How to Create an Small Business Organizational Structure

Do you need an organizational structure and the right business structure for a small business?

Before we had an accountability chart at our e-commerce business, 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 a small business organizational structure, along with an example of our e-commerce business’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. Creating an organizational chart is a crucial step in visualizing the structure of your business. 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. This step involves creating a functional organizational structure by departmentalizing based on job functions. 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. Assigning roles within a functional structure allows for specialization and scalability within your business. 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 and Functional Organizational 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 ensure it gets done right.

In some cases, a matrix organizational structure with dual reporting relationships can provide balanced decision-making and flexibility.

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: Our E-commerce Small Business Organizational Structure

See our e-commerce business’s Accountability Chart

At our e-commerce business we currently have four full time employees and one part time admin person. Different business structures, such as sole proprietorships, partnerships, and LLCs, can impact how you organize your business. 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 Amy 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. There are various organizational structures to consider, each with its own benefits and drawbacks.

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!