Whether you’re seeing slow-growing sales or want to next-level your business, changing the business structure can be key to evolving. But there are also smaller structural changes that can help in unlocking business potential. Both kinds are discussed here.
The structure
Legal structure
There are two ways to look at a business structure. The first is in legal terms and the second is in organizational terms. As far as legal structures go, there are essentially three kinds. You can determine the best one for you as an entrepreneur by determining your stage of growth.
- Sole proprietor: Being a sole proprietor can be the easiest structure for a small business to start up. But it comes with its limitations in that it doesn’t separate the personal from the professional finances. It also holds back from expansion possible by bringing in other stakeholders into the business.
- Partnership: A partnership allows for more than one owner to share both the profits and the responsibilities. However, even this isn’t the best option if your business is to truly expand your business.
- Limited company: A limited company is the way to go for a maturing business. It separates the individuals from the entity reducing financial risk and also gives unlimited potential to expand. It’s a more complex structure than the others, but it’s a sustainable solution for a growing business.
Small changes
If you are not up for changing either the legal or organizational structure, smaller changes can still be made. Here are three of them:
- Financial revamp: Good financial management is not just about cutting expenses to grow profits. It’s also about making the process that much smoother. Like with the use of good accounting software or secure checks for both efficient management and peace of mind. A financial revamp can clear up the mind space required for other business aspects.
- Product and service development: The next is to review the products and services on offer. In the dynamic market environments of today, customers always require something new. Providing new products and services that cater to the changing demands can take sales growth to the next level. But these require intent and focus that can get overlooked when meeting the day-to-day demands of the business.
- Rework the sales strategy: Similarly, the sales strategy can also need changing over time. If you haven’t tried email marketing, it might be a good idea especially if it’s the go-to for competitors. Or a more active social media presence can do the trick even if you are a local business.
Organizational structure
The next way to restructure your small business is by making organizational changes. Broadly speaking there are two kinds of structures here, hierarchical, and organic. As the names suggest, a hierarchical structure is one with a clearly defined chain of command. On the other hand, an organic structure is flatter.
There are many options to choose from among these, that fall somewhere on the spectrum. A small business typically has one of the three structures:
- Functional: This is one organized across the functions like sales, marketing, and finance, as examples. This indicates that each division works on furthering the objectives of their particular function.
- Divisional: This structure divides the organization across geographies. If your small business has branches in three cities, as instance, each division would be responsible for their branch.
- Matrix: This type of structure is a hybrid of functional and divisional. It also comes closest to an organic structure in that employees work in teams. They work on specific projects together irrespective of the functional or divisional roles.
Unlock the potential
There are unlimited ways to unlock the potential of your small business. These can be big changes in either the legal or organizational structure or smaller but effective ones. If your business is getting bogged down by slow decision-making, an organizational change could be ideal. Or if your sales have hit a slump, adding new elements to the sales strategy can be good. Whichever way you look at it, initial ideas like these can provide the impetus needed to take your business to the next level.