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How to Create the Organizational Structure of Your Growing Small Business

How to Create the Organizational Structure of Your Growing Small BusinessThere can be no progress in business without structure and order. As a small business having only you and, maybe, a partner at its helm, it made no difference how you titled yourself. But when the time comes to start hiring employees and expanding your operations, things are very different.

You need to create an organizational structure from the moment when you take the first employee onboard. There are several reasons for it: first of all, there is the issue of the job description and the duties the employee will perform. Without a clear definition of their role, you will never be able to put these duties in writing. Then there is the issue of authority and chain of command: who is answerable to whom, how much authority does a specific job position have in decision making, and so on.

The key to a successful organizational structure is to find a simple, but flexible model which can be adapted easily as your business grows. It should also fit the needs of your specific line of business: a law firm will have a different organizational chart from an advertising agency and from a furniture company.

There are various models of organizational structures which can be adapted to your business model, and these are:

1. The Functional Structure
This is a classic business organizational chart which details the various departments existing in a business and how they relate to each other. The CEO or administrator is at the top level and oversees the activity of managers from the other departments. These departments focus on the key functions of any company:
⦁ Product development
⦁ Marketing and sales
⦁ Financial and taxation
⦁ Legal

As a small company, you will probably have only one employee for each key role, but this role should be clearly defined and included in the business structure, allowing you to allocate further job positions and manage your personnel efficiently. This type of structure is ideal for companies operating in traditional industries, such as manufacturing and consumer products.

2. The Product-Centric Structure
When your business focuses on specialized and proprietary products, it makes sense to organize your company structures in departments which deal with various aspects of creating, testing, marketing and further developing your products.

Such companies will start with a Research and Development department, a Customer Accounts department and a Sales and Marketing Department. The core structure of a product-centric company is also influenced by the way you are selling your product or service: one-time sale or subscription-based model. In the first instance, the Sales department has a stronger role and in the second, the Customer Accounts department.

3. The Divisional Structure
Some companies plan to expand by entering new territories in order to find new customer bases. These companies need to be careful about expanding in the right places and at the right pace.

If you plan to grow your business out of your city, or even out of your state, each new division needs to have a separate department in your organizational structure. These departments must monitor the state of the market, competition, and revenues and expenses, while the central structure receives their reports and compares their performances.

4. The Customer-Centric Structure
This type of business structure is adequate if you are selling services or evergreen digital products. The product development is not the key focus of this type of company (since there are few variations foreseen in the future), but rather how to attract customers and keep them loyal.

Such a company will focus on the Marketing department, the Customer Loyalty Programs department, the Customer Care department and any other department which you consider relevant to keep your customers happy in your specific niche.

5. The Matrix Structure
This type of structure is often seen in software and video game development companies. These companies have one key product (or line of products) and the activity is organized in departments which have an equal input into creating and promoting the product. Basically, except from the top CEO who oversees everyone else, there are no other relations of subordination among departments. On the contrary, they are required to collaborate together and complement each other’s work. Nobody can say that the graphic design team is more important than the programmers’ team, for example.

This is an organic company structure, adapted for modern businesses which focus on digital products and services.

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