No need exists for lengthy requirements documentation or expectations for the staff. A simple conversation usually gets the job done. Another advantage is maneuverability. If a bad decision is made, a small company can quickly take a step back and follow an alternate path, without having to address the organizational inertia that constrains larger firms. In this model, you can choose the wrong path more than once and still keep your timeline relatively intact.
Disadvantages lurk in the shadows, though.
Because ideas typically flow down from one individual, few opportunities occur for checks and balances. More heads are better than one. The best balancing agents for superior ideas are far-reaching vision, fiscal reality, and experience. The right vision can spawn a historical event, but without addressing fiscal reality and experience, you can bet your solution will never get it into production. Another consideration is the effect on the troops.