Creating an Org Chart: Why Your Small Business Should
With fall and back to school now upon us, I’m feeling like, “Okay but seriously, it’s time to get organized.” Over these past bizarre and scary couple of years, our team has observed that people are craving clarity and organization more than ever. One option for that is with fun new office supplies (if your name is Tammy McCammon-Tracy) :P. However, if your name is Julie Sellers, that organization is more likely to look like an populating an excel file, retreating for an annual plan, or creating an org chart.
While this isn’t an emergency for most small businesses (we typically tackle it in years 2-3 with our advisory clients), creating an org chart is important for small businesses to do at some point. Even if you’re a solopreneur and want to stay that way.
If you’re facing any one of these three scenarios, it’s time to pull out the sketch pad and start dreaming about the future of your business in people-form:
1. The business has reached its 2nd or 3rd plateau point.
I specify 2nd or 3rd because the answer to the first plateau is usually refining the product and pricing mix.
Also, here’s a numerical litmus test if you have a client intimate business (that means that much of your work is 1-1 work with people or offering customized products / services. We’ve learned that the average plateau point to where you really need to make a hiring investment is $120K-150K income. This is solopreneur income or applies too if you have a few employees. Your salary will likely max out there, if you’re not open to hiring (even if on a contractor basis). And please note: these average numbers are if you’re super lean and a producing machine!
2. It feels like you’re reacting to growth (and maybe just barely hanging on).
Back to our evergreen hamster wheel analogy 🙂 If you’re a student of mindfulness or leadership, you may have heard the common question, “Are you reacting or responding?” The solution to this problem too could be product and pricing mix. But if you’ve already nailed that, it’s probably time to start looking at people.
3. You’re wondering, “Where am I actually going?”
If you are starting to get concerned that you’ll never break out of the cycle, and the business (and life) will look and feel like its current state forever, you may not need another goal setting exercise. Well, you may need a little of that, as I’ll share below; but you’ll definitely need a people plan to help you get there.
So, a likely solution to these 3 problems is creating an org chart. It’s not a quick fix, but it’s a roadmap that will guide the people part of the equation.
For small businesses with existing teams, an org chart inspires, illustrates growth tracks for employees, and shows you for what to hire and fire.
One client recently said this brilliant thing:
I’ve made org charts before, trying to attack the minutiae. But I’ve never sat down and thought about an org chart in the context of ‘What does success for the business look like?’
Then, when this person sat down with one of her employees to illustrate where their business is going and career growth tracks, she described that they “LIT UP!”
For this longtime, dedicated employee who was on her own hamster wheel, she was suddenly able to see, in black and white, the step forward. And that the business would have the space and make the investment for her to do so.
And for solopreneurs, it shows the next investment your business needs to avoid the $120K plateau.
We’ve learned that most small business owners and solopreneurs hire by reaction. This isn’t to shame anyone; it’s totally normal.
Said another way: someone presents a skillset or service, and the business owner thinks, “That sounds good!” but it’s not really what the business needs to make its most efficient or effective next step forward.
The other thing that happens is that solopreneurs tend to hire contractors or outsourced solutions before they’ve defined what success looks like. We’ll talk more about that in a coming post, but charting it out on the org chart is the first step to ensure you get the most bang for your buck. (And least disillusionment with the freelance industry – ha)!
So if I have your attention and interest (hopefully I do!), next week I’ll share a follow-along of how you can get started, creating your org chart… including a peek behind the curtain into ours.
If you want to prepare yourself to participate, work through day 1 of our Annual Planning guide.