Starting a new business is a thrilling experience full of first-time experiences, stress, and excitement. But as your startup grows, so too do the responsibilities and tasks that demand action. In order to keep up with the demands of a growing company, it’s essential to have the right departments in place to support your business without unduly bulking up your staff, bloating your management, or adding unnecessary complexity that stymies growth. In this article, we will look at the signs of when you need to support startup growth as well as which departments you may need to support your growing needs.
Signs you need to support startup growth
As a business owner, scaling your startup at the right time, in the right way isn’t an easy task and it’s a time when many small businesses make the fatal step that sinks their business. Either they fail to support startup growth with sound financial management (especially cash flow), founders find it challenging to turn over some decisions to employees with special skills, or try to grow before they have a well-established customer base. Here are some signs that you may need to scale your business:
If you’re struggling to keep up with demand for your products or services, you may need to support startup growth by finding ways to increase production. Turning away customers or struggling to fulfill orders due to a lack of capacity, is a clear sign that you need to scale your business.
While having too much demand might seem like an enviable problem, it’s potentially worse than not having sufficient demand for your products. Economic theory suggests that excess demand causes prices to rise, which encourages competition. But, from a marketing standpoint, excess demand works even faster to sink your startup. When you fail to deliver on customer promises, such as speedy delivery, you have dissatisfied customers who might never return to give you another chance. They also spread their discontent across social media and other forms of word of mouth that damage your reputation, possibly forever.
Solving this problem could mean expanding your physical space, investing in new technology to streamline your operations, or outsourcing certain tasks to third-party vendors or partnerships.
Profit margins are squeezed
If your profit margins are getting squeezed due to increasing costs, you must find innovative ways to reduce costs without damaging your product or customer service. Hence, you shouldn’t begin the cost-cutting by eliminating staff, substituting less expensive raw materials, or cutting your marketing budget. Although these are often popular ways to cut costs, they’re harmful in the long run and don’t support startup growth. As most successful companies know, you can’t shrink to greatness.
Improving profit margins mean negotiating better prices with suppliers, investing in new technology to automate certain tasks, or restructuring your operations to reduce waste and inefficiencies.
New opportunities arise
As your business grows, new opportunities may arise that you hadn’t considered before. You may be approached by a new customer or asked to expand into a new market. For instance, early in the history of Adobe, they were approached by Apple, which was interested in buying its desktop publishing software but had no interest in its printers despite a business plan that called for Adobe to sell the products as a bundle. Adobe sent Apple on its way to find another customer willing to buy their bundle. Luckily, a mentor advised them to throw out the business plan in favor of a lucrative arrangement with Apple.
In support of startup growth, you need sufficient breathing space, knowledgeable mentoring, and time to noddle through opportunities that knock on your door or the bandwidth necessary to investigate opportunities.
Departments you need to support startup growth
Maybe you started the business on your own or with a few founders. At some point, you need to consider adding to the team to support startup growth. Adding team members at the right time for each business function, finding the right people for the job, and creating a management that rewards initiative, hard work, and responsible leadership means the difference between success and failure. Below are some departments you might consider. Some of these departments you will likely add fairly early in support of startup growth, while others you might outsource for a long time. Still, other departments aren’t needed until the business reaches the point where you need specialized skills that don’t easily fit within existing departments.
- Finance and accounting. Managing your finances and accounting is crucial to the success of your business and keeps you on the right side of the government. As your company grows, you need to replace outsourced accounting and bookkeeping for an internal employee (later a staff) to handle more complex tasks such as forecasting and handling stock issues. This department is responsible for managing budgets, tracking expenses, and ensuring that the company remains financially stable.
- Human resources is another area commonly outsourced in the beginning. As you bring on more employees, you need to have a human resources department in place to handle everything from recruitment and hiring to payroll and benefits administration. This department is also responsible for developing and implementing company policies, as well as managing employee relations.
- Marketing and sales. Marketing and sales are critical components of any business, even in the early days and are harder to outsource because you need a strategy, not just implementation. As your startup grows, you need a team in place to develop and execute marketing strategies, manage social media accounts, and track customer feedback. This department is also responsible for driving sales and revenue growth through targeted advertising campaigns, lead generation, and customer acquisition efforts.
- Product development. Over time, you need innovations, product extensions, and product improvements or your competition will lap your business. Your product development team is responsible for creating and improving your company’s products as customer needs change, competitors introduce new products, or technology makes new products possible. This department works closely with marketing and sales to understand customer needs and identify opportunities for innovation. They are also responsible for testing and refining products to ensure they meet customer expectations.
- Operations. As your company grows, you need an operations department in place to manage the day-to-day activities of the business. This department is responsible for everything from inventory management and supply chain logistics to customer support and order fulfillment. They also work closely with other departments to ensure that all aspects of the business are running smoothly.
- Information technology. In today’s digital age, every business needs a strong IT department to manage technology infrastructure, software applications, and security. Your IT department is responsible for maintaining servers, troubleshooting hardware and software issues, and ensuring that your company’s data is secure.
- Legal. As your company grows, you might need a legal department in place to handle everything from contracts and negotiations to compliance and regulatory issues, although hiring a firm on retainer might work for many businesses until they’re fairly large. This department works closely with other departments to ensure that the company is operating within the boundaries of the law and that its interests are protected, especially intellectual property.
- Research and development. A research and development (R&D) department is crucial for businesses that aim to stay ahead of the competition. This department is an extension of your product development department once the tasks require specialization. It is responsible for developing new products and improving existing ones. They work closely with the product development team to ensure that the company is continually innovating and creating products that meet customer needs.
- Customer success. A customer success department is another outgrowth when tasks require more specialization than is possible from a marketing department. This department is responsible for ensuring that customers are happy with the products or services provided by your company. This department will be responsible for managing customer relationships, addressing customer complaints and feedback, and providing training and support to customers. They work closely with the marketing and sales departments to ensure that customer needs are met and that the company is delivering value to its customers.
- Public relations. A public relations department is responsible for managing your company’s reputation in the public eye, although many companies continue outsourcing this function until they reach a fairly large size. This department is responsible for crafting and distributing press releases, managing media relations, and organizing events and speaking engagements, which require somewhat different skills than marketing communications. They work closely with the marketing and sales departments to ensure that the company’s message is consistent and that it’s reaching the right audience.
- Business development. A business development department is responsible for identifying and pursuing new business opportunities, such as partnerships, strategic alliances, and acquisitions. This department works closely with the marketing and sales teams to identify potential areas for growth and expansion, and then develop strategies to pursue those opportunities.
- Supply chain management. A supply chain management department is responsible for managing the flow of goods and services from suppliers to customers. This department works closely with the operations department to ensure that inventory levels are optimized, production schedules are met, and customer orders are fulfilled on time and within budget.
- Quality assurance. A quality assurance department is responsible for ensuring that the products or services provided by your company meet or exceed customer expectations. This department is responsible for testing products and services, identifying and addressing any defects or issues, and implementing processes to improve overall quality.
- Facilities management. A facilities management department is responsible for maintaining and managing your company’s physical facilities, such as offices, factories, and warehouses. This department ensures the facilities are safe, secure, and in good working order, and that they meet the needs of your employees and customers.
- Data analytics. A data analytics department is responsible for analyzing and interpreting data to provide insights that can help drive business decisions. This department works closely with other departments to collect and analyze data on customer behavior, sales trends, and other key metrics, and then use that information to develop strategies to improve performance and drive growth.
- Employee development. An employee development department is responsible for creating and implementing training programs to help employees develop their skills and advance their careers. This department works closely with the human resources department to identify areas for development and design programs to address them.
- Environmental, social, and governance (ESG). An ESG department is responsible for ensuring that your company operates in a socially and environmentally responsible manner. This department works closely with other departments to develop and implement policies and practices that align with your company’s values and commitments.
- International business. An international business department is responsible for managing your company’s operations in other countries. This department is responsible for navigating the legal and regulatory requirements of different countries, managing international supply chains, and developing strategies for entering new markets.
- Creative services. A creative services department is responsible for developing and executing creative strategies and campaigns across various media channels. This department works closely with the marketing and sales teams to create engaging content that captures the attention of your target audience.
- Corporate wellness. Corporate Wellness is a department that is becoming increasingly important in today’s workplace. This department is responsible for promoting the health and well-being of your employees. They may organize and manage fitness programs, mental health resources, and nutrition programs. The department may also offer stress management classes, on-site massages, and other wellness initiatives that encourage a healthy work-life balance. By investing in the well-being of your employees, you can increase their productivity and job satisfaction, reduce absenteeism, and attract top talent to your company. Hire a certified corporate wellness specialist to kick off on the right foot.
- Corporate communications. A corporate communications department is responsible for managing your company’s internal and external communications. This department is responsible for creating and distributing newsletters, press releases, and other communications to keep employees and stakeholders informed about company news and developments.
Having the right departments in place is essential for the success of any growing startup. By considering and implementing these key departments, you’ll be well on your way to building a strong and sustainable business that can continue to grow and succeed in the long term.
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