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How to Choose the Right Structure for Your Small Business

by Olufisayo
How to Choose the Right Structure for Your Small Business

When there is only one of you, it’s simple. You are your own boss, and in charge of every area of responsibility. From getting new business to managing customer complaints, filing your tax returns or organising your business admin, it is all down to you.

Of course, as you grow and become more successful, things get a little more complicated. As you have more clients or more customers demanding your products or services will probably start to bring new people in – to grow your team as your business expands. And this process brings its own fascinating challenges, around how we begin to best organise this fledgling organisation into a business that has a genuinely robust structure. Here are our thoughts on how you might start to think about organising your small business as it grows.

How to Choose the Right Structure for Your Small Business

Whatever you do, don’t do nothing

We often hear business people saying things like ‘well, the company has just grown organically over time’. That might well be true, but we generally find that this is just a short hand way of saying that it has got bigger (albeit quite slowly and steadily) without any clear sense of trying to establish any underlying structure.

People and teams have been added here. Others have been removed from there. Some people have been given roles and responsibilities, and then they have either changed or they have been given to someone else. Worse still, it could just be that people are taken on to deal with the ongoing ‘crisis’ of the company simply getting more and more work – a situation that will ultimately end in mistakes being made and the standard of service dropping as your teams struggle to keep up. Once this happens, customers will leave, and you are on a downward spiral. So, start building a structure – any structure – early on.

       

Consider a partnership

One route that many people take in the early stages, as they grow from being a sole trader of their company, is to form a formal partnership. There are a number of benefits to creating this kind of structure for your growing business. The first is that it is a chance to share the burden of managing the business with someone who has an equal share in the profits of the company.

Of course, this is usually an ownership structure rather than an organisational one, but in a way it does have implications for the way your business will grow over time. Expanding by bringing in equal partners can force you to be very clear about individual responsibilities (responsibilities that will feel very real to all partners, as every person is fully liable for the debts of the company too). With everyone having a stake in the success of your growing company, creating a clear structure to build on will be fundamental to your development.

Learn to trust the right people

Getting a robust structure for your growing small business goes well beyond simply choosing the right legal structure for you to build on. One of the most important skills you will learn as your business grows is to learn how to know who to trust. Of course, this is vital at any point in your life, at work or otherwise, but in business it is a fundamental part of putting the right foundations in place upon which to build your company.

Why? Because as your business grows, you will begin the process of handing over portions of the work you do now, to other people. The implicit understanding and expectation that they will do the work to the standards you expect, and then trusting them to get on with it, is the oil that will make the cogs of your new organisation run smoothly.

Set a vision and clear expectations.

Setting a clear vision for your business is one of the most important processes you will go through as an entrepreneur. It is really crucial that you do this early on – even when you are a sole trader – but particularly as you bring new people in and try to establish a team structure.

       

There are a few good reasons for this. The first is that your clearly articulated vision will hopefully attract the kind of like-minded people you want in your business. This is absolutely crucial to the ongoing process of structuring your business as it grows, because you will be adding people to your company who already buy in to your way of doing things.

And this, in turn, makes setting expectations so much easier – the new people are committed to helping you achieve the vision of the company, they appreciate the way you are trying to do things, and they fully understand what is expected of them in terms of their contribution to that journey. In that way, these people will form the backbone of the structure of your growing business.

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