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    Posted by Shane McQuillan 7 Jul
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    What is Corporate Structuring?

    Depending on what level your startup or company is at, or even what kind of comprehension you have of just how a major business is run - your understanding of corporate structuring and just how distinct these departmental lines are will be pretty clear.

    During early stages of your business, this field won't exactly matter - as a founder, you'll likely have so much required of you that it's either hard to actually delegate tasks, or you'll be the only member of the team.

    But as companies or startups start to raise more capital, and staff up, these same founders will need to delegate and create new areas and departments, this is where the whole notion of Corporate Structuring comes into it.

    For those that are not so well initiated with the concept - Corporate Structuring refers to the way in which departments are clearly distinguished from one another, and delegated to managers and other people that would make up that staff. In doing so, it means you, as the founder, or one of the founding members, undergo far less logistical and professional pressure. Meanwhile, this provides far more accountability for what goes on in the various regions of your company.

    So now we know what this broad process refers to, we can now go into just how corporations can structure themselves and just what they would be structured to include.

    The Structure[s] of Corporate Structuring

    When a company decides to structure their business in a particular way, they delineate various departments which now make up the new structure of the corporation. These can include departments like HR, Administration, Research and Development, Sales, Marketing, etc.

    While the end-result is the same, how do companies decide to structure in the first place? Well, there are a number of methods that corporations use for delegating responsibilities and forming departments -

    Functional Structuring -

    Much as the name suggests, functional structuring refers to a delegation of duties on a more meritocratic basis; so those that have the best set of skills to get the job done will be placed in a particular 'department'.

    For more close-knit teams, this is a highly effective means of structuring; being a good combination of capability and ease of communication.

    Divisional Structuring -

    This method splits employees into clearly defined divisions, markets, purposes, etc. This allows for larger companies to more readily delegate responsibility and cater to the needs of a specific customer base.

    An example of this is if a customer needs technical expertise from a telecoms company, so as a result - its customer service division puts them in dire contact with its IT department.

    Hybrid Structuring -

    Alternatively, depending on the kind of employees you have, along with how many. You can make use of a more Hybrid structuring method. Just like the name suggests - this method of structuring is wholly dependent on your needs as a business.

    Using Divisional, Functional among other kinds of structuring solutions in order to formulate an effective model for your staff.

    In summary - if you're a business entrepreneur looking to reach the next stage of your business' growth, corporate structuring is a critical foundation block for the creation of any financial model.

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