Alternative Company Structures for the Small Business

In a projected structure, the focus is on one project at a time. In this centralized organizational structure, project managers act as supervisors, not just as resource referents and decision-makers. Unlike other types of structures, a projected structure involves the demobilization of teams and resources after a project has been completed. But it is like other types of organizational structures that an obvious hierarchy exists, as you can see in this projected structure model. Key takeaways: There are eight types of organizational structures, each of which is centralized (executives and owners have power) or decentralized (non-executives share power). As you can probably see, this organizational structure is much less formal than mechanistic and takes an ad hoc approach to business needs. This can sometimes make the chain of command, whether long or short, difficult to decipher. And as a result, leaders can give the green light to certain projects faster, but create confusion in the division of labor of a project. Choosing the right legal structure for your business starts with analyzing your company`s goals and considering local, state, and federal laws. By defining your goals, you can choose the legal structure that best suits your company`s culture. As your business grows, you can change your legal structure to meet the new needs of your business. Unlike the other structures we have examined so far, a matrix organizational structure does not follow the traditional hierarchical model. Instead, all employees (represented by the green boxes) have duplicate report relationships.

Typically, there is a functional report line (in blue) and a product-based report line (in yellow). Here are some of the benefits of this business structure: The way a company is organized affects its ability to achieve its goals. This chapter focuses on the legal forms of corporate organizations that are widely used in the United States. These include sole proprietorships, general partnerships and limited partnerships, limited liability companies (LLCs), S companies and C companies. Partnerships, LLCs, and C companies can be found in a wide range of business types and sizes. LLCs are becoming increasingly important in the agricultural manufacturing sector, especially in multigenerational family businesses. In family businesses, legal structures that facilitate the transfer of assets between generations have become particularly important. A divisional organizational structure consists of several smaller functional structures (i.e., each department within a division structure may have its own marketing team, sales team, etc.). In this case, a product-based service structure, each department in the organization is assigned to a specific product line. “If you want to be your own boss and run a home-based business without a physical storefront, you can have full control with a sole proprietorship,” said Deborah Sweeney, CEO of MyCorporation. “This company doesn`t offer separation or protection of personal and business assets, which could prove to be a problem as your business grows and more and more aspects hold you accountable.” A network structure is particularly suitable for a large multi-city or international company active in the modern era. It organizes not only the relationships between the departments of an office, but also the relationships between the different sites and the team of freelancers of each site, the third-party companies to which certain tasks are outsourced, etc.

While this may seem like a lot to some kind of network structure, this network structure model shows how useful this decentralized structure can be, especially for understanding the human resources your company has. The types of structures vary from company to company, so it`s important to remember that these structures are not universal. Each type may not be right for your organization, but there`s a good chance one of them will. Use this article to determine which organizational structure works for you, and then it`s time for the actual work to begin. Unlimited liability remains a major disadvantage for a general partnership. All shareholders are responsible for the debts of the law firm. Because of this unlimited liability, the company`s risks can be allocated according to the owners` equity and not according to their interests in the company. This risk becomes a real obligation if the partners are not able to meet their shares in the company`s obligations. Imagine a company that doesn`t have an organizational structure. Questions about systems and processes arise immediately. Who makes the decisions? How are employees held accountable? What are the company`s objectives? It is virtually impossible to answer these questions without a functional organizational structure. Another disadvantage of a sole proprietorship is that it has a limited lifespan that corresponds to the life of the owner.

The owner may sell assets of the corporation to another sole proprietorship or corporation. However, if the business is not terminated before the death of the owner, after the death of the owner, the remaining assets in the company will be distributed according to the will of the owner or a comparable instrument. When the owner dies, the business is terminated. “This entity is ideal for anyone who wants to start a business with a family member, friend or business partner, such as merging a restaurant or agency,” Sweeney said. “A partnership allows partners to share profits and losses and make decisions together within the company structure.