It is entirely possible to be too small to meet the demand for whatever a given small business produces, and therefore too small to be able to get whatever is needed to expand to meet existing demand. I and Indian Maid Products Inc. are there now, and we have been for the past 5 years. (Gasp! Our secret exposed! Well, if I believed it is a problem, I wouldn't have told you. Lack of size doesn't equate to lack of ability.. remember the size of the wand vs the ability of the magician who wields it?)
There are many advantages to staying small, however, and for designing an operation to stay that way.
I, for one, would rather be able to cover a certain amount of market comfortably and have people wanting more, and accepting our explanations that we simply don't care to expand (on the basis of quality of product produced, and/or the cost of expansion is just too high), than have to play catch-up and try to supply those people while they hollered, "I want this, and I want it now, not excuses about why you can't!" They do yell that.
It's easier to keep track of a small entity - and all its parts - than it is of a big one. It's easier to maintain the physical plant; it's easier to supply the business; and it's easier for people to wrap their minds around a small entity than a big one.
Granted, banks may not look at you with the same drooling, glassy-eyed expression they reserve for mega-customers, but statistics show that small businesses still account for the vast majority of jobs and innovation in the world, and therefore, I expect, for the tax base. This is Power to the People. The People just haven't made use of it in suitable ways, that I have seen..
When you are a small business, it is generally easier to shift position if your Board decides this is desirable, than if you are big, if for no other reason than that there are fewer humans - and their built-in opposition to change - to deal with. Change is not automatically 'bad', but it is human nature to stay with the familiar rather than to go for the good you can see associated with a given change, even if it's a great amount of good.
The Board and Officers can 'order' changes of perspective and can make 'policy' about it until the pteh (buffalo cows) come home, but 'policy' has never made a whit of difference to anyone whose mind is made up - that's why we have the term "prejudice". It means, 'to judge ahead of time'. My first foster father used to call it, "My mind is made up; don't confuse me with facts".
Small businesses generally have smaller ecologic impact than large ones - certainly a major consideration now that humans are finally coming back to being aware of the necessity of keeping our place in the web of life in mind.
Last, in a small business, there is a stronger feeling of 'family/friends' and the responsibilitys and loyalty one has to 'family/friends' than there is in a large business. That's human nature. Above a certain (small) number, people naturally lose that feeling of 'family' and begin to separate into groups that are closer to 'family size', where the bonds of friendship operate more easily and are stronger. I believe the company suffers when this happens - and so does everyone in it.
I've heard that at every Wal-Mart, every day, there is a group singing of the company song and a group recitation of the company perspective, but I know that the employees on the floor generally refer to themselves as 'the peons' and express considerable resentment at how they are regarded and how they are treated by 'the people upstairs'. There is a definite "us and them" mentality; and I've often seen it 'upstairs', too. That doesn't happen in a small business to anywhere near the degree it does in a big one. I don't doubt the 'us and them' attitude happens at Microsoft, GM, Toyota, etc., as well. But I believe it happens less in a small business. People are more aware of needing each other in order to survive and be successful.
Within a small business, individuals feel they count more in every way. They feel they have a bigger impact than they do in a large business.
If we want to change the world and improve our position in it as a group, particularly in the area of the footprints we humans make, it makes good sense to stay small. At Indian Maid, it's about 'showing' respect, not merely claiming to have it without walking our talk.
We plan for our growth 'to occur to a certain maximum size', but should we reach that point, we plan for Indian Maid to grow in such a way that it remains and operates as a collection of small entities in order to retain the family / friends / loyalty aspects of human nature and diminish as much as possible the 'us n them' mentality with all the problems it brings.