The Internal Organization Required For Business Success
Once you have decided what type of organizational format best suits your needs, be it corporate (S or C), proprietorship, partnership or LLC, the further analysis and organizational design must be applied to your internal organization although there are no alternative options. Every business requires three distinct divisions and if possible, three division managers, excluding the owner who should oversee all three. This is unlikely in small business settings so the owner can be one of the division managers or even two or in some cases all three, but at the very least, he should understand the requirements and treat this responsibility requiring him to address each division he manages independently and separately and with accountability and focus.
The three divisions that every business must initiate and develop to manage any company are: finance, operations and sales/marketing. Each division requires a plan and a strategy, goals and objectives, as well as clear implementation with reporting functions so the effort can be tracked, monitored and controlled. This is a lot harder to do without separate and distinct managers, but can be done. Every function, strategy and plan a business may initiate and implement stems from one of these areas. Each area needs a plan to support reaching the overall goals. Key indicators must be installed to track, monitor and control its efforts, direction and success.
Each division should report its progress to the other managers in weekly, orderly manager meetings. If each division is meeting its goals, the company is healthy and progressing well. If there are problems, they will be demonstrated early and clearly when reviewing the key indicators. Not having three functions and hopefully three managers, will result in the business being improperly managed and it will in all likelihood fail because of the ineffective internal organization.
Most small businesses I review do not have this organizational format and thus have no real direction, nor can the managers track and control progress. Keep in mind that it’s never too late to reorganize in light of these requirements. In fact, not doing this will result in disaster along the way. Look at your business and ask this simple question, do you have three separate plans all working together to support the overall business? If not, make the appropriate changes.
