Business
These are 10 major challenges business owners face when growing
Anything that matures will go through growing pains, and scaling businesses are no exception.
Expanding operations, products, and customer bases can make or break new businesses. Building a larger company also requires bringing on more workers, but taking a team from a dozen people to 50 can create chaos. Processes can break down and bottleneck, company cultures may change, and founders might struggle to keep an eye on day-to-day tasks. All of this can confuse or demoralize owners, investors, early employees, and customers who undergo these changes—particularly when companies are underprepared to make the leap into growth-stage status.
To take a closer look at this issue, Ruby identified 10 major challenges business owners encounter as they grow and highlighted ways they can address or prepare for those challenges. The analysis draws from existing news coverage, small business resources, and insights from experts, including an interview with Karin D. O’Connor, a professor of strategy at Northwestern University and the executive director of the Heizer Center for Private Equity and Venture Capital.
Alliance Images // Shutterstock
Finding customers
At the most basic level, businesses only succeed if they have customers. As a company scales its operations, customer volume must support that growth. Newer companies often acquire new customers through networking and referrals, so it is imperative to listen to existing and potential customers’ needs and ensure that they are satisfied.
“In the early days, you’re looking at engagement metrics,” said O’Connor, an early-stage investor who has served on the boards of several scaling startups in the last 25 years. “So once a software has been implemented, for example, are people using it? Are they in there every day?”
Other ways companies can attract additional customers include new customer discounts, loyalty programs, partnerships with more established companies, and maintaining a quality website with strong search engine optimization.
Totsapon Phattaratharnwan // Shutterstock
Expanding geographies
Scaling a business to multiple locations can be relatively simple depending on an entrepreneur’s experience, but once they cross city or state lines, the process can become more complicated. Branching a business into new localities can be like opening an entirely new company.
Taxes and policies on permitting, zoning, and licensing often vary. Leaders of growing companies should inquire with state offices and research websites to get the full picture of what an expansion will take before moving forward.
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Expanding industries
Certain types of businesses are less dependent on geographies, especially in the technology space, O’Connor said. But where they find ease in growing across cities, states, and countries, they may encounter challenges in expanding across industries. Entering a new industry requires significant market research, including interviews and testing, to make sure the product will work for the new subset of customers.
“Let’s say you sell to franchise restaurants, and you think that gas stations would be another good target,” O’Connor said. “You really need to go in and understand those buyers and not just assume that you can just launch.”
When considering moving into a new vertical, O’Connor noted a few important questions: “Do they have the same problem? Is this top of their priority list in the same way that it is with your existing customers?”
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Recruiting
One of the largest considerations for a growing company is adding personnel. It’s a balancing act between how much work is coming in, how many people are needed to complete it, and what skills they need to be efficient.
Recruiting the right people impacts everything else, from how productive the company is to its culture. In a column for Forbes, recruiting expert and “Recruit Rockstars” author Jeff Hyman breaks down how to recruit the right people. Hyman outlines the importance of searching for applicants within networks rather than relying on job boards, having those applicants produce sample work products, and creating a working environment that people want to be a part of.
Having a meticulous recruiting process does take more time and effort, but pays off with longer tenures and higher work quality, Hyman says.
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Preserving company culture
Recruiting the right people plays a huge role in preserving and improving the culture of a growing company. But once new employees are there, companies have to continue to put in work to sustain a positive culture. That includes a comprehensive training and integration strategy that is intentional about promoting culture.
Companies are wise to clearly define their values, including examples that convey what it means to embody that value. For example, “consistency” means meeting deadlines and holding all assignments to the same standard; “collaboration” means allowing everyone to speak, contribute, or lead. Regularly collecting employee feedback can also help ensure that culture isn’t lost in the shuffle.
Amnaj Khetsamtip // Shutterstock
Obtaining funding
Hiring people and creating a product requires money—sometimes a lot of it. When a founder doesn’t have the money upfront to put toward establishing their company, they may struggle to find other resources for capital. Many lenders and investors require credit histories and business details that a growing company may not have yet.
Fortunately, there are resources for entrepreneurs to obtain funding, largely through the Small Business Administration, which provides long-term loans for property, equipment, and other business startup costs. Some private investment firms also partner with the SBA to provide government-backed loans to small business owners to advance local economies.
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Pursuing venture capital
Venture capital is another way small businesses can access funds to scale, but O’Connor noted that most companies are not well-suited for it.
“Venture investors are looking for companies that have the potential to grow very large and companies that are meant to be exited within a reasonable period of time,” she said. “The founder needs to be on board with that. If the founder is seeking to build a business that they’re going to run for decades, a legacy business, a family business—that is great, but they’re not going to want to capitalize it with venture capital or spend time trying to do that.”
Investors are looking for product-market fit; they want to see that whatever product a company has created is something people want and are willing to pay for, that it can have broad reach, and that it has some kind of advantage over potential competitors. Founders should have quantitative and qualitative data to support those ideas when they seek funding.
“Whether you’re raising money from investors or it’s your own money that’s coming in, you need to be really focused on making every dollar work as hard as it can,” O’Connor said. “Understand what your expectations are for those dollars, and how you can stretch them. There isn’t an endless pile of capital out there that’s available to grow businesses.”
Diana Vucane // Shutterstock
Getting press
Name recognition can go a long way in obtaining customers and investors. Press coverage is one advantageous method to gain that popularity, but as a small company, getting the attention of news sites can be difficult.
Growing companies can improve their chances of getting coverage by reaching out to local and industry publications when notable events occur at their companies—including funding rounds, hiring pushes, and leadership changes. Whenever these landmarks are on the horizon—even before the news goes public—company leaders should be prepared to discuss them with journalists.
Entrepreneurs can also establish themselves as industry experts by creating a strong social media presence, registering with sites such as Qwoted and PR Newswire, and offering their insight to reporters when something relevant comes up in the regular news cycle.
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Choosing the right processes and technology
Effective processes help a company function. As startups scale their operations and processes, they must decide what tasks to complete internally and what to outsource.
“The infrastructure piece shouldn’t suck up a lot of time,” O’Connor said. “Too many companies are trying to reinvent the wheel. When there’s already Slack, why would we build out a whole communication system on our own? Particularly with technology, we’re developing tools every day that are helpful.”
From communications to customer management, utilizing existing process and infrastructure tools can help employees focus more of their time on coaching, marketing, selling, and creating the actual product. In markets with many competitors filing the same niche, like instant communications, deciding which products to use can be difficult. O’Connor said speaking with other entrepreneurs who have implemented certain tools helps her vet solutions for the companies she works with. Convening groups of founders, owners, and CEOs to chat about common problems can surface the processes and technologies that work best for various use cases.
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Delegating
When companies employ a handful of people, founders typically have a hand in everything. But as a company scales, founding members can’t maintain the same level of oversight.
“This is hard psychologically for some people because they really want to have that control, and that makes them comfortable,” O’Connor said. “But it’s also hard from a process perspective.”
Even with an openness to share decision-making, it can be difficult to delegate properly and to set goals and track metrics effectively, O’Connor said. Again, recruiting and retaining employees with the necessary skills plays a big part in delegating work and trusting that it will be done properly. Effectively delegating also means creating clear expectations and goals, allocating tasks to specific employees that previously fell to founders, and providing continuous training and development for employees to grow in their roles.
While scaling can be intimidating for business owners, if they are intentional with their research and preparations, they can build their companies into something much greater, without too much friction.
This story originally appeared on Ruby and was produced and
distributed in partnership with Stacker Studio.
It’s well-documented that the surest, and often best, return on investments comes from playing the long game. But between stocks and real estate, which is the stronger bet?
To find out, financial planning firm Wealth Enhancement Group analyzed data from academic research, Standard and Poor’s, and Nareit to see how real estate compares to stocks as an investment.
Data going back to 1870 shows the well-established power of real estate as a powerful “long-run investment.” From 1870-2015, and after adjusting for inflation, real estate produced an average annual return of 7.05%, compared to 6.89% for equities. These findings, published in the 2019 issue of The Quarterly Journal of Economics, illustrate that stocks can deviate as much as 22% from their average, while housing only spreads out 10%. That’s because despite having comparable returns, stocks are inherently more volatile due to following the whims of the business cycle.
Real estate has inherent benefits, from unlocking cash flow and offering tax breaks to building equity and protecting investors from inflation. Investments here also help to diversify a portfolio, whether via physical properties or a real estate investment trust. Investors can track markets with standard resources that include the S&P CoreLogic Case-Shiller Home Price Indices, which tracks residential real estate prices; the Nareit U.S. Real Estate Index, which gathers data on the real estate investment trust, or REIT, industry; and the S&P 500, which tracks the stocks of 500 of the largest companies in the U.S.
High interest rates and a competitive market dampened the flurry of real-estate investments made in the last four years. The rise in interest rates equates to a bigger borrowing cost for investors, which can spell big reductions in profit margins. That, combined with the risk of high vacancies, difficult tenants, or hidden structural problems, can make real estate investing a less attractive option—especially for first-time investors.
Keep reading to learn more about whether real estate is a good investment today and how it stacks up against the stock market.
Wealth Enhancement Group
Stocks and housing have both done well
REITs can offer investors the stability of real estate returns without bidding wars or hefty down payments. A hybrid model of stocks and real estate, REITs allow the average person to invest in businesses that finance or own income-generating properties.
REITs delivered slightly better returns than the S&P 500 over the past 20-, 25-, and 50-year blocks. However, in the short term—the last 10 years, for instance—stocks outperformed REITs with a 12% return versus 9.5%, according to data compiled by The Motley Fool investor publication.
Whether a new normal is emerging that stocks will continue to offer higher REITs remains to be seen.
This year, the S&P 500 reached an all-time high, courtesy of investor enthusiasm in speculative tech such as artificial intelligence. However, just seven tech companies, dubbed “The Magnificent 7,” are responsible for an outsized amount of the S&P’s returns last year, creating worry that there may be a tech bubble.
While indexes keep a pulse on investment performance, they don’t always tell the whole story. The Case-Shiller Index only measures housing prices, for example, which leaves out rental income (profit) or maintenance costs (loss) when calculating the return on residential real estate investment.
Wealth Enhancement Group
Housing returns have been strong globally too
Like its American peers, the global real estate market in industrialized nations offers comparable returns to the international stock market.
Over the long term, returns on stocks in industrialized nations is 7%, including dividends, and 7.2% in global real estate, including rental income some investors receive from properties. Investing internationally may have more risk for American buyers, who are less likely to know local rules and regulations in foreign countries; however, global markets may offer opportunities for a higher return. For instance, Portugal’s real estate market is booming due to international visitors deciding to move there for a better quality of life. Portugal’s housing offers a 6.3% return in the long term, versus only 4.3% for its stock market.
For those with deep enough pockets to stay in, investing in housing will almost always bear out as long as the buyer has enough equity to manage unforeseen expenses and wait out vacancies or slumps in the market. Real estate promises to appreciate over the long term, offers an opportunity to collect rent for income, and allows investors to leverage borrowed capital to increase additional returns on investment.
Above all, though, the diversification of assets is the surest way to guarantee a strong return on investments. Spreading investments across different assets increases potential returns and mitigates risk.
Story editing by Nicole Caldwell. Copy editing by Paris Close. Photo selection by Lacy Kerrick.
This story originally appeared on Wealth Enhancement Group and was produced and
distributed in partnership with Stacker Studio.
In today’s digital climate, consuming sports has never been easier. Thanks to a plethora of streaming sites, alternative broadcasts, and advancements to home entertainment systems, the average fan has myriad options to watch and learn about their favorite teams at the touch of a button—all without ever having to leave the couch.
As a result, more and more sports venues have committed to improving and modernizing their facilities and fan experiences to compete with at-home audiences. Consider using mobile ticketing and parking passes, self-service kiosks for entry and ordering food, enhanced video boards, and jumbotrons that supply data analytics and high-definition replays. These innovations and upgrades are meant to draw more revenue and attract various sponsored partners. They also deliver unique and convenient in-person experiences that rival and outmatch traditional ways of enjoying games.
In Los Angeles, the Rams and Chargers’ SoFi Stadium has become the gold standard for football venues. It’s an architectural wonder with closer views, enhanced hospitality, and a translucent roof that cools the stadium’s internal temperature.
The Texas Rangers’ ballpark, Globe Life Field, added field-level suites and lounges that resemble the look and feel of a sports bar. Meanwhile, the Los Angeles Clippers are building a new arena (in addition to retail space, team offices, and an outdoor public plaza) that will seat 18,000 people and feature a fan section called The Wall, which will regulate attire and rooting interest.
It’s no longer acceptable to operate with old-school facilities and technology. Just look at Commanders Field (formerly FedExField), home of the Washington Commanders, which has faced criticism for its faulty barriers, leaking ceilings, poor food options, and long lines. Understandably, the team has been attempting to find a new location to build a state-of-the-art stadium and keep up with the demand for high-end amenities.
As more organizations audit their stadiums and arenas and keep up with technological innovations, Uniqode compiled a list of the latest tech advancements to coax—and keep—fans inside venues.
Jeff Gritchen/MediaNews Group/Orange County Register // Getty Images
Just Walk Out technology
After successfully installing its first cashierless grocery store in 2020, Amazon has continued to put its tracking technology into practice.
In 2023, the Seahawks incorporated Just Walk Out technology at various merchandise stores throughout Lumen Field, allowing fans to purchase items with a swipe and scan of their palms.
The radio-frequency identification system, which involves overhead cameras and computer vision, is a substitute for cashiers and eliminates long lines.
RFID is now found in a handful of stadiums and arenas nationwide. These stores have already curbed checkout wait times, eliminated theft, and freed up workers to assist shoppers, according to Jon Jenkins, vice president of Just Walk Out tech.
Billie Weiss/Boston Red Sox // Getty Images
Self-serve kiosks
In the same vein as Amazon’s self-scanning technology, self-serve kiosks have become a more integrated part of professional stadiums and arenas over the last few years. Some of these function as top-tier vending machines with canned beers and nonalcoholic drinks, shuffling lines quicker with virtual bartenders capable of spinning cocktails and mixed drinks.
The kiosks extend past beverages, as many college and professional venues have started using them to scan printed and digital tickets for more efficient entrance. It’s an effort to cut down lines and limit the more tedious aspects of in-person attendance, and it’s led various competing kiosk brands to provide their specific conveniences.
Kyle Rivas // Getty Images
Mobile ordering
Is there anything worse than navigating the concourse for food and alcohol and subsequently missing a go-ahead home run, clutch double play, or diving catch?
Within the last few years, more stadiums have eliminated those worries thanks to contactless mobile ordering. Fans can select food and drink items online on their phones to be delivered right to their seats. Nearly half of consumers said mobile app ordering would influence them to make more restaurant purchases, according to a 2020 study at PYMNTS. Another study showed a 22% increase in order size.
Many venues, including Yankee Stadium, have taken notice and now offer personalized deliveries in certain sections and established mobile order pick-up zones throughout the ballpark.
Darrian Traynor // Getty Images
QR codes at seats
Need to remember a player’s name? Want to look up an opponent’s statistics at halftime? The team at Digital Seat Media has you covered.
Thus far, the company has added seat tags to more than 50 venues—including two NFL stadiums—with QR codes to promote more engagement with the product on the field. After scanning the code, fans can access augmented reality features, look up rosters and scores, participate in sponsorship integrations, and answer fan polls on the mobile platform.
Boris Streubel/Getty Images for DFL // Getty Images
Real-time data analytics and generative AI
As more venues look to reinvigorate the in-stadium experience, some have started using generative artificial intelligence and real-time data analytics. Though not used widely yet, generative AI tools can create new content—text, imagery, or music—in conjunction with the game, providing updates, instant replays, and location-based dining suggestions
Last year, the Masters golf tournament even began including AI score projections in its mobile app. Real-time data is streamlining various stadium pitfalls, allowing operation managers to monitor staffing issues at busy food spots, adjust parking flows, and alert custodians to dirty or damaged bathrooms. The data also helps with security measures. Open up an app at a venue like the Honda Center in Anaheim, California, and report safety issues or belligerent fans to help better target disruptions and preserve an enjoyable experience.
Story editing by Nicole Caldwell. Copy editing by Paris Close. Photo selection by Lacy Kerrick.
This story originally appeared on Uniqode and was produced and
distributed in partnership with Stacker Studio.
Inflation has cooled substantially, but Americans are still feeling the strain of sky-high prices. Consumers have to spend more on the same products, from the grocery store to the gas pump, than ever before.
Increased import costs are part of the problem. The U.S. is the largest goods importer in the world, bringing in $3.2 trillion in 2022. Import costs rose dramatically in 2021 and 2022 due to shipping constraints, world events, and other supply chain interruptions and cost pressures. At the June 2022 peak, import costs for all commodities were up 18.6% compared to January 2020.
While import costs have since fallen most months—helping to lower inflation—they remain nearly 12% above what they were in 2020. And beginning in 2024, import costs began to rise again, with January seeing the highest one-month increase since March 2022.
Machinery Partner used Bureau of Labor Statistics data to identify the soaring import costs that have translated to higher costs for Americans. Imports in a few industries have had an outsized impact, helping drive some of the overall spikes. Crop production, primary metal manufacturing, petroleum and coal product manufacturing, and oil and gas extraction were the worst offenders, with costs for each industry remaining at least 20% above 2020.
Machinery Partner
Imports related to crops, oil, and metals are keeping costs up
At the mid-2022 peak, import costs related to oil, gas, petroleum, and coal products had the highest increases, doubling their pre-pandemic costs. Oil prices went up globally as leaders anticipated supply disruptions from the conflict in Ukraine. The U.S. and other allied countries put limits on Russian revenues from oil sales through a price cap of oil, gas, and coal from the country, which was enacted in 2022.
This activity around the world’s second-largest oil producer pushed prices up throughout the market and intensified fluctuations in crude oil prices. Previously, the U.S. had imported hundreds of thousands of oil barrels from Russia per day, making the country a leading source of U.S. oil. In turn, the ban affected costs in the U.S. beyond what occurred in the global economy.
Americans felt this at the pump—with gasoline prices surging 60% for consumers year-over-year in June 2022 and remaining elevated to this day—but also throughout the economy, as the entire supply chain has dealt with higher gas, oil, and coal prices.
Some of the pressure from petroleum and oil has shifted to new industries: crop production and primary metal manufacturing. In each of these sectors, import costs in January were up about 40% from 2020.
Primary metal manufacturing experienced record import price growth in 2021, which continued into early 2022. The subsequent monthly and yearly drops have not been substantial enough to bring costs down to pre-COVID levels. Bureau of Labor Statistics reporting shows that increasing alumina and aluminum production prices had the most significant influence on primary metal import prices. Aluminum is widely used in consumer products, from cars and parts to canned beverages, which in turn inflated rapidly.
Aluminum was in short supply in early 2022 after high energy costs—i.e., gas—led to production cuts in Europe, driving aluminum prices to a 13-year high. The U.S. also imposes tariffs on aluminum imports, which were implemented in 2018 to cut down on overcapacity and promote U.S. aluminum production. Suppliers, including Canada, Mexico, and European Union countries, have exemptions, but the tax still adds cost to imports.
U.S. agricultural imports have expanded in recent decades, with most products coming from Canada, Mexico, the EU, and South America. Common agricultural imports include fruits and vegetables—especially those that are tropical or out-of-season—as well as nuts, coffee, spices, and beverages. Turmoil with Russia was again a large contributor to cost increases in agricultural trade, alongside extreme weather events and disruptions in the supply chain. Americans felt these price hikes directly at the grocery store.
The U.S. imports significantly more than it exports, and added costs to those imports are felt far beyond its ports. If import prices continue to rise, overall inflation would likely follow, pushing already high prices even further for American consumers.
Story editing by Shannon Luders-Manuel. Copy editing by Kristen Wegrzyn.
This story originally appeared on Machinery Partner and was produced and
distributed in partnership with Stacker Studio.
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