Tips to build a strong business structure for start-ups

As a start-up, establishing an organizational structure should be one of your priorities. Starting a business is both a scary and exciting ride. It takes no time to get chaotic and confusing. A strong structure can indeed simplify the process and give direction to your start-up.  Before understanding a full-fledged business structure for start-ups, let’s understand why it is needed at all.

The kind of business structure you follow will affect how much you pay in taxes, the level of risk or liability to your assets (your house, your savings), and even your ability to raise money from investors or venture capitalists. An organizational structure prevents a company from falling apart as it undergoes changes that are essential for growth.

Often, start-ups overlook organizational structure until it’s too late. Here are some considerations for founders as they grow their companies.

1 The three elements that are common to every business to create your departments: Sales and Marketing, Operations, Finance & Admin. Make sure you begin with these and fulfil requirements under each department.

 2 A Distinction of responsibilities is a must. Every start-up needs two types of people

1) Creative thinker to bring a ton of energy and innovative ideas.

2) Organizational thinker to be well organized, and strong at systems thinking.

3  A sole proprietorship is easy to form and gives you complete control of your business.This means your business assets and liabilities are not separate from your assets and liabilities. You’re automatically considered to be a sole proprietor if you do business activities but don’t register as any other kind of business.

4 Partnership: There are two common types of partnerships: limited partnerships (LP) and limited liability partnerships (LLP).

Limited partnerships have only one partner with unlimited liability, and all other partners have limited liability. The partners with limited liability have limited control over the company. Profits are passed through to personal tax returns, and the general partner — the partner without limited liability — must also pay self-employment taxes.

Limited liability partnerships are similar to limited partnerships, but give limited liability to every owner. An LLP protects each partner from debts against the partnership, one won’t be held responsible for the actions of other partners. 

In today’s competitive world, you need to be adaptive and open-minded to all the opportunities that can help your company grow.

However, you must also do this intelligently and focus on one area at a time. All of this can be considered as a beginner’s guide to build a business structure for a start-up. There are definitely more key elements that need to be taken care of.

In conclusion, founding a start-up is indeed much work. There are thousands of details to keep an eye of. However, whatever you do, you should never make the mistake of establishing an organisational structure too late, to avoid your entire enterprise collapse to its growing size.

Want to learn more or discuss your project? please click the button below, and let’s talk.

Let’s Talk

Leave a comment