How do you begin to create a business organizational structure?

I saw this question posted in a LinkedIn forum, and was suggested to come and answer it here. What follows is what I posted there.

One of the things that I think is really important is to decide how "flat" you want your organization, meaning are you wanting to do more of a traditional hierarchial structure (ie "top down") or a structure where everyone is fairly equal and flat. This can be a tough decision, and one that you must ensure fits with your vision of your business.

Another really important piece is to list what jobs need to be done, which ones can be grouped together (in to say, one position) and then the behaviors that you are looking for in each of those categories. This allows you to not only define the positions, but will help down the road when you are actually hiring for the positions. I've been through this process myself to some degree, and it can be tricky. But, ultimately, it is important.

There is always the possibility of having teams of cross-functional personnel. This is one of my favorite methods, because it allows for inter-disciplinary learning and collaboration within, and across, teams. If you have any questions, please don't hesitate to reach out to me! I hope this helps!

Christopher Janney
President/Consulting Partner
www.provative.com
410-382-3590
christopher.janney@provative.co

Sam,

I'm sorry to tell you this but you can't have a solid business plan without having an organizational structure and some people in place particularly if you are seeking funding. In the past a great idea could get funding but now the focus has switched to the management team.

Christopher's suggestions are good but there is one essential that must be taken into consideration. No one person is good at everything. Honestly assess your talents and skills. Perhaps you are a wonderful salesman but have no head for the day to day operations details. So look for partners and/or employees that have strengths in those areas in which you are weak. It is an extremely smart strategy whether you are seeking funding or not. Writing job descriptions is useful but they must be adaptable to someone you may find that would be a wonderful contributor to your business.

If I can help, please let me know.

Gail
gail@bellwindconsultants.com
317-773-3280

Gail and Christopher - great comments from both of you. I'd like to draw out a couple of things from your comments

1. One variable for your org chart is what business you're in and, therefore, what types of tasks you need to manage. Not all start-ups are the same. Industry and sector matter. For example, the management team to start a B2B remoted back-up and archiving solutions company will look really different than the start-up team for a retail concept.

2. When you hire your team make sure you have people that get along but that also have complimentary talents.

A couple of other thoughts to add:

3. Timing to grow your organization - You don't always hire your management team all at once. For example, you might hire product and technology people before you hire sales and operational people simply because there are no tasks for those people until you're created a technology or product.

4. .Be flexible and opportunistic - Sometimes you're introduced to people that don't fit the exact role you're looking for. While you don't want to hire people that don't meet a need, also realize it is hard to find amazing people. I define amazing people as driven, passionate, smart and culture creators. Don't let them slip through your hands even if you need to adjust your growing organization.

5. There are some general activity groupings that most businesses need to address. Think of these as you build out your management team and organizational growth strategy.

* General administration - first, this includes finance and accounting - the people that manage the cash, balance the books and help with financing. For smaller companies I throw HR into this bucket since HR in a lot of smaller companies is limited to items that have financial considerations - e.g. payroll, benefits, etc.

* Outbound functions - These are typically custom-facing and revenue-generating functions and can include sales, marketing, business development, account management, product management, customer service, etc.

* Inbound functions - These are typically functions that manage the inards of your company and can include things like operations, logistics, manufacturing, engineering, information technology, etc.

I'm sure other Focus members have additional ideas for you.

Sam, you have some great comments posted above on this topic. I would add just one more consideration. To help you map out a business organizational structure take the time and map out your data flows. Where will your information come from and what steps does the data need to take before it's archived? For example, will you buy products and resell them or will you manufacture products yourself? If manufacture, will you purchase from one supplier or multiple? How will orders be placed, by sales teams or through distribution channels? How will returns be handled? How will the products be delivered, by company owned trucks and delivery personnel or courier or shipping co? Once you've mapped out your dataflows you can define the key departments for your organizational structure.

As mentioned above, keep the department roles and responsibilities scalable so that as business increases you can easily spawn off additional departments without restructuring the whole company.

Finaly, as you work through the data flow mapping, keep in mind what processes will be required, which department will own those processes and what technology you will need to facilitate the processes?

Good luck on your new endeavor.