Best Practices : Responsibilities & Business Structure

Now that you have an idea about where you want to go, it’s important to build the foundations or shell of the business.  In particular, we’re talking about business responsibilities and structure.

Legally speaking (again, from my experience but I’m not a Lawyer so take it for what it’s worth); I have found that a company structure is best if you are entering business with more than 1 person involved in ownership.   If there’s only 1 individual involved, thanks to the bank’s and distributors requirements that you sign a personal guarantee; there’s no financial liability difference between a personal / business entity.   On the other hand, there is a difference if you (personally) go bankrupt in such a situation. At the end of the day, this is a decision that should be made with a Lawyer.

I’m more interested in discussing how the business responsibilities affect it’s structure.  Even if there’s only one of you involved, it’s worth breaking down the company into it’s functioning components and assigning these responsibilities .  The reason for this is that it allows you to consider the functions that are important to keep in-house and those that you could outsource.

Here’s a brief example taken from our business:

  1. Strategy / Direction
  2. Information Technology
    • Website Design & Infrastructure
    • Website Content
  3. Marketing
    • Advertising
    • Public Relations
    • Graphic Design
    • Promotions
  4. Logistics
    • Shipping & Receiving
    • Purchasing
    • Inventory
  5. Customer Service
    • Sales
    • Customer Support & Enquiries
  6. Finance
    • Bookkeeping
    • Taxes
    • Cost Management / Negotiations
  7. Administrative & Legal
    • Administrative purchasing & supply (paper, tape, pens, etc.)
    • Legal

By breaking down and assigning responsibilities, you can actually start planning your tasks list.  In addition, if you have partners / employees the list allows you to sign responsibilities and reduce arguments when something doesn’t get done.

Lastly, the ability to break down these areas lets you decide if you want to / can outsource the work.  I generally outsource the vast majority of the IT & Graphic Design work, ditto with bookkeeping, legal &  Taxes. Why? Because it’s not core and I don’t have the time / expertise to deal with it.  It allows me to focus more directly on areas that I can influence.

On the other hand, there will be specific areas in this list that you will not want to outsource (e.g. Marketing, Customer Service, Purchasing, etc.) as it’s important to the survival and differentiation of the business.

Lastly; the Boss.  Make sure, if there’s more than 1 person involved (especially if you have equal partners) that you assign where the buck stops. Someone should, at the end of the day, have the responsibility & authority to make the call.