I have little use for discussions of 'economy of scale.' So often, the speaker is making a claim so broad that it's more an expression of faith.
Yet, let's look at the details of a contracting business. Let's assume "Joe" has always worked a full week, even had regular overtime, and decides to go solo.
Well, if "Joe" is going to continue to maintain his income, he needs to keep working 40 hours. That is, 40 hours on his jobs. That means he needs to put in additional time meeting customers, chasing permits, preparing bids, invoicing, doing his books, maintaining his vehicle, etc. What is that? Another 2-4 hrs. a day? So, our 1-man operation is already behind the curve.
So, "Joe" gets a helper. That takes a lot of the grunt work off of Joe, but also means that Joe now needs additional cash reserves, to start paying workmans' comp and unemployment insurance, and have a payroll. That's more administrative work for Joe. Now Joe's admin time is at least 3 hrs. each day- and he still needs to spend the day working alongside the helper.
Since Joe can't be with his helper, he gets another guy, so the two can work together. Joe can now spend all day on those admin tasks. The admin time and associated costs don't change much. Problem is, Joe is still putting in some long days. In effect, the wages for the three of them is now being earned by the two guys in the field. That's a heavy load; especially since Joe is approaching the point where he needs to provide outfitted trucks for the crew; that's a big expense.
Joe decides to add another crew. Naturally, this now means he must find more work. No longer can he just use his cell phone and the clipboard in his truck. It's time for a real office, with someone to answer the phone. Might as well have them do the books too.
Joe's firm now has six employees (counting Joe), with the four 'field crew' guys paying six salaries. That's not a very easy 'spread.' There's a temptation to add more crews.
More crews? That's more trucks, and now a uniform service, and some serious advertising. At somepoint the 'office' staff will have to grow. An assistant for the first gal, someone to do the drawings, someone to chase parts, etc. You end up needing a 'shop guy' to maintainthe trucks. An important consideration here is that your regulatory burden - things like OSHA recordkeeping - starts to mushroom. At some point, having 'benefits' will be a requirement.
Thus, "scale" only brings economies to a point.
Let's say things continue to go well for Joe, and he continues to grow. I suspect the best he'll ever be able to do is to spread the pay of 4 people over 3 'field' guys. Only when he get to having a payroll of, say, 50, will there be enough of a base for him to be able to kick back and start living the 'high life.'
True, there are things that will let Joe seem better off as he grows. Credit will be very available, and a lot of the money that he formerly sent the taxman will show up in his business as trucks and equipment. Oddly enough, it is the management of this 'paperwork' that becomes the most important part of running the business.
"Scale" has with it other advantages than just any imagined economies. Name recognition, as everyone sees your trucks on jobs, makes it easier to get work. The pain from one bad job is spread over many other jobs.