Who’s in Charge: Preventing Chaos in Your Small Business

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You’ve just started a small business with your spouse, a friend or a few family members.  Everyone is enthusiastic and the creative juices are flowing.  You don’t want to reign in all this energy with something as “old fashioned” as an organizational chart, right?

Wrong.

I’m currently working with a small business startup that’s a prime example of why you need to set levels of responsibility and authority from the very beginning.   This business is working with an experienced web design team.  The web site is vital to their marketing launch.  After several revisions, they have a design that all the partners have approved – except one.  Now this important project is on hold – indefinitely – while they try to resolve a basic problem: no one is in charge.  There’s no pre-defined mechanism for settling disagreements and moving forward.  They are stuck.

In an effort to avoid conflict or potential hurt feelings at the onset, many small business owners set themselves up for failure at critical moments down the line.  They fail to address a key element in any business structure: for any task, someone has to be ultimately responsible for getting the task done and someone must have the authority to make final decisions.  Without these simple guidelines, your business will keep tripping over itself.  Even if you only have two people in your business, you still need to define who does what – and who has the final say.

Erin Duckhorn offers excellent advice in this post on the E-Myth Blog , including these 4 tips:

Four Tips To Creating Your Organization Chart

1. There is no box on the chart labeled “Owner.” If you are an owner, you need to occupy one or more boxes on the chart and play by the same rules you would have for any other employee.
2. Every position on the chart reports to one (and only one) manager. Giving two or more managers the power to direct the activities of one employee is an invitation to miscommunication and chaos.
3. Make sure you divide up the work according to what the business needs. Don’t try to design a position to fit the particular talents of one individual. If (when) that person leaves, you’ll have to start all over with a new chart because you won’t be able to find a replacement.
4. Instead of using titles, designate positions in terms of the results they will obtain.

Wikipedia’s  overview of Organizational Charts -  is a good resource for information on different types of organizational charts.

If you don’t have an organizational chart for your business, make the time to do it now.  If you have an organizational chart, take another look and make sure it reflects your current business model.  If you want your business to run as smoothly as possible, everyone must understand their responsibilities and how decisions are made.  Your organizational chart is the first step toward that goal.

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