Why are small firms reluctant to expand?

Answer 1

This is what I call the next step Dilema. The thought process goes like this:

• We are busy and every employee is actually working to hard
• We need to expand
• If we expand we need to expand to the next size Example: I have two employees the next step is four employees and double the space equipment and expense
• We won't make as much profit after the expansion and may loose money and even go broke if I can't get enough business to suport four employees.
• The bank makes it hard to borrow the money to expand.

I am better to not take the chance.

The large company:

• We need to expand this section of our business
• Ok buy the equipment, hire the people.