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Establishing The Leadership Structure for Your New Business

In my years of helping small business owners find their path into entrepreneurship, I have discovered that a lot of small businesses do not take out the time to set up their leadership structure. This is most common with sole proprietorships. At the start of the journey, this may not seem important to small business owners but as the business grows, demands begin to arise.

Also, the leadership gap becomes obvious and challenging. I have seen a lot of small businesses fail because of the lack of effective leadership structures.

The time to set up a leadership structure for your new business is before the need becomes urgent and obvious.

As a new business owner, here are a few things I believe you can do to establish a strong and effective leadership structure for your business.

Begin with Self-Leadership

The first thing I advise new business owners to do is, to begin with, “self”. “You cannot become better at what you do until you become better at whom you are”. Business leaders need to develop clarity about themselves and their purpose, self-awareness, develop character, confidence, strategic management skills, and so on.

Establishing The Leadership Structure for Your New Business
Leadership is key to running a business

According to the article “The Three Strengths of a True Strategic Leader”, statistics show that fewer than 10% of leaders exhibit strategic skills. This is a scary number, considering how important strategy is to move your business forward. Therefore the journey of setting an effective leadership structure for your business begins with effective self-leadership practices.

Set up departments

It is important to sections your business into departments. You need this for clarity and organizational structure. You can start with three to four departments: sales, marketing, operations and admin, finance. You do not have to worry about creating all the necessary departments at the very start.

Remember, you can always add a department you feel should be a part of your business and remove anyone you believe is redundant or unnecessary. However, for a good start, these four departments are needed. Why? They embody what your business will be doing in the first few months of its existence.

Sales will be in charge of the selling of your products. Marketing will strategize how to get your goods and services into the market to ensure that your customers see them. It will also help strategize how to put up advertisements if the need arises. Furthermore, it will be in charge of the entire commercializing of your business to ensure that you make sales.

Operations will be at the center of it all. How much goods are produced, how they are sold, where they are sold; all these are determined by the operations department. This department is also in charge of ensuring that the infrastructure of your company is maintained. The finance department will track your profit and loss, your expenditure, and every other monetary part of your business.

All these departments are needed to ensure the smooth running of your business. So as a new business owner, I recommend this strongly.

Fill up positions

The next thing that should come to mind after setting up these departments is the leadership of these sections. Who will head these departments? This is where your business partners and team come in.

Although new business owners may think the first step to filling up positions is finding the right people, I believe the first thing to do is define the roles. What job will the head of the departments do? What will their weekly deliverable look like? How do they come into the central leadership structure of the business? What are their responsibilities to those working in their department?

All these will determine the kind of person you will get to fill up these roles. After you’ve defined the roles, then you can proceed to add names to each department. These should be people who fit into the criteria you’ve written down and they should be people you are compatible with. You may come up with multiple names for a position and that is good. It gives you the chance to interview them and pick the best fit to work with you.

Set-up decision-making structures

This is very important if you are ever thinking of upscaling in the future. Determine how decisions will be made early on. This is to avoid bureaucracy and organizational deadlock. You do not want indecision or lack of agreement to stall an important project for days or weeks.

You may want to put the final decision-making power in the hand of one person to eradicate every form of organizational delay. However, to allow for equality and prevent abuse of power, having two or three people holding the reins sound more appropriate.

This is a decision you will have to make on your own. Whatever you decide will go on a long way in how the leadership structure of your new business will operate

Build as you grow

This comes after you have already written out the departments you need, filled up the leadership positions and you have seen them working already. When you have all these in place, then you need to be intentional about organizational and leadership growth. Remember that the departments you have are just what you need for the initial running of your company. As you grow, I am confident that more demands will arise and there will be a need to create new departments.

This is part of growth and you must build as you grow. Build each department and add new ones when necessary.


New business owners need to embrace the idea of proper organization and planning when setting up their business. Part of this is establishing the leadership structure for their new business early.

Article First Published on SME 360NG

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