Your startup team structure can make or break your business. While there are plenty of stories about solopreneurs who built tech companies from the ground up on their own, more often than not, they’re the exception—not the rule.
You dramatically increase your odds of success with a team, but not just any collection of individuals will do the trick. You need an intentionally chosen band of talent that fits properly in an ideal tech startup team structure. Get your structure right, and you’ll be ready to make lightning-fast decisions and scale to your upper-most potential. Get it wrong, and you’ll introduce confusion, unnecessary expenses, and poor decision-making.
Fortunately, building the right startup team structure isn’t rocket science. You just need to put the right people in the right places at the right time. While that might sound easier said than done, in this article we’ll walk you through everything you need to know to nail your organizational structure and set your startup up for success.
Your startup team structure defines the organizational departments and business leaders. It helps identify the core role and duties of each executive, manager, and employee. Having this hierarchy in place ensures you hire the right people for the right position, eliminating waste and optimizing your payroll spending.
Establishing your team structure also prevents holes from appearing in your workflows and strategies. For example, if you build an organizational structure with a sales executive but no marketing department, your sales team might quickly run out of leads. And if you invest heavily in your engineering teams but neglect sales, you might just create the best product that nobody knows about.
Organizational structure puts all your pillar departments in place and establishes chains of management and communication to keep information flowing freely. It establishes decision-making processes and keeps the engine of your startup machine running smoothly.
Without an established startup organizational structure, you risk building a team that more closely resembles a high school group project—one person does all the talking, another never shows up, and your workhorse gets everything done, which isn’t an ideal or scalable structure.
Here are a few of the benefits of investing in the right startup team structure:
Avoid failure: Only 80% of startups survive longer than a year, and many of the failed companies [blame poor partnerships and the team] (https://www.investopedia.com/articles/personal-finance/040915/how-many-startups-fail-and-why.asp).
Spend wisely: Running out of cash is the top reason for startup failure. Build your team wisely and ensure you spend on the right positions and headcount.
Streamline operations: Defined roles and structure help you avoid duplicative work and make collaboration and performance more efficient.
Improve communications: Establishing a hierarchy ensures conversations get routed to the right places between the right people.
Accelerate decision-making: Organizational structure helps you build and implement a model for decision-making, such as RAPID (Recommend, Agree, Perform, Input, Decide).
Prepare for scale: While you might not see all the benefits of team structure from the get-go, the efficiencies become more evident as you grow and build your teams and business.
Startup team structure evolves at different stages in your company’s journey. At the onset, everything might be more horizontal, and each team member might have an equal say with a short chain of command. However, as you grow and scale, chains become longer, and it’s important to set up a structure that’ll still be lean, fast, and efficient.
Most successful startup teams start with the following foundation:
Chief Executive Officer (CEO): Promotes the business, inspires the team, negotiates with investors, and drives the business toward the big-picture vision.
Chief Technology Officer (CTO): Builds the technical aspects of the startup, including establishing a tech stack, planning for the future, and hiring developers to make it all happen. Often, they also fulfill the role of a Chief Product Officer until later in the scaling stage.
Beyond the CEO and CTO, a business usually has sales and marketing departments:
Sales Department: Focuses on selling the product and differentiating it from competitors.
Marketing Department: Builds brand awareness and leads through content, events, advertisements, and branding.
The leaders in these departments will likely start out at the entry-level or manager role, but they can advance to become Chief Sales Officers (CSOs) and Chief Marketing Officers (CMOs) with time and experience.
Once you’ve built a minimum viable product (MVP) and it’s gaining traction in the market, it’s time to start thinking about scaling. This is where you expand your client base, improve your product, and focus on optimizing the customer experience.
Here are the roles you should consider adding (if you haven’t already):
Chief Financial Officer (CFO): As your CEO and CTO become more ingrained in the day-to-day processes of the company, you’ll need a financially savvy individual to take charge of your income and expenditures and manage the cash flow of the business.
Chief People Officer (CPO): As you scale, you’ll need to be more intentional with who you hire to ensure maximum efficiency and culture fit with each new employee. Your CPO keeps everything systemized and on track.
Chief Product Officer: This role helps build the long-term vision for your products, ensuring their profitability and competitive angle.
Business Development Manager: Business development managers work with your CSO and CMO to build your brand and improve the return on investment (ROI) from each new and existing client.
Customer Service Manager: Your product will inevitably have flaws and difficulties, and you need to start building a customer support team to handle inquiries effectively and improve the customer experience.
Scaling your startup often involves roles becoming more specialized. Your developers might have pitched in on building the back-end, polishing up the user interface, and adding features to your website or mobile application—now, they’ll need to become a bit more focused.
Here are the teams you’ll likely need to build, and each will need to be led by an experienced manager (likely reporting directly to the CTO or an operations team manager):
UX Team: Responsible for the front-end development and user experience. You’ll eventually need user experience researchers, designers, and front-end developers.
Back-End Team: Responsible for the code behind your tech company’s product or application. This team is made up of back-end developers and middle-stack developers.
DevOps Team: Responsible for optimizing cloud infrastructure deployment and maintenance to improve the user experience and create scalable systems. This team comprises your cloud architect, system administrators, and site reliability engineers (SREs).
Quality Assurance (QA) Team: Responsible for ensuring the quality and performance of your products by testing for bugs and errors. This team is made up of analysts and testers.
Identifying your startup team structure is one thing—building it is another. With unemployment at record lows, it’s harder than ever to fill open positions at your business.
However, evolving trends give you more options. For example, the rise of remote work opens the possibilities up to a larger talent pool. And the Great Resignation shows that employees will leave what they know for greener pastures.
When it comes to building your organizational team structure, here are your options:
Build everything internally. Hire employees to accomplish every task that needs doing. Building an entirely in-house team can be challenging, especially when the scope and product development are still evolving.
Finding an employee for every necessary seat can be difficult, and you have to worry about retaining your talent—getting them in the door is just the first part.
You might hire a large team with grand ambitions but not secure the necessary financing to keep scaling. In this situation, you’ll need to make a painful downsizing to stay afloat as you build your business.
However, in-house teams tend to be more aligned and productive. They’re driven by culture and mutual trust, and they’ve built systems and processes that work.
You can hire third-party vendors to handle many of your growing pains. For example, you might engage additional developers resources, or you could hire a public relations agency to handle that arm of your marketing team.
Outsourced teams are usually trained and efficient, but they’re expensive and need overseeing and active communications to coordinate internal and external efforts.
Freelancers can’t fill holes in your startup team structure, but they can step in to accomplish tasks and get jobs done. They’ll need a manager to assign them work and supervise strategy, but freelancers can help balance the load as you scale and look for full-time hires.
Keep these best practices in mind as you plan and build your startup team structure:
Commit your startup team structure to paper (or at least a Google Doc). Having your plan written down will help you resist the urge to scrap your plans when another option presents itself. It’ll help you be more intentional with the decisions you make.
Whether you’re in the early stage startup days or haven’t even launched your idea yet, begin thinking about what the future could look like. What role will you fill? Do you have a CMO? When will you need to bring on a CFO?
Begin thinking about these options as soon as possible. Think big. Imagine what your business might look like in a year or two. That might seem like a long road from now, but it takes time to form a dream team, and you may need to start having conversations well in advance to bring on the top talent you need.
Meet with your leadership team often to review your organizational structure and make plans for the future. Do you anticipate any redundancies? What positions do you need to fill next? Has an emerging need prioritized one role over another?
Your entire executive team should be part of this conversation, as changes to the team structure will impact their workflows and operations.
Every leader of your startup team structure should have the power and autonomy to do their job and fulfill their responsibilities. While you should collaborate and work cross-departmentally, your executives, directors, and managers should be free to execute according to their best judgment.
That’s why building the right team is important. It’s not just about filling chairs and checking off to-do lists. It’s about finding the right individuals to grow your business. Creating this hierarchy helps you make decisions (hopefully the right ones) quickly and capitalize on opportunities while they’re hot.
You’ll be tempted along the way to ditch your plan and head in a new direction. Pivoting isn’t always a bad idea, but it should be done with intention and planning.
Don’t nix your startup team structure and adopt a new plan without careful consideration. Council with your leaders and think through the short-term and long-term impacts. Shiny objects will present themselves but resist the urge to chase every brand-new idea or opportunity.
The startup team structure you build has a big impact on your startup’s growth potential, and so does the cloud infrastructure you choose. DigitalOcean provides a simple and affordable cloud solution with all the computing services, documentation, scalability, and predictable pricing you need to grow your business.
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