Taking a private company public generally invokes a public premium because of the public buyers’ perception of the advantages of scale, and because there is substantially greater liquidity.
The public premium gets you a higher share value compared to a private company with the same amount of profits, revenues, and projects. So you see that added liquidity is yet another way scale provides companies with extra leverage, which means each additional dollar of profit will come with less effort.
The bigger you are, the more money you should make merely due to your size and the added efficiencies created by your size, assuming that bureaucracy doesn’t paralyze your business like it does many large organizations.
Often, your competitors don’t believe they can effectively scale their organizations. They conveniently think that their current size is their optimal size. In this case, your strategic advantages are for you to understand economies of scale better than the competition, believe you can effectively scale, and be willing to make an assertive try at it. Just as the rich get richer, the bigger companies with more scale, and therefore leverage, get what they need cheaper and faster. This leaves them at a perpetual advantage by effectively distancing themselves ever further from their mainstream competitors.
Don’t forget that incompetence or wasted time in large or small businesses could readily reverse any strategic advantages that scale may offer.
