Organization and Management Section of a Business Plan: What it is and How to write it

Organization and management section of a business plan is a section that summarizes information about your business structure and management team. It provides a detailed look at your company’s structure and gives you an opportunity to introduce your leadership team.

The purpose of the organization and management section is to demonstrate the ability of your entity to achieve its objectives under  competent leadership. Writing this section is a step by step process that requires you to use a confident and professional tone. The organization and management section is written after the market analysis section of a business plan and is typically one page long. Professional business plan writers are specialists in writing the section as well as designing the organizational chart.

What is the Organization and Management Section of a Business Plan?

The organization and management section of a business plan  is a section that entails your entity’s organizational structure, ownership details of your business as well as the qualifications and profiles of your management team. The organization and management section gives investors an idea of how your business is organized as well as who runs it. You should start by introducing your team members and include their experience, education, as well as their roles in your business. This shows that you have a strong team in place who help you run your business.

You should provide an overview of your business structure and include an organization chart if your organization is complex. Describe the hierarchy within your  organization specifying the chain of command and how communication flows. Clarify the roles and responsibilities of the different departments and how they contribute to the overall business objective.

What is the purpose of the business plan organizational structure? 

The main purpose of the organizational structure of a business plan is to demonstrate to investors and other stakeholders that your business is well organized and has a competent team to execute its strategy. It provides a comprehensive overview of the business’ internal framework and leadership.

An organizational structure with well thought out procedures demonstrates an understanding of how workflow will be handled. This ensures that no time is wasted duplicating roles or dealing with confusion internally about responsibilities. The organization chart visually represents the accurate current administrative structure of your business clearly illustrating the hierarchy within your organization. It is then easy for readers of your business plan to easily understand how your business is organized as well as the lines of communication.

A well defined organizational structure ensures that your business functions effectively and that there is clear accountability. It includes information about your board of directors showcasing governance and oversight. A qualified board significantly enhances the credibility of your entity appealing investors. 

How to write the Organization and Management Section of a Business Plan 

Writing the organization and management section of a business plan is a step by step process. The steps are made up of the components of the section such as outlining the organization hierarchy, introducing the leadership team and  explaining the departmental structure. Break the organization and management section into two segments.

One way describing the organizational structure while the other way introducing the management. When writing about your management team, use a tone that is confident, positive and professional. Keep your audience in mind by being clear on who you are writing the section for. If you are writing it for internal use, you will be more general than when you are writing it for potential investors.

What are the components of the Organization and Management Section of a Business Plan?

Components of the organization and management section of a business plan refer to the elements that make up this section. This guides you on what you should cover in the organization and management section of your business plan. Components of the organization and management highlight aspects of organizing and managing a business such as the organizational hierarchy, leadership team, departmental structure, roles and responsibilities of team members and cross functional teams. Other components include the decision making authority, reporting and accountability, scalability and growth, culture and values as well as succession planning. 

Organizational Hierarchy 

Organizational hierarchy refers to a ranking system where an organization is structured using different levels of authority and a chain of command. It is a system where people are ranked according to how business decisions are made with the highest ranking individuals having more authority than low ranking individuals.

Organization hierarchy provides leadership at each employment level for leaders to focus on the goals and mission of the organization. Start by including the top leadership, middle management and frontline employees. Describe the reporting lines as well as levels of authority within the organization. 

Leadership Team

Introduce key leaders of your organization such as the CEO, executives and managers. Highlight their experience, qualifications as well as their roles and responsibilities in your business.

Outline your leadership philosophy that guides the organization and describe the core values that drive leadership decisions. Explain the leadership style employed by your organization and how these styles align with the entity’s goals and culture.

Departmental Structure

The departmental structure explains how your organization is divided into departments such as finance, marketing, human resources and operations. It refers to how your business delegates tasks and responsibilities to your personnel.

Organizing business functions into departments ensures that operations of your business are completed effectively and efficiently. Clarify the roles of each department.

Roles and Responsibilities

Roles refer to functions that people perform as part of an organization while responsibilities are specific tasks that a person is accountable for to achieve the goals of the organization. Detail the roles and responsibilities of employees in each department.

Clearly outline job titles, the scope of duties and reporting relationships. Defining roles and responsibilities in an organization provides clarity and direction to employees, letting them focus on their core responsibilities. Additionally, it leads to higher output as employees take ownership of their responsibilities.

Cross-Functional Teams

Cross functional teams are groups of people drawn from different departments in an organization who work together to achieve a common project. Cross functional team members have different skills and knowledge sets and the goal is to create synergy and leverage the collective expertise of members. They help to identify potential risks and opportunities and will efficiently and collectively  tackle problems.

Mentioning cross functional teams in your business plan shows investors that you have a team that quickly develops creative solutions to address challenges that may arise.

Decision-Making Authority

Decision making authority refers to a well defined structure that determines who will manage decisions pertaining to each function in an organization. The decision making responsibility is eventually on managers. However, consensus on who is responsible for decisions in a department is essential for smooth workflow in an organization. Describe the process of decision making in your organization and how major decisions are reached. Include who has the decision making authority at different department levels.

Reporting and Accountability

Reporting refers to voicing complaints against procedures or actions happening within an organization. Accountability is when people in an organization take responsibility for their actions. Reporting and accountability ensures transparency, error rectification and maintaining and trust in an entity. Explain how employees are held accountable for their roles and performance.

Accountability measures include signing performance contracts or performance reviews. Reporting mechanisms include suggestion boxes, hotline services or emails and should be communicated to all employees. Reporting incidents, violations or errors creates learning opportunities as the organization will investigate and put corrective measures.

Scalability and Growth

Scalability refers to the capacity of a business to grow and meet an increase in demand. It is the ability of a business to perform well under an increasing workload.  Growth refers to getting bigger in terms of size and scope for a business.

As your business grows, address how the structure of your organization will evolve. This could be by adding new departments, teams or positions of leadership. Investors assess the scalability and growth to determine if your business has the ability to expand and take on a larger market share ensuring long term viability.

Culture and Values

Culture refers to shared beliefs, behaviors of an organization.It influences how employees interact with each other, their methods of conducting tasks as well as the way they make decisions. Values are the ethical guidelines and principles that an entity upholds.

When designing an organizational structure, you should ensure that it aligns with the culture of the organization. For example, if the values of an organization are teamwork and collaboration then a hierarchical structure will not be appropriate.

Succession Planning 

Succession planning is the process of selecting and developing talent to ensure continuity of crucial roles in an organization. It is a business strategy that entities use to pass leadership roles down to other employees.

Succession planning ensures that your business will continue running smoothly without interruption after key people move away or retire. It requires proper hiring of candidates capable of rising through the ranks and training such employees so that you instill company knowledge and develop their skills. Succession planning cultivates a new generation of leaders hence paving an exit strategy for business owners who want to sell their share of stake.

Communication Flow

Communication flow refers to patterns of communication classified according to the direction of interaction. Information in an organization flows downwards, upwards, horizontally, diagonally and externally. Downward communication comes from supervisors to subordinates while upward communication flows from subordinates when they want to convey their problems to superiors.

Horizontal communication takes place among peers in the same hierarchy level while external communication takes place between a manager and external parties such as suppliers. Information should be disseminated effectively to ensure understanding between managers, team members and partners.

When is the Business Plan Organizational structure written?

The organizational and management structure in business planning is written after the  market analysis section and precedes the products and services description. It is written if you have a partnership or limited company because you do not need to include the section in the case of a sole proprietorship.

Organizational structure is written when you want to lay the groundwork for efficient operations of your company. Other components of a business plan include the executive summary, company description, sales and marketing strategy, marketing plan and financial plan.

How long is the Organization and Management Section of a Business Plan?

The organization and management section of a business plan is one page consisting of three paragraphs utmost. However, the length will be determined by factors such as the size of your business plan. The larger your organization is, the longer the organization and management section. This is because a large organization has many employees and departments meaning the organization chart will be long.

The type of business structure also influences how long the section will be. For a company, the organization and management section will be longer because of the hierarchy as compared to other structures like a partnership or sole proprietorship. 

How long should it take to write the Organization and Management Section of a Business Plan?

It takes between  thirty minutes and one hour to write the organization and management section of a business plan because it summarizes information about your business structure and team. However, the time taken depends on factors such as the experience of the business plan writer and the complexity of your business. The more complex your business model is, the more time you will need to write the section.

An experienced business plan writer will be quicker than a less experienced one hence taking a shorter time. The time taken to write the organization and management section is shorter as compared to the one to two weeks taken to write an entire business plan.This is  because of the time taken for extensive research when writing a business plan.

Are professional business plan writers specialists in the Organization and Management Section of a Business Plan?

Yes, professional business plan writers are specialists in the organization and management section of a business plan. They possess a wealth of expertise and experience in writing sections of a business plan to ensure that the section is tailored to meet the needs of investors. They possess skills such as collaboration, excellent writing skills as well as attention to details.

Collaboration skills ensure that they work with you to understand your business structure while excellent writing skills enable them to be clear and make the section flow seamlessly. Attention to details ensures that they don’t leave out important information required to be part of the section.

What are the qualities of professional business plan writers? 

Qualities of professional business plan writers refers to traits that a professional business plan writer should have. They are the elements that you should look out for when hiring a business plan writer. Qualities of professional business plan writers include excellent academic qualifications, outstanding research skills, exceptional writing skills as well as excellent communication skills.Strategic thinking, project management skills, adaptability and confidentiality are additional qualities of  professional business plan writers.

Should business plan experts design the organizational chart for a business plan?

Yes, business plan experts should design the organizational chart for a business plan which outlines your corporate management structure. Business Plan experts have the expertise required to design it such as graphic design and utilizing online software. They will collaborate with you to create a chart that suits your organization. Additionally, business plan experts have the experience of designing an organizational chart having worked with other clients and understand the intricacies of various organizations.

Example of an organizational chart in a business plan 

An example of an organizational chart is an illustration of how an organizational chart looks like. Sample business plans are found online and are editable so that they fit your requirements. There are organizational chart templates which provide guidelines and instructions on how you should create one for your organization. 

Organizational chart in a business plan example