How to Organize a Startup Team Structure
Building a startup requires more than just an idea. It takes time to find the right people to join the team and requires making a well-organized startup team structure that'll grow together with the company. No two hierarchies are the same, and the org chart will differ based on the business model, goals, and needs.
On this page, we'll explain why making a clear tech startup team structure isn't a waste of time and go over some effective ways to organize one so it'll serve to benefit your business.
What Is a Startup Organizational Structure?
An organizational structure for startups refers to the hierarchy of the team and how the workforce is organized in a company. Such a framework is defined to outline which roles, duties, and responsibilities employees have and the relationships between them (such as chains of command showing who reports to whom). It's generally a schematic diagram representing the departments and key roles like stakeholders, executives, managers, and subordinates.
When the roles in a startup company are clear, the chances of hiring the wrong people go down. It also becomes simpler to manage resources and keep everyone on the same page. This way, all people start working toward common objectives and goals more effectively, minding the current OKRs and KPIs.
Task distribution, planning, and completion become more efficient, just as are the rest of the organization's operations, which also helps manage product development, boost productivity, and achieve growth. Many holes or voids in workflows can be avoided, making the internal processes much smoother.
Why Does a Startup Team Structure Matter?
Numerous startup founders mistakenly think that having a clear tech company organizational structure is uncalled for. However, if you don't define one, chances are high that it'll lead to commotion and disorder, in turn stumbling your decision-making and causing other business inconsistencies.
The bottom line is that a startup has to run like clockwork. And if you have issues with coordination, this will bring various losses and unnecessary chaos. Hence, the impact is rather significant.
Here are a few core reasons why it makes sense not to neglect having a tech startup team structure.
- You'll avoid problems with allocating resources incorrectly
Be it money or human resources, to operate effectively, a startup has to ensure there's little to no waste of resources and startup budget, which becomes harder to control without a startup team structure as the company grows.
- You'll boost the efficiency of decision making
To stay afloat, a startup has to be quick to spot the need for changes, react to them timely, and respond to them by making a business pivot or strategy change when the time is right without delay. A transparent tech company structure (when each person knows their area of responsibility) facilitates making decisions quickly, helps you stay competitive in the market, and allows for MVP agile development.
- Your communication and performance will be enhanced
When teammates understand each other and know who to turn to with questions routed to the right people, this improves management, streamlines communication, improves collaboration, and aids timely task delivery. On the contrary, a lack of accountability and a startup team structure can result in wasted time, delays, misunderstandings, useless work, subaverage performance, disproportionate workload distribution, not enough input from some team members, and generally lower quality of work.
- Your startup will be more appealing to investors
When your startup runs like a Swiss watch, pitching to investors becomes easier. You can demonstrate how well-organized your business is and that you're all working toward the same goals in accordance with a solid growth plan.
Roles in a Startup Based on the Stage
It's no secret that starting a tech startup is really tough. That's why it is very common that one person has to take on multiple roles in the startup's early days. And as the company expands (especially if this happens at breakneck speed), it might get tough to reorganize processes, delegate responsibilities, and keep people on track.
Nonetheless, the startup organizational structure can vary depending on its current stage (e.g., pre-seed, seed, series A, etc.). Let's overview how.
At the earliest stages of a startup, it is the founder who commonly tends to have multiple roles. In the very beginning, this person may be a one-man band or a couple of co-founders who combine responsibilities. For example, the founder could also act as the Sales Manager, accountant, or even recruiter.
At this point, the team doesn't necessarily have to be large, as the product might only be at the validation phase, moving toward creating an MVP. Nonetheless, little by little, the team will expand from a solo founder or several co-founders thanks to new hires.
Designated roles will likely appear in the startup structure, but which ones precisely will depend on individual business goals and industry specifics. The minimal set of roles varies from one company to another, however, some key positions at a startup's early stage often include:
- hire a CTO to handle the technical side;
- a product manager to think through the product;
- a marketing specialist for promoting the company, handling startup branding, and generating leads;
- a salesperson for closing deals;
- an accountant to handle payrolls and financial operations;
- an HR manager for recruiting new people.
On occasion, the company may hire designers, developers, QA testers, and other specialists. Yet, oftentimes, they turn to outsourcing providers to find a dedicated team instead and don't employ such roles in-house (at least not yet), but they may be added on to the startup team structure later. Similarly, many startups opt for outsourced CTO services to get the needed tech guidance early on without making an expensive hire. In this vein, it's not uncommon for startups to engage in lead generation companies, outsourcing this critical function to ensure a focused and effective approach to building their customer base.
Once the product starts getting traction and the company grows bigger, the tech startup organizational structure expands too. This means the team gets enforced with an extra workforce, and many roles are delegated. A startup's org can be made up of several levels: executive and operational. Here's a rundown of the sample roles that are common during the growth stage.
Top Level Management
At the highest level of the startup team structure, there's the founder, who's the initiator of the project. This person's main responsibility is the startup's vision, mission, ground rules, startup culture fundamentals, core strategic decisions, and overall direction. In many cases, the founder has the Chief Executive Officer (CEO) role, it's the "captain of the ship" monitoring everyday operations and is among the most important decision-makers. Stakeholders and co-founders are commonly attributed to this top level too.
The C-suite top management level is the driving force behind the entire startup. Oftentimes, co-founders take on "chief" roles in a technology company organizational structure. Here's a sample overview of several of these.
- The Chief Technology Officer (CTO) is in charge of tech and decides how the product will be built from a technical standpoint (e.g., the chosen startup tech stack, architecture, scalability, and other fundamental tech strategy decisions).
- The Chief Financial Officer (CFO) is the go-to person for the company's finances. Major decisions on the operations, budget, cash flow, and regulations are their area of responsibility.
- The Chief Marketing Officer (CFO) or Head of Marketing's main responsibility is to promote the startup, keep an eye on its image, and develop an effective startup digital marketing strategy.
- The Chief Sales Officer (CSO) is in control of sales and turning potential customers into paying ones, strengthening the sales team and strategy, and finding new market opportunities.
- The Product Manager may sometimes be included in this level as this person is accountable for developing the product. He's there throughout the entire product development life cycle, selecting optimal features, changing the product development roadmap, and making sure the product meets the expectations of end users.
The management level with supervisors may go next in the startup team structure, depending on the company's size. These are the people who report to the C-level or heads of departments and coordinate the work of employees. For example, the Front-end Team Lead can report to the CTO or Project Manager about the work done by the front-end, back-end, and Quality Assurance teams. Similarly, there can be an SMM Lead reporting to the CMO or other leads.
Operational roles are handled by the "busy bees". A tech startup team structure can feature multiple departments and subdepartments. Below we'll go over several customary ones.
- The Design Department (UX/UI designers, graphic designers, and other specialists work on the product's website, app, and visuals).
- The Development Department (a tech department that works on coding and bringing the product to life, it may be broken into smaller teams and have such web development team roles as front-end developers, back-end developers, QA Engineers, DevOps specialists, and others).
- The Marketing Department (can also be divided into smaller teams such as SMM, content, SEO, and others; work on promoting the product and attracting prospects);
- The Sales Department (sales representatives communicate with clients to close deals and sell the products or services);
- The HR Department (recruitment and HR teams handle human resources tasks like employee seeking, screening, interviewing, onboarding, and consequent retention);
- The Customer Support Department (a service team to address all incoming client concerns, complaints, and requests specializing in customer support for startups);
- The Financial Department (accountants and other reps who take care of the startup's financial operations, including handling income, expenses, and payrolls).
Certainly, there may be other teams and roles. If the startup works in the office, there could also be administrative roles like an office manager. A startup can have a Chief Operating Officer (COO) who manages day-to-day operations and helps out the CEO or a Business Development Manager to solidify the strategy. Likewise, the teams may be comprised of specialists with various levels of expertise, from Juniors to Seniors.
The actual "lineup" is always different. Every startup has its own unique set of employees and roles. Nonetheless, as the number of people onboard expands, it's vital to keep things organized in a definitive startup company structure.
How Do You Hire the Best Startup Team?
You won't expand your tech startup organizational structure without hiring new employees. But how should you approach startup team scaling?
First of all, you have to ensure that you're ready to take on more people and enlarge the team. You must be certain that team upsizing is truly necessary and that now is the right time to fill these roles. Doing so prematurely can lead to many risks, like running out of money. When you're positive that more hires are required, you'll need to decide how you'll hire new people. Below we'll go over several common paths.
The first option is employing people to join the company full-time and become a part of your tech startup team structure. In this scenario, you go through a lengthy candidate screening process followed by interviews and onboarding.
The person officially becomes part of your startup with all the payrolls, paid time off, hardware, insurance, etc. implied. The process of forming a team or department this way is usually time-consuming and costly.
Many startups opt for alternatives, like finding freelancers. They turn to popular freelancer platforms like Upwork or Freelancer to sign individuals. Mind that hiring such contractors is a reasonable choice for short-term cases like when you need help in fulfilling a specific standalone task that you can delegate to a third party.
When choosing between freelance and outsourcing, the former is not a good idea if you plan to augment your startup team structure. Freelancers usually have limited availability, which can backpedal progress.
Finding an Outsourcing Partner
The third alternative is to turn to outsourcing vendors who have large talent pools. There are many IT outsourcing models, however, generally, such providers give startups the opportunity to quickly augment teams, so you can create a hybrid workforce. Or, they may assemble a full team to take on your project (these specialists are sort of lent to the startup for a while and work on the product as if it was theirs).
The outsourcing vendor selection process has to be taken seriously, though, as you may face hidden costs or encounter unprofessionalism or bloated team sizes. But if you find a trustworthy partner with a proven track record, this can be a great way to build or scale your product.
Are there other ways to find talent or partners? Sure! Many entrepreneurs meet co-founders in special startup communities. Such startup groups were created for networking purposes and often have job boards. Moreover, some are even equipped with matching functionality (an algorithm selects people who can join forces and team up).
What is more, startups may also consider joining an incubator or accelerator program. The suitable option will depend on the startup's current stage (early or growth), but providing networking opportunities is among the perks of incubator and accelerator programs.
Building Your Startup Team Structure: Best Practices
Creating an org chart and keeping the information on it relevant is a hassle if you have to handle it all manually. Therefore, we gladly share a lifehack on how to accelerate and optimize procedures dealing with building and sustaining a startup organizational structure.
As most businesses use Slack for business communication, you can link up a handy bot called OrgaNice. Upsilon created this startup team structure tool to help other businesses make a team directory using the data in their Slack workspaces. The bot automates not only the structure creation process but also helps keep data relevant as your business or startup scales.
Startup org structure chart visualization is very beneficial as employee visibility strengthens team awareness and increases transparency. Having access to up-to-date information can remove confusion, connect people, and alleviate many processes since people understand who they're working with and who to turn to.
The bot ensures that fired staff are no longer featured in the tech company hierarchy and that the organization's workspace is filled with all the necessary information on existing employees. OrgaNice sends reminders and Slack notifications to employees to fill out profile details like their contact phone or email. This way, you don't have to waste time manually updating the org structure.
Other Startup Structure Organization Tips
Apart from using handy startup tools, what else can you do to build a seamless startup team structure? Here's a plan you can follow.
- Begin with a plan (outline your goals, specify your business model, and other vital details to fall back on as you start building a startup team structure).
- Choose the key positions and departments (shortlist the most important roles for your business, including the "chiefs", and jot down the roles you need now and might need in the future and which departments you have).
- Define roles and responsibilities (create job descriptions, noting what's expected of each role, like qualifications, skills, and requirements, to avoid confusion and simplify the search for candidates).
- Select an organizational structure (based on your business type, you can go for a structure that's flat, matrix, functional, or team-based).
- Decide on the core workflows (to eliminate bottlenecks and boost internal processes, mark how decisions will be made and the lines of communication).
- Fill out the employee profiles (once you make the key hires, start filling out information on the employees, preferably with names, photos, occupations, and contact details, and put them in the right place in the hierarchy).
- Keep the structure updated (to encourage collaboration, ensure that the information in the structure is relevant by regularly reviewing the chart and data, perhaps it is worth assigning someone to keep track of and adjust the chart).
Final Thoughts on the Company Structure for Startups
With employee turnover rates high, it is vital to keep up a healthy work environment and ensure the teams are well-coordinated. Having a clear startup organizational structure at hand can yield many internal processes, get multiple teams working in tune with each other, and a smoother flow of information and data exchange. This may lead to more effective management and better overall business results.
As we've mentioned earlier, you may use OrgaNice to simplify the process of creating and maintaining your startup team structure. And if you need a hand with product development or are lacking talent, Upsilon can assist you with MVP development services and offer IT team augmentation services too. Feel free to contact us to discuss your needs!