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3 Tips to Build Better Business Structure

Once you’ve completed all the hard work from business startup through to the point where you start building a team, or you have an established team after several years in business, structure becomes very important.

The right structure will help you grow the business further, manage a growing team more effectively, and enable you as the CEO to become less operational and more strategic.

The following are my top three considerations when building a more solid structure for your business:

1. Role of the CEO/Owner of the company

This sounds obvious, but when you’re in the thick of day to day operations and trying to keep everything running and on track, few business owners stop and assess their own role.

When you start building a team or you have an established team, your own role has to change as you bring in more people. You need to become the CEO rather than fill the role that many do of general manager involved in everything.

You need to shift your focus to more strategic matters like funding for expansion, assessment of growth opportunities, and building a strong team that can gradually take over your operational role.

Don’t make the mistake of trying to build a team without shifting your own role to how you can best add real value to your company.

When you get to point 3, it will be clear if you need to change your own role.

2. Legal Ownership

I’m just going to assume you have a limited liability legal entity for your business structure, and have the right legal and financial structure in place to protect your business and personal assets.

The other form of legal ownership is equity, usually when the owner of the company wants to ‘lock in’ good employees or reward those who perform well.

Once you give an employee equity in your company, you set a precedent for others to follow. How much share of your business are you prepared to give others; on what basis will they earn it or buy in; what structure will you set up for shareholder voting rights; do all equity holders have the same weighted shareholding, and so on.

And finally, what happens when you have a falling out with one of those employees, and you can’t shake them off because they are an equity holder in your business. It happens.

You may consider two other options: reward good performance with a bonus system or bonus incentives. The other option to reward those who have contributed to the growth and success of your business by offering to sell your company to them when you’re ready to walk away.

And remember, not everyone wants to have equity in your business, and too many people don’t understand that equity comes with responsibilities and legal duties. Think twice about this strategy.

3. Your Organisation Chart

Often people don’t bother with this as it’s ‘too formal’ or ‘too structured’, but an organisation chart is a test of how well you’ve set up the structure of your business.

If you draw up your map of the organisation and you have boxes/roles with gaps and no-one to fill them, or you have others (usually the business owner) in more than one box, then your structure is not set up for future growth.

The key people who report directly to the CEO or business owner, need to be able to take responsibility for their area, without having to defer to the CEO on the majority of decisions or problems.

If you have the team in place and you find they still have to go to you for advice on a regular basis, you need to factor in some more experienced and capable people into your structure.

I’ve seen this happen so often that there is a big gap in capability between the business owner and the next level, which means that the business owner effectively remains as the manager of all areas of their business.

(As the new CEO, I once had a team of 18 people reporting directly to me, because one of the company’s founders believed that everyone was equal and a flat structure was the only way to run a business. I restructured my team to five direct reports, who were then able to run the day to day business and leave me to be strategically focused.)

Fill the boxes and strengthen your business.

7 Simple Steps to a Better Business Plan

Here are 7 easy tips to help you get started right now on your business plan.

It’s possible that even though you may have all this information on doing a business plan, you may not be any further ahead. We understand. The first time you do something is the hardest…

Like Mr. Miyagi in the Karate Kid movies taught his protégé: Wax on; Wax off… over and over again. The more often you do something the more “expert” you become at it.

Follow these seven “simple” steps and then you can get a business plan together pretty quickly:

Step 1: Start with the end in mind – you need to visualize and be able to describe what you want at the end of the day.

Step 2: Write it down. Do not worry about competing with Shakespeare – he wasn’t so good at the business side of things, but do take the time to jot done your ideas and expectations, starting with Step 1.

Step 3: What is your USP? What is your unique selling proposition? Are you going to be the “best” in the world, the city, the block? Do you need to be the best? Watch out for superlatives when describing your business and focus on customer benefits and value.

Step 4: How will you make money? Are you going to be selling a widget? How much for the widget? What goes into the making or acquiring of the widget? You do not need to be an accountant to explain this, but do take the time to follow the advice in step 2 – write it down!

Step 5: Who (whom my fifth grade grammar teacher would have corrected) will be buying whatever it is you are selling? How do you know them? How will you reach them? How will you grow them? By answering these questions (in writing) you will have the basis of a marketing plan.

Step 6: Putting together an operational budget and cash flow. It might sound complicated but work your budget by extending out Step 4. Do your cash flow by including your sales from your marketing plan.

Step 7: Do you have your exit plan ready? Again, working as a guerrilla means having the end in mind. Having that end forces us to have a firm understanding of our current situation. Answering some queries in a “partnership” questionnaire may help.

“Wait, I do these seven steps and I will have a business plan?” No, but you will have the necessary components to now begin to build your plan – whether using a kit or a third party service!

Keep smiling!