Are larger businesses more competitive than smaller businesses?

According to the Small Business Success Index: "Scale is important. Businesses with 20 or more employees are more able to compete than those with fewer than 20."

Do you agree?

*The Small Business Success Index, an ongoing measurement of the overall health of U.S. small businesses, was commissioned by Network Solutions, LLC and the University of Maryland’s Robert H. Smith School of Business. To take the survey yourself, click here.

In many ways I agree with this statment as if your company can hire 20+ employees, you must have a considerable amount of income coming in.  With that income you can then decide if you want to continue to grow and expand, or concentrate on one specific niche and target towards your clients.  Also with having 20 employees odds are your company would have a much wider skill set which will allow you to compete more.

Note though that this does not simply mean when starting your business hire 20 people, your company has to have the income to sustain this otherwise you will not be competing with anyone.  Based off of these thoughts though I would say that the number of people doesn't really matter, it is the business idea and the ability to generate cash flow.  If your business can do this with even just 2 people, you will be able to compete because you will be able to spend more money to grow/expand your business sets.

I agree with Joe. There are factors outside of the number of people in a company that determine it's success. Perhaps the more appropriate fact could be found when you think about a company's ability to successfully support a staff of 20 or more and still bring in good profits. I don't think the success is solely dependent on the number of people you have, the number of people you have is dependent on your success.

Given what I have said above, it would be true then that with a larger staff you can support more projects, broaden your offering or simply scale your existing offers, run your business more efficiently (assuming you have resources dedicated to ensuring productivity) and so forth. With more resources, more can get done and the faster you could potentially move forward.

So, while it is an easy fact to say generically, companies with 20+ employees are more likely to be successful than those with fewer, I don't think it really addresses the reason businesses of larger size are successful. Generally, they have more funding and resources and can take on a little more risk than a smaller operation. You can see the diversity in successful companies by looking at how business websites, newspapers, and other publications classify them. One method is certainly by employees, but another common filter is by revenue.

Well it's a self-fulfilling prophecy on some level.  To have the cash to scale and stay in business, you will have had to experience some level of financial success.

What interests me more is how businesses define "success" beyond just the bottom line and how that impacts scale.  My father's auto repair business' success was defined by customer satisfaction as well.  He always had more business than he could handle, because of the trust that people had in his work.  And for him, not scaling beyond 4 or 5 people including himself was a conscious decision, because there is no way he could have ensured the quality and personal interaction levels the same with more people.

The shelter I work with defines success differently--it's by numbers of animals with positive outcomes--either with adopters or rehabilitators or returned to their owners in the case of strays.  In that case, success and employee size go hand in hand--the more animals you have, the more kennel staff and volunteers you need.  And with non-profits, the whole concept of a volunteer corps turns the employee count concept a little bit on its head!

I don’t think that larger business face more competition than small size business. Competition is same, to succeed you will have to win it. Rather, I would say that it is easy to penetrate the customer segments of small businesses because they are not traditional users, while in large business brand value plays a major role.  

I think that cash/revenue is important, yes, but agility is also equally important. 20+ person organizations while much more agile than an organization comprised of thousands can still experience some pain switchin gears.