From Solopreneur to Small Business - How to Develop an Org Chart for Your Growing Startup

October 1, 2021

When you launched your startup, The hierarchy was pretty simple. There was you and ... you. Not much need for an org chart.

But now that your business has moved past the kitchen table stage, you'll need something a little more complex. You have to figure out how to structure your team. That means creating an org chart.

This article will help you do just that. You’ll get the basics you need to create an initial org chart and update it effectively as your business grows.

What is an org chart and why is it important to create one?

Imagine a few scenarios you might run into as a startup:

  • You receive an email from a customer complaining about one of your products. Who responds?
  • A prospective client calls wanting to discuss pricing. Who handles those discussions?
  • Your PR campaign is working and a major industry publication wants information about the firm. Who tackles that exchange?
  • An employee needs a question answered about their paycheck. Who figures out those details?

Quickly dealing with situations like these represents the purpose of an org chart. In its basic form, the organizational tool maps out the lines of responsibility within your company. It shows who has authority in which area and who reports to whom within the company.

In its basic form, the organizational [chart] maps out the lines of responsibility within your company. It shows who has authority in which area and who reports to whom within the company.

In large corporations, these can become quite complex. But even within a burgeoning startup like yours, they can provide an excellent way of maintaining efficiency and optimizing internal communication.

How to create an org chart

When you hire your first employee, you probably don't need a formal org chart. Over time, the two of you will work out a rhythm about who does what.

But as your team grows, that casual approach will break down relatively quickly. Without a clear system, you run into a series of potential risks. You’ll open the door to inefficiencies like:

  • Wasting effort by doubling up work
  • Undermining team spirit by stepping on each other's toes
  • Not handling all the necessary tasks because everyone assumes someone else will catch it

An org chart can eliminate these issues. However, it's important to put some thought into its creation. Here are a few things to keep in mind:

  1. Make sure all the tasks are assigned
  2. Think about who reports to whom
  3. Keep it as simple as possible
  4. Respect the org chart in practice

Developing your org chart over time

Your business will evolve over time. Just look at Amazon. In the early days, the company had 10 employees and founder Jeff Bezos drove shipments to the post office himself in his 1987 Chevy Blazer.

Today? The company has a market capitalization of more than $1 trillion and Bezos' vehicle of choice is a spaceship. Meanwhile, the company has over one million employees and a 22-person elite S-team that consists of its top executives.

Clearly, Amazon's org chart has gotten more complicated over the years. You might not be able to match Bezos' success as a founder. But you can certainly expect your organizational structure to change along with your business.

How do you handle this evolution? How does an org chart evolve as you grow your business?

Here are a few tips to help you modify your org chart as your company expands:

Regularly update your org chart. Make a review of your org chart a routine part of your managerial responsibilities. Periodic cleanups will keep it up-to-date and accurate.

Think about how new employees fit in. Every time you hire someone, consider how they fit in the current org chart. This gives you an excellent chance to review the situation and make whatever changes are necessary.

Make sure the org chart matches reality. An org chart should accurately reflect the way responsibilities flow through your organization. Don't have one version on paper and another shadow version that operates on a day-to-day basis. You never want someone saying to a new employee, "oh, ignore's how things really work."

Respect the org chart. If you want people to follow your org chart, you need to set the tone. As the founder/CEO, people will look to you for guidance. If you're constantly sidestepping chains of command or assigning tasks in conflict with the formal structure, people will soon get the hint that the stated org chart shouldn't be trusted.

Think about people, not positions. Each team member will have different skills. As people leave and you replace them, consider the abilities of your incoming workers. Don't anchor tasks to a particular job title. Rather, think about what individuals are best suited for particular roles.

Don't anchor tasks to a particular job title. Rather, think about what individuals are best suited for particular roles.

Communicate. Make sure the org chart is common knowledge within the company. It provides handy reference material for your employees. Especially as your operation gets larger, it can aid in internal communication, especially across teams.

Putting the "org" in "organization"

Startups often grow in an ad hoc manner. You add employees as needed and make decisions on the fly. You have to move fast and stay flexible, so often your company grows in ways you can't anticipate.

However, you have to think about your startup like a garden. Unattended, it will get overgrown with weeds and you'll end up losing some of your most promising flowers. An org chart helps you keep things neat and organized.

A well-constructed org chart will make sure that every task gets completed in the most efficient way possible. It also helps avoid internal conflicts and simplifies the day-to-day decision-making process.

For these reasons, it is important to have an org chart for your growing startup. Use the information here to build a structured, talented team that is designed to help your company grow and scale successfully.