Gap Between Small and Large Companies Growing: Why?

By: First Union


Gap Between Small and Large Companies Growing: Why?

While within the past few years, there have been several smaller companies emerge onto the scene and blossom into major corporations because of their ability to essentially disrupt an entire sector, this does not suggest that this is the norm. In other words, the larger corporations are still holding sway at the top and the consequent gap between small businesses and the bigger conglomerates is seemingly growing. Recent reports have shown that large corporations are becoming more dominant than ever, whereas the small corporations are not as profitable as one would think. You could say those small companies are in many ways, simply remaining stagnant.

So why is this…What is causing these small companies to get lost somewhere in the shuffle as the large corporations outperform them? According to some experts, this may be the result of what they deem the small size trap; that is to say, smaller businesses are finding it nearly impossible to emerge from their "class." Going from a small to even a medium-sized business is becoming increasingly trickier for many. And so, they remain firmly within their group.

Additionally, the ability of a small company to grow organically as we have seen with the likes of Amazon, for instance, is an increasingly difficult feat. Not to mention, the large corporations are rarely moving from those top positions. The fact that these larger businesses are staying dominant does have a great deal to do with the fact that they are being more innovative and investing wisely. So where though does this leave a small business?

One thing that small businesses must do more, according to recent studies, is to invest intangibles, things such as equipment, plants, and property. Studies also report that larger corporations tend to also invest more in intangibles as well; customer data for example. In fact, at a fairly rapid pace, more and more large corporations are investing money into key intangibles in their efforts toward innovation.

As a small business, you need to take steps to ensure that this gap doesn't consume you. You can stay competitive, make smart investments and innovate to keep pace with your competitors. If you need additional capital to this end, First Union Lending can certainly help. Call today!

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