Earlier quoted context omitted.
for every small business that "gets by", there are 2 (probably more) that go out of business due to not having grown sufficiently by the time they face some competition.
I think this is a weird framing of the issue. Sure, lots of businesses go under, and maybe being larger would have saved them, but maybe not. Plenty of VC-funded businesses go under precisely because they tried to be too large, when they could have perfectly comfortably served a few satisfied initial clients for enough money to pay all their bills. I think the idea that companies go under because they aren't ambitiou…
A larger profitable company has more chance of survival by shrinking into a smaller profitable company. It's a buffer. But an already small profitable company doesn't have that option, there's more risk.