5 factors about structuring a company for growth in Australia

5 factors about structuring a company for growth in Australia

When a business is started it is normal that there are only one or two people, an idea and a common goal to grow the business and not a lot of thought is given to how it might be structured to accommodate that growth. Everything is focused on the here and the now.

Growth is fundamental to success so it makes sense to consider early on how the business will grow and what is needed to achieve growth. This is where the importance of your Business Plan takes effect as it will set out the phases the business will go through to reach the goals you are setting. Many founders underestimate the importance of structure in facilitating growth.

  1. Corporate Structure

Corporate structure includes the type of entity that is used to house the business, for example, Sole Trader, Partnership, Pty Ltd Company or Limited Company. Each type of corporate structure has its own advantages and disadvantages. In brief, Sole Traders and Partnerships are generally more suited to smaller businesses, a Pty Ltd Company provides room for growth whereas a Limited Company structure is more commonly used by larger companies and ones that want to list their shares on a Stock Exchange. It is often the case that a Pty Ltd Company that has grown to become a large company will change its corporate status to a Limited Company to allow it to raise money from investors by listing on a Stock Exchange.

  1. Operational Structure

Very few companies grow without employing staff. As a Founder you initially would have concentrated on the idea and how to get it up and running. There will come a point at which the tasks and roles of a growing company will need more hands-on deck. A good time to plan for this is when you are creating your Business Plan as it will require you to think about what types of skills you need, where they will be located and what management hierarchy (organisation chart) is needed for control and reporting.

  1. Production Structure

Whether your business produces a product or service you will need to consider how each part of the chain is organised. If you are creating a digital service platform will the website, programming, and digital marketing be handled internally or outsourced or a combination of both? How you do this affects both bottom line profits and growth.

If you intend to produce a product or provide a service you will also need, plan and cost who does what.

  1. Sales Structure

No matter what your company does, if you do not sell anything, you will not make money. How will you create ‘brand’ awareness? How will people know where you are? How will people find your website? You need to market your company’s services and products to get to your end users. Will you use agents, direct salespeople, distributors, intermediaries, influencers or a combination of these to reach your audience. The way in which you structure your marketing and sales approach will be reflected in your company’s success.

  1. Business Structure

This is the core of your business that runs in the background, it encompasses all of the back-office activities including accounting, invoicing, supply ordering, customer deliveries, employment and administration. All these activities should be thought out and cost in your Business Plan and, importantly, should be monitored on a regular basis to enable you to make any adjustments necessary for the operation of your business.

In conclusion

As a Founder or business owner, be conscious of all the structural elements that will make your business a success. They all work together and have an impact on each other, ignoring one can be damaging for any company.