Business Setup & Organization

After you clarified the market potential for your product(s) and/or service(s), it is now time to plan your business itself.

At the beginning, a business is often still easily to manage.

But once a business become really successful and grows rapidly, a thought-out organization becomes necessary.

You shouldn’t wait for that until that moment arrives, but much rather built a thought-out basis right at the beginning.

Business Goals

Name your medium and long-term goals (company vision) and give information about how and when you plan to achieve these goals (stepping stones). Pay attention to the fact that your goals and visions need to be optimistic, but at the same time realistic.

Legal Form, Management and Ownership

At first, make clear what legal form you chose for your company since that decision will heavily affect your liability towards lenders. Also, it will determine the right for investors to have a say (if not even control) in your company and it will also affect your tax situation. You should also include information about the ownership situation of your business and the responsibilities every owner holds. The information given in this segment can be kept short.

Business Key Tasks

This segments’ core is the question what kind of business your company is doing in general and how you plan to organize it. Some sections like marketing, distribution and accounting need to be set up for all companies, while other sections are only necessary for certain companies.

  • If you plan to produce your products yourself, you need to set up a production process and acquire the necessary equipment.
  • If you have a technological product, it can be useful to set up a business section (department) that is responsible for research and development.
  • If you business is offering several different product(s) and/or service(s), setting up separated business sections (departments) can be helpful.

Make clear where your business’ key competence is located and focus on it. Think about where your business’ strengths are and how your can make your business stand out from your competition. Some tasks can be taken over by external service providers in order to save personnel and other costs, temporarily or permanently. That procedure (“make or buy”) is an effective remedy, especially during the first years.

Organization

A business organization consists of an organizational setup and a process/operational setup.

Organization Setup

The organizational setup describes the system of organizational units in your business that regulates the responsibilities necessary to run the business. Here you give explicit information about the responsibilities and competences for each section (department) in your business. You should keep your organizational setup flexible so that you can adjust it to a changing environment at any time.

In order to create an organizational setup for your business, you can use the area of operations in your business (i.e. purchase, production, distribution, finances, etc.) for your orientation. Alternatively, you can structure by products (divisional organization), by customer group (market oriented organization) or even create mixtures. Usually, the organizational setup is shown in form of an organigram (organization chart).

Process / Operational Setup

The “process / operational setup” determines business processes and operating cycles. Here you describe your business’ activities that are necessary to provide (or deliver) your product(s) and/or service(s) to your customers. Sometimes it is helpful to create so called functional blocks.

  • Research & Development

  • Production

  • Marketing & Distribution

  • Service

Personnel

Give a short description of the training and experience your senior staff (management) and key personnel should have, whether the persons filling these positions belong to the founder (owner) team or if you need to hire external personnel as supplementation.

It is not necessary to include similar descriptions for the remaining staff. Nevertheless, you should always include an overview about how many people your company will have for the first three years of business (for every year separated).

Location

For many businesses, the choice of its location is very important, especially for retailer or chain stores. For other businesses, it is much more important to have a low rent. Therefore, think carefully which location factors are important for you (i.e. accessibility/reachability for your customers, existing technical equipment, transport connections, location related costs, infrastructure, etc.).

Even though you will give much more detailed information about the cost for the organization of your business in the finance planning, you can start already here to determine the costs for personnel, investments and rent.

GUIDING QUESTION FOR “BUSINESS SETUP & ORGANIZATION”
  • Which legal form will your business be in?
  • Who are the owner of the business and who will be responsible for the executive management?
  • What kind of sections (departments) are necessary for your business in order to make it work?
  • What are your business key tasks?
  • Is it helpful for your business to hire third party service provider for some tasks?
  • What kind of organizational setup are you planning for your business?
  • How do you plan to allocate responsibilities and competences?
  • What are your staff (personnel) requirements?
  • How can you find the right personnel and how can you bind it to your business?
  • Which location factors are important for your business?
  • What are the costs related to running your business (production costs, distribution costs, administrative costs, etc.)?
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