Will small companies disappear in advanced countries?

Since several years ago, the disappearance, or rather the shrinking number of small businesses, as well as the crisis of the middle class, have been hotly debated topics by sociologists, economists and even the political class, which considers small businesses and the middle class to be two pillars of a healthy and balanced society.

The disappearance of small businesses in countries with advanced economies can be attributed to several factors.
Here I will try to address the main factors that are leading to the decline of small econoic businesses.

It is important to note that the situation may vary among different countries and sectors, here are some common reasons:

Competition from large firms: small firms often struggle to compete with large firms that have significant resources, economies of scale, and established brand recognition. Large firms that can offer a greater range of products, at lower prices, and benefit from a solid marketing campaign easily succeed in winning competition from small firms by stealing their customers. In advanced economies, by now, large economic.financial groups dominate the scene, and they are eliminating small competitors from most of the economci sectors (the manufacturing and commercial distribution sector, especially).

Formalization and regulation: Advanced economy countries often have stricter regulations and formalization requirements for businesses. Small businesses, particularly those that operate informally or on a very small scale, are finding it increasingly difficult to meet these increasingly demanding, time-consuming and costly regulatory standards These new regulations can be difficult for small businesses to manage compared to large companies, which may have dedicated legal and compliance departments Compliance with licenses, taxes, labor laws and other legal obligations can be too onerous for small-scale operations, leading some to close or operate in the informal sector.

Rising costs and overhead expenses: Small businesses often face challenges related to increasing costs of rent, labor, utilities, and raw materials. These rising expenses can squeeze profit margins, making it harder for small businesses to sustain their operations and remain profitable.

Technological advancements: Rapid technological advancements can disrupt traditional business models, favoring larger companies with the resources to invest in and adopt new technologies. Small businesses may struggle to keep up with the pace of technological change, which can put them at a disadvantage in terms of efficiency, productivity, and customer reach.

Access to financing: Small businesses may struggle to secure adequate financing or loans to support their growth and operations. Banks and financial institutions may be more inclined to lend to larger, more established companies with proven track records and collateral, leaving small businesses with limited access to capital.

Changing consumer preferences: Consumer preferences and behaviors evolve over time, influenced by factors such as convenience, online shopping, and access to a wide range of products and services. Small businesses that fail to adapt to these changing preferences may find it challenging to attract and retain customers.

Demographic shifts: Changes in demographics, such as aging populations or shifts in urbanization patterns, can impact the demand for certain goods and services. Small businesses that rely heavily on specific customer segments may face challenges if their target market shrinks or undergoes significant changes.

It is important to note that although these factors may pose an invincible challenge to many small businesses, which will therefore have to close, certainly not all small businesses will disappear, . Some governments, organizations and communities recognize the value of small businesses and may implement policies or initiatives to support their growth and sustainability. In addition, the rise of the sharing economy, online platforms, and niche markets can create opportunities for small businesses to find their niche and meet the needs of specific customers.