Nathan Sykes

March 4, 2021

The Five Commandments Of Automated “Micro-Companies”

This is an internal document originally created for my team on how to create and run micro-companies — simple, low-maintenance, one-man companies that can be run by virtual assistants and serve as passive income for you — whether it’s to live off of, or just to boost your income as you pursue a larger goal.

Let’s get started:

#1 - It Has ONE Offering
When you take your first step into the business world, it’s easy to get swept up with options, variations, and different opportunities. Look at some of the largest companies alive — Amazon offers virtually every product and service imaginable. Apple is innovating on seven different types of products at the same time. It takes McDonald’s no time at all to add shit to their menu.

It’s easy to get sucked into that world, and want to offer all sorts of products and services to match as many different types of buyer personas as possible — at first glance, it makes total sense. However, you’re forbidden from offering more than one product, one upsell, and one downsell per company.

This immediately feels backwards, and that’s okay. We need to go back in time to understand why this is important.

All three of the companies I named are some of the largest players in their field, but they started out that way by minimizing their product line. Amazon started by just selling books. Apple created one product at a time. Even McDonald’s, who now has hundreds of products, started their burger stand with nine items (including fries, drinks, and shakes).

We want to scale, sure, but we need to start small. As Jason Fried says, it’s “better to have a kick-ass half than a half-assed whole.”

And when it comes time to scale, we’ll do so, but not in the way traditional companies have done it. Micro-companies are just that — micro. They’re never meant to scale vertically, but rather, horizontally. Instead of adding products and services, you start more companies.

Before you ask — the goal here is to have virtual assistants manage each of your companies, and for them to turn a profit. You’re not solely managing multiple companies on your own. You’re starting them, and passing them off to a manager who will earn you money every month, like clock work.

#2 - It's Cheap To Start
I’ve never spent more than $500 on validating a micro-company. It’s just not necessary. If you have a winning product/service, you’ll be able to turn a profit on that $500 fairly quickly, and be able to see if the idea is worth more of your time, energy, and resources.

Starting a micro-company is agile. The point of it is to be able to test things quickly and easily, to see what works and what doesn’t. If you’re investing $5,000 into every idea, it’s not sustainable. $500 is a much more realistic investment.

These businesses are not meant to be traditional. They don’t have office space, don’t have W-9 employees, and don’t need insurance or a CPA. Until you turn a profit, you don’t even need to register it as an LLC; just run it as a sole proprietorship.

The goal here is to eliminate the time between your initial investment, and your first deposit hitting your bank account. If it turns out you can’t turn a profit, you drop it and start something else.

For your reference, here was my budget on a passport renewal company I started this month, for less than $500:
  • Domain from GoDaddy — $13.00
  • WP Engine Web Hosting — $30 (first month)
  • Logo from Fiverr — $15
  • G Suite — $6.00 (first month)
  • WordPress Plugins — $59
  • Postage Reserve — $50
  • Advertising Spend (Google) — $250 (first month)
  • Advertising Spend (Facebook) — $100 (first month)

I was targeting people renewing their passports, offering to handle all of the paperwork and filing for a nominal fee. When it was done, I’ll send ’em a pre-labeled envelope with the filled documents that they can put their old passport and new passport photo into, and then drop it in a mailbox.

Saves them time and hassle, and they pay my micro-company a fair price for that service. The first set of payments from that micro-company hit my bank account yesterday. Now that it’s profitable, I’ll go ahead and incorporate as an LLC, and find a virtual assistant who can take it over.

See? The rules of the business game are changing — gone are the days of office space, rent, payroll, insurance, utilities, etc. Keep it nice and simple, and you’ll be in the black faster.

#3 - It Can Be Done Quickly
The goal is to start making money within seven days. Seriously. I’m not kidding. It’s the same amount of time I give students to start their businesses in my book, and if they can do it, we can too.

Leave the scalable ideas at home — this is not the place or time. We need to create an offering, and the infrastructure to sell that offering to people, within 48 hours. The logo, website, product, and advertisements should all be done within that initial two-day span.

Afterward, your ads can run for the full seven days. You can check in every day to make optimizations in your budget, and within a week, you’ll see if it’s worth pursuing. If you’re already profitable, breaking even, or close to breaking even, you can work on that — congratulations. If you’re nowhere near it, you’ve gone in the wrong direction, and should quit while you’re ahead of sinking thousands of more dollars into your idea.

Move quickly. If it works, congratulations! If it doesn’t, that’s fine too, but don’t waste months of your time on it.

#4 - It Can Be Documented
Remember, your management of the micro-company you are building ends shortly after you make profit. It’s important to build the flow of your company in such a way that every process can be easily replicated by virtual assistants and/or automation. Keep this in mind when making decisions:

  • How will my product/service be delivered to my customers?
  • How will my customers get in contact with me?
  • How hard is it to update my website/social media channels?
  • How will we process payments, and how can the virtual assistant generate profit/loss statements? (Eventually, when you scale to having a dozen-or-so of these “micro-companies”, you need to tighten up your restrictions on the way assistants submit financial documents to remain uniform).

Now, it’s important — don’t ACTUALLY write any of this down quite yet
. At this point in the game, it’s a waste of time. Wait until you’re profitable, and begin the search for a new virtual assistant BEFORE writing this documentation. If you’re not profitable and scrap the idea, it’s not a waste of your time, and in addition, you’ll be able to modify the documentation required based on the specific needs and skills of the assistant you hire.

Just keep in mind that you’ll likely have little-to-no involvement in the day-to-day operations of the company after you pass it off to a VA, so make sure that’s top-of-mind as you build your project. Make it simple and easy to understand.

#5 - It Should Be A Straight Line
Simple and easy to understand has been repeated over and over again, more than you’d probably ever like to hear about this concept. But I can’t stress this enough — it NEEDS to be simple; for your sake, for your assistant’s sake, and for your customer’s sake.

Let’s go back to a micro-company I started; a social media marketing agency for dental practices and orthodontists. Here was the way we ran things:

First, a dentist signs up for our marketing program. It’s a no-cost-upfront lead generation program for dentists, where they only pay after we get them new patients. It’s simple for a few reasons:

  • The campaign we use is exactly the same. Same Facebook ad creatives, same landing pages, same email campaigns, and same tools across the board, for every single dentist. It works, and they love it. SIMPLE!
  • We change the campaign’s logo, colors, and information for each dentist before launching it. It only needs to be done once. SIMPLE!
  • The pricing is kept the same for every single patient we generate. SIMPLE!
  • The method for obtaining clients is the same. SIMPLE!
  • The billing and communications is the same. SIMPLE!
  • The advertising budget for the dentists is the same. SIMPLE!

Because of our business model, my virtual assistant just needs to onboard the dentist once, and then they’re set for life.

The campaign will bring in more patients automatically using the dentist’s ad budget, generating us more money every single month.

Set it and forget it. A simple, straight line.