better way?

The Entrepreneur's Operating System (EOS).

EOS is a blueprint for how to run a company. It covers everything.

• How to create the 10-year vision, 3-year roadmap, and 1-year plan.

• Creating your organization’s “accountability chart.”

• Using a scorecard to track numbers (and what to do if they’re ugly).

• Running meetings, systems for hiring, and more.

It’s a game changer used by over 15,000 businesses with success in many different industries. They all follow this blueprint, and it works. If that many people can figure it out, so can you.

While nothing is perfect, it’s a great start. Check out the book Traction for more.

Automation:

I get goosebumps thinking about what’s possible with automation (maybe you do too).

While older businesses are still printing emails and putting them in folders, automation is a major time and money saver.

Here’s the secret. Automations don’t require code anymore.

20 years ago, you had to hire a developer and wait weeks/months. Things have changed.

“No-Code” software companies can automate nearly anything with clicks in seconds. Think of it like software superglue—no more copy-pasting between apps.

Here’s a list:

• Zapier - the industry leader. So many apps, very user-friendly.

• Make - well priced alternative, not as many apps, also user-friendly.

• Automate - very similar to the above.

• IFTT - simple solution for business and personal use.

• Parabola - extremely powerful with clear visual workflow builder.

Remember, it’s superglue. Helpful but not perfect. But amazing for a new business.

Staffing:

It’s a tricky subject these days. Productivity drops and “quiet quitting” are decimating many businesses.

The key is to start by avoiding full-time hires (W2, T4).

Here’s how:

The “pay-per-task” model.

It’s straightforward: pay only for work produced.

For example, writing a blog post:

• Written content - $30

• Cover and in-article images - $20

• Re-purpose blog content for Twitter and LinkedIn - $10.

You would just oversee the process and hit “post.”

Once the costs are fixed in this way, it becomes easier to operate.

The example blog post might cost $60. But what if it took a full-time marketing person 4 hours to do this?

That will cost more than $60 per blog post in the long run. What if that person’s having a slow day? Fire and replace them? It’s definitely going to cost more than $60.

Plus, a blog writer is an expert writer. A “marketing coordinator” that does a bit of everything may be better at making videos and only writing blog posts because they have to (but not as well).

Instead of paying people $20/hour for 8 hours.

Give them the task and pay $40 when it’s done.

I guarantee they will work better and faster. Just don’t pay them until you’ve checked the work.

Be warned: they will be less reliable because they’re not full-time staff. If you don’t have your ducks in a row and end up in a huge rush, this could bite you. Use EOS to keep things on track.

Hiring overseas staff:

This one may trigger some of you. It has to be said.

Admin tasks (among others) do not require someone in the west. If you can’t automate it (for whatever reason), look overseas.

That’s the beauty of remote work. Just takes a laptop (and speaking the same language).

There are millions of potential employees out there who charge less but work just as well.

It’s less overhead for the same work. Plus, “quiet quitting” applies to the west. Not always the case abroad.

It’s not easy to pull off. Cultural differences are real and affect work. While the cost-savings are clear, be warned. It’s straightforward, not easy.

Note: we’re not here to rip people off. When hiring overseas (and in general), pay a fair wage.

The “Company of One” Approach:

This approach challenges the “growth at all costs” philosophy. Turns out not all business owners want to scale forever.

Some want $1M a year to keep things stress-free.

This approach deliberately keeps businesses small by headcount but successful by profits.

It’s based on the best-selling book by Paul Jarvis. He owns a company of one called. Fathom Analytics (privacy-focused Google Analytics competitor).

Here are some other successful “companies of one:”

• PlentyOfFish - did you know it started as a company of one?

• GetLatka - database of software companies built from scanning interviews with founders and plotting the data points on a web-app (like a spreadsheet) with automation.

• Visualize Value - former design agency owner packaged his expertise with dark, minimal design styles into courses. A multi-million dollar empire of much more now.

• Backlinko - one of the best marketing blogs online, run by one person.

• Nomad List - the original home for remote workers.

• RemoteOK - remote job board from the creator of Nomad List (he’s got 2 companies of 1).

Some of these use code, while others don’t. GetLatka, Visualize Value, and Backlinko don't need code at all

There are many ways to create a “company of one.” This is the start.

• EOS can give you a blueprint to operate efficiently.

• Automation is worth learning. It’s no-code and millions of others have figured it out (so you can too).

• No need to hire full-time staff when you can hire contractors and pay-per-task.

Wrapping Up:

When new business applications double, it’s no surprise that great talent is becoming harder to find. Many of them are starting businesses.

Makes sense. Keep the day job but “quiet quit.” Then work on the side hustle until ready to go full-time.

Starting a Company of One today is possible. Take The Level Ups. Whether I have 1 subscriber or 1M, the work is (pretty much) the same.

Thanks for reading!

Today’s email was different, but let me know if you like this style.

See you tomorrow,

Darwin

PS - so sorry there was no email yesterday. Had a technical issue that’s been mostly resolved. Thanks again!