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Organizational Structure Examples Small Business Guide

Before Knowing about organizational structure examples small business guide. Let’s First know – What is an Organization?

An organization is nothing but a group of people who are working towards a predetermined goal. It can be viewed as a social structure that includes all formally recognised human relationships. The organisation includes task alignment with respect to the company’s ultimate goal and the division of labour among employees.

It can also be referred to as the second-most significant managerial activity, coordinating employee efforts, acquiring resources, and fusing the two in support of organisational objectives.

Organization Structure Types

  • Formal Organization Structure: A formal organisation structure is a set of roles and responsibilities that have predetermined relationships and activities. It was developed by management to help the business reach its goals.
  • Informal organisational structure: The interaction between staff members that is based more on individual attitudes, prejudices, and interests than on formal procedures. It is a system of interpersonal and social interaction, and formal organisations are not required for its creation.

Organizational structures are used by businesses to depict the chain of command and aid employees in understanding reporting relationships.

The ability of a small business to move work around the organisation will depend on its management structure. Every organisation should manage with a clear organizational structure examples small business regardless of how big or small it is.

Clarifying reporting relationships and fostering efficient internal communication are two benefits of a well-planned and strategic business configuration.

This thorough planning can produce a smooth and effective workflow and can promote team building.

A structure for an organisation should be defined by who?

The board and senior management should make the decision as to what kind of organizational structure examples small business is best for the company.

Finding a structure that would best support internal operations, how work is done, and the chain of command is the objective.

Answering the following questions will help you choose the ideal structure for your company:

  • What do the various work processes fall under? For instance, accounting, human resources, and purchasing are common functions in organisations. Often, it makes sense to arrange things according to these specialities.
  • Are teams, workgroups, or units naturally grouped together? Let’s say, for illustration, that you own a recording studio. A group of producers, musicians, and technical assistants will be present.
  • All functions are examined by senior leadership, which then decides how they want work to be planned out and carried out.

This procedure also establishes a chain of command and natural reporting relationships.

5 Illustrations of small business organisational designs

  1. Organizational structure in a matrix

A matrix structure offers both horizontal and vertical reporting levels.

Employees may work on a team that supports the development of new products or they may be a member of a functional group (for example, engineers) (i.e. new album). Members of various groups may collaborate in this type of structure to create a new product line.

For instance, a recording engineer employed by a music publisher might supervise other engineers, but he might also use his skills and collaborate with teams to create new music albums.

Employees in a matrix organisational structure are in charge of both departmental and organisational projects, which is advantageous.

In order to share collective knowledge, employees are forced to share their responsibilities across departments.

When employees must prioritise their work responsibilities while receiving direction from two different managers, this type of structure presents a challenge. To avoid these pitfalls, make an effort to have clear communication practises.

  1. Organizational Structure That Is Functional

The most prevalent organizational structure examples small business are functional.

Such a structure classifies people according to the particular tasks they performed.

It is common to separate and manage each of these areas independently to organise departments like purchasing, accounting, and human resources.

For instance, managers of various functional areas all answer to a single director or vice president who is in charge of all the operational divisions.

Functions are divided by expertise in this type of structure, which is an advantage. When the various functional areas become silos that only focus on their own area of responsibility and don’t support the function of other departments, this structure poses a challenge.

  1. Organizational Structure for Products

Grouping products by type is another common structure. Each product group answers to a particular executive who is in charge of overseeing all issues relating to that particular product line.

A manager for Kraft Products, for example, would be in charge of all goods sold under that brand, such as sauces, meats, dressings, etc.

The benefit of this type of structure is that it can separate processes from other product lines within the organisation while still organising products by category.

  1. Organizational Structure for Customers

Organizing by customer type is a practice in some industries. In an effort to guarantee that certain customer expectations are met with a customised service approach, this is done.

Healthcare would be one setting for this.

As opposed to patients who stay in the hospital as inpatients, outpatient patients have very different needs.

For those patients, a customer-centred structure creates personalised care.

This kind of structure has the benefit of focusing specifically on the requirements of each customer group. The problem with this strategy is that patient care may fail to take into account the requirements of various customer types and may not have regular communication between care specialities.

  1. Organizational Structure by Region

Organization by region can make sense for businesses that serve a wide range of geographical areas.

This is done to better support customer needs to be based on geography and logistical demands. A structure that is arranged according to geographical regions typically answers to a central oversight figure.

This kind of organizational structure examples small business is common in businesses that serve clients nationwide or across several states, going beyond the confines of a single city or state.


Each company’s mission, vision, and strategy are unique. Due to the variety of business objectives, the structure requires time and attention.

Spend some time considering the best organizational structure examples small business for your business. After all, your company’s organisational structure will act as a foundation for developing the goods and services you offer to customers.

This crucial management duty ensures that staff members comprehend the chain of command and have a clear understanding of how the organisation runs.

Working within a defined structure, with effective communication processes and workflows, aids in the efficient management of the company’s limited human, financial, and time resources.

Do you have an organisational chart for your company?

David Scott
David Scott
Digital Marketing Specialist .


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