Starting a new business means having to deal with a list of endless decisions such as where you're going to work, your company name, who you will work with, your logo and all the minute details around the product or service that you intend to provide. It can be exhilarating, scary, or both, depending on the founder, and as I always say it's not for everyone. Amid these many decisions come some of the most essential, yet overlooked aspects of running a startup, like just how organized you want the structure of your company to be.

Startup culture sometimes gets a bad rap for being all about fun and too little about work. The media also grasps onto the idea that all startups are fast moving and youth-led, which of course isn't always true. From time to time however, some of these startups collapse because too much time is spent on creating a cool space or culture, instead of the hard work around creating, building and selling a product.

This is where small companies can benefit from a more structured environment. As inspiring as open concept, work from anywhere, Google-inspired models might be, it's helpful to learn about the benefits of a more structured framework to foster growth in a startup. What follows are some examples of this more formal work environment and how it helps.

The Realties You'll Encounter

As an entrepreneur, you might tend to resist too much structure and conventionality. After all, you've built or are building a team that can move in different directions at once. This is one of the reasons why many startups tend to have less formal organizational structure. The idea is that too much structure can render you less agile, less responsive to market changes or customer needs.

I'm advocating that balance is also important here. I've written time and time again about the importance of staying lean, but you shouldn't stay in a position where you must reinvent your model too often just to accommodate customer whims. This can lead to a lack of focus in what you're providing, confusion among those trying to sell your product, and other stumbling blocks to growth. Consider that if you're having to literally change everything about your product or service over and over again, you may not be in the right field.

To this point, a study published in California Management Review discovered that more organizational structure meant a healthier company. The study found that having an organizational structure was the key to a company's success and that the rate of growth was three times faster among companies that adopted this approach in their early years.

Formal Organizational Work Structure Benefits

The benefits of having a formal organizational work structure are plenty. They include:

  • A Better A Sense of Purpose - Having a structured work environment provides guidance to employees by establishing the official reporting channels that dictate the workflow of the company. What's more, a startup can easily add new positions, as well as provide a flexible means for growth. Conversely, having no structure and taking a more "wild west" approach often means there's less accountability or mechanism to track responsibilities.
  • Greater Order - If you are running your startup from multiple locations, employees may find it difficult to know whom they ought to report to in various scenarios. With a well defined organizational structure, you're able to provide clarity to employees at all levels of a company. This means that more time and energy is used on productive tasks. Furthermore, you're able to better track and promote entry-level employees.
  • Better Defined Roles - During the early stages, most startup founders find themselves filling as many roles as possible to save money and time. When the company grows, it's essential to revisit your role and ensure that you outsource much-needed skillsets to others. But, if the parameters of each role aren't set, it leads to confusion at best, duplicity and unattained goals at worst.
  • Communication Is Easier And More Focused - Being in an organized structural setup doesn't mean that you have to wait for board meetings to convey new information or ask for advice. A corporate structure enforces accountability and communication through the chain of each task. You can accomplish this in a startup by making sure that your communication is frequent and casual. Listen to your advisors and team, but, in the end, you'll have to ensure that the decisions made are in line with your principles and in what you believe.

Founding a startup takes a lot of hard work and sacrifice. You have a lot of things to keep an eye on, from documentation development to company roles. While it's common for most startups to embrace fun, unstructured business models, over time, this can cripple a business if you overdo it. Having a solid organizational structure not only helps to define certain roles, it creates room to foster growth. Whatever you do, remember to reevaluate your organizational structure regularly. Ensure the relationships and roles function as effectively as possible and redefine the functions as necessary.

Published on: Jul 27, 2017
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