How to Create an Organizational Structure for a Small Business

by Jeremy Robinson
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Organizational Structure for a Small Business

Do you need an organizational structure for a small business? Before we had an accountability chart at SoYoung, roles were so fuzzy that essential tasks often fell through the cracks, leading to a last-minute panic. But once we had a written organizational structure in place, we saw a huge boost in our overall efficiency. While there are still a ton of things to get done, we now each have a clear set of priorities that help us stay focused, productive and accountable. 

Here is a step-by-step guide on how to create an organizational structure for a small business, along with an example of SoYoung’s accountability chart:

Step 1: Create departments by starting with the 3 elements common to every business:

Open a new powerpoint, keynote or google drawing doc – anything that will allow you to create a simple layout. You can even use pen and paper to start. Draw 3 boxes with the 3 core functions of every business:

  1. Sales and marketing – every business needs to generate sales
  2. Operations – every business needs to fulfill on the promises it makes to customers by delivering products or services
  3. Financial and Admin – every business needs to keep track of its finances and insure that its infrastructure is maintained.

Step 2: Bucket more specific roles under each of the 3 main functions

Underneath each department, list the specific roles that must be filled in your business. Here is a quick list of some of the most common roles that you can adapt to your company’s structure:

Sales & Marketing

  • Website maintenance
  • Online Marketing
  • PR
  • Lead Generation
  • Opportunity Management
  • Account management

Operations

  • Production
  • Customer Service
  • Shipping and Fulfillment
  • Product Development

Financial and Admin

  • Book Keeping
  • Accounting
  • Office Management
  • IT
  • HR
  • Financing

Step 3: Assign a specific person to lead each department and own each role.

Write a single name beside each of the boxes in the org chart. Since you’ll each be taking on numerous titles, it helps to also be specific by adding a few high level responsibilities under the title.

Step 4: Define the Executive Leadership Structure

When there are 2 leaders in an organization they’ll ideally have complementary personality types:

  • The Creative Thinker – this personality brings a ton of energy and innovative ideas. They’re often great at relationships and may have a larger personality – but they tend to be weaker on follow through.
  • The organizational Thinker – this personality tends to be well organized, and strong at systems thinking. They may not be quite as strong at spotting opportunities but once the direction is defined, they are the person who will insure it gets done right.

I’m going to introduce a potentially controversial idea here, so please hear me through. While you may value the idea of equality in your partnership, I strongly advise giving a single person the final word in order to avoid organizational deadlock. In the case of equal partnerships, this person should always be the organizational thinker.

Why? Because you can have a business without a creative thinker but you can’t have a business without an organizational thinker. At the end of the day, a mediocre idea that is well executed will trump a brilliant idea that is poorly executed.

If you have serious questions about what role each partner will play it may be an indication of more fundamental problems in the partnership. That’s why it’s best to have this conversation early on, so you can avoid bigger pitfalls down the road, when there is more at stake.

Example: The SoYoung Organizational Structure

See SoYoung’s Accountability Chart

At SoYoung we currently have four full time employees and one part time admin person. We also have a host of suppliers and contractors we work with in areas such as product development and accounting.

You can see from our org structure that Catherine is the Integrator (the Organizational Thinker) and I am the Visionary (the Creative Thinker), which is aligned with our respective personalities. You’ll notice that we’ve also added a Product development department at the top level of our organization. We initially had it under operations but decided we wanted to place more importance on it by moving it up a level in the chart.

Conclusion:

There are 4 steps to creating an accountability chart

  1. Start with the three elements common to every business to create your departments: Sales and Marketing, Operations, Finance & Admin
  2. Bucket the roles specific to your business under the three departments
  3. Assign a person to each role
  4. Define your executive leadership structure

Creating an organizational structure for a small business is one of the first things you should look at when planning your venture. In addition to creating clear roles and responsibilities, an accountability structure is a valuable strategic planning tool allowing you to spot current gaps and plan next hires so that you can focus on where you deliver the most value.

Have any questions or experiences to share about creating an organizational structure for a small business? Leave them in the comments and I’ll post a reply!

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11 comments

Nishadha July 21, 2016 - 8:21 am

Very useful information for a small business owner. With most org charts the biggest problem is maintaining, although drawing can also be a pain. If you’re looking for a tool to create org charts you can give our tool a try. Its web based and you can draw many other diagram types like flowcharts, mind maps, business process models.

Draven Vestatt August 10, 2017 - 12:48 am

Well written article. Many articles do not go into detail like this one does, and I agree with 99% of it. Well done.

Kuwakanu Admiel Emmanuel November 2, 2017 - 2:41 pm

Thanks so much for this article. It is very useful and resourceful, and easy to understand.
So I noticed that in your own organization chart, Cathrine and Jeremy have their responsibilities in the line of ‘internal’ and ‘external’ respectively. She focuses on the product and other internal issues, while you focus more on the product and external people. Is this a valid point I noticed?

Adam Williamson January 27, 2018 - 9:03 am

Jeremy this is such an incredible and informative article! I am on a board of an adult sports organization entering its second session and I am going to share this article with the other 4 members of the board! I can’t tell you how excited this makes me!……I’ve already started to place names next to roles mentally! This road map will help us tremendously and on behalf of the Greater Dayton Flag Football League I’d like to thank you in advance for how it will impact our organization for the better!!

Jeremy Robinson January 27, 2018 - 2:01 pm

thanks Adam – glad it was of help!

Kristen m October 23, 2018 - 8:14 pm

Thank you for the detailed information! Every other article I found when I Googled the topic was too vague or irrelevant to me. I am starting a bag business so it couldn’t be more perfect for me. Happy to have found you.

Jeremy Robinson October 23, 2018 - 8:28 pm

Your welcome, Kristen – glad it was of help!

Jeremy Robinson December 5, 2018 - 5:21 pm

You’re welcome Kristen, I’m happy to have helped!

SME Quest January 9, 2020 - 9:58 am

Thanks for sharing information. We are also works for startups structures. But this article have fresh vibes. We share an article from our website about it. What you think Jeremy?
http://smequest.com/looking-to-start-a-business-in-singapore-how-important-and-challenging-is-it-for-an-sme/

Siddharth April 28, 2020 - 9:20 am

Thank you for the information! This is going to be really helpful. Could you suggest some software where I could make a chart depicting proper functions and hierarchy? Thanks again!

Alexandra Shalamova October 12, 2020 - 1:52 pm

Thanks for your great tips! And if someone wants more information about structure of IT department you can check this.

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