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How To Create Small Business Organizational Chart

Updated: Mar 23, 2023

What Is A Small Business Organizational Chart? Why Should Businesses Need One?

An organizational chart is a graphical depiction of the relationships and relative ranks of positions within an organization. It typically shows who reports to whom, and where each person fits in the overall structure.

Small businesses need organizational charts to help them run operations more efficiently by clarifying the company's chain of command and roles.

Some benefits of having an organization chart for your small business:

  1. Improving communication and efficiency among employees

  2. Facilitating delegation of tasks and responsibilities.

  3. Providing a reference point for new employees.

  4. Gives business owners a sense of understanding of their company's operations for better decision-making.

Hierarchical Organizational Structure

One type of organizational structure is known as a hierarchical structure, in which there is a clear chain of command from the top down. In this type of organization, every employee has a direct supervisor who they report, and each level of management oversees a specific group or department.

For small businesses, a hierarchical organizational structure can be beneficial because it helps to ensure that tasks are completed efficiently and that everyone knows their role within the company. This is also helpful for decision-making, as decisions can be made quickly by those in charge without having to consult with a large group of people.

However, one downside to a hierarchical structure is that it can lead to inflexibility within the company, as decisions need to be made from the top down.

Hierarchical Organizational Structure template

Source: Creately

Functional Organizational Structure

Another type of organizational structure is known as a functional structure, in which employees are grouped together based on their skills and expertise. In this type of organization, each department or team is responsible for a specific function within the company.

For small businesses, a functional organizational structure is common. It helps to ensure that tasks are completed efficiently by those with the necessary skills and expertise. This type of structure can also help to reduce costs by eliminating the need for training employees on various tasks.

However, one downside to a functional organizational structure is that it can lead to silos within the company, as departments or teams may be reluctant to share information with those, outside of their group.

mockup of a functional organizational structure

Source: Power Slides

Project-based Organizational Structure

Project-based organizational structures are becoming increasingly popular in the business world, especially for small businesses. In this type of structure, employees are organized into teams that are responsible for specific projects.

This allows businesses to be more flexible and responsive to customer needs, as well as to rapidly adapt to changes in the marketplace. One of the key benefits of a project-based structure is that it enables businesses to tap into the expertise of their employees.

By assigning team members to specific projects, businesses can ensure that each team has the skills and knowledge needed to complete the task at hand.

Additionally, this type of structure encourages employee involvement and ownership of the project, which can lead to higher levels of motivation and engagement.

Project-based Organizational Structure

Source: Invensis

Matrix Organizational Structure

The matrix organizational structure is a type of business organization in which there is more than one line of reporting. In other words, employees have more than one boss. This can be beneficial for small businesses because it allows for more flexibility and creativity.

For example, if a small business has a team of designers, they can report to both the marketing department and the product development department. This type of structure can also help to encourage communication and collaboration between departments.

Additionally, it can allow small businesses to respond quickly to changes in the market

Matrix Organizational Structure template

Source: Org Chart

Line And Staff Organizational Structure

The line and staff organizational structure is a way for businesses to balance the need for specialized knowledge with the need for clear lines of authority. In this type of structure, businesses have a clear hierarchy, with each level of management being responsible for a specific area.

However, businesses also have staff positions that provide expert knowledge in specific areas. For example, businesses may have a marketing staff position that provides guidance to the sales team.

This type of structure can be beneficial for small businesses because it allows them to have access to specialist knowledge while still maintaining a clear chain of command.

Line And Staff Organizational Structure template

Source: Creately

Circular Organizational Structure

A circular organizational structure is a type of business model where decision-making goes around in a circle instead of up and down a hierarchical tree. Small businesses can use this type of structure to their advantage by creating more lateral decision-making processes that promote creativity and innovation.

This type of structure also allows for better communication and collaboration among employees, as everyone has a voice that is heard equally. Additionally, this type of model encourages employees to take ownership of their work and be more invested in the company's success.

circular org chart template

Source: Lucidchart

Creating An Organization Chart For Your Small Business

Creating an organizational chart for your small business is not difficult, and there are a number of different ways to do it. The most important thing is to make sure that the final product is clear and concise so that everyone in the organization understands the structure and knows their place within it.

Here are a few tips on how to create a Small Business Organizational Chart:

1. Define the purpose of the chart. Before you start creating the chart, it is important to have a clear idea of what its purpose will be. Will it be used primarily for internal communication, or will it also be used as a marketing tool? Knowing the answer to this question will help you determine the level of detail to include in the final product.

2. Gather the necessary information. Once you know what the purpose of the chart is, you can start gathering the information you'll need to create it. This will include things like job titles, names of employees, and a brief description of each person's role within the company.

3. Choose a format. There are a few different ways to format an organizational chart, so it's important to choose the one that makes the most sense for your needs. A simple list format may be all you need if you're creating a chart for internal use. However, if you're using the chart as a marketing tool, you may want to consider a more visually-appealing format, such as a diagram or infographic.

4. Create the chart. Once you have all the necessary information and you've chosen a format, you're ready to start creating the chart. If you're using a list format, simply start by listing out the different positions in the company, along with the names of the employees who hold those positions. For more complex formats, you may want to use a software program or online tool to help you create the chart.

5. Proofread and revise. Before you publish or distribute your Small Business Organizational Chart, be sure to proofread it carefully for any errors or typos. Once it's been finalized, post it in a place where everyone in the organization can see it, such as on the company website or intranet.


No matter what type of organizational structure you choose for your small business, it's important to make sure that it aligns with your company's goals and objectives. The most important thing is to find a structure that works well for your company and that helps to promote communication and collaboration among employees.


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