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What type of management structure works best for businesses?

There are many ingredients to producing a successful business. Having a good product or service, favorable market conditions, and a strong business model are just a few of these ingredients. However, Michigan businesses also need to have a solid team of individuals in place to put these factors into operation.

Last week, this blog discussed how a central component of a new business start-up is choosing the right corporate structure. The corporate structure can have a large impact on the operations of a business, including tax consequences and liability for business owners.

Along with choosing a corporate structure, businesses need to decide on what type of management structure will be in place to run the business. The management team will be responsible for the day-to-day operations of the company, including hiring, marketing, accounting, and other responsibilities that must be undertaken to operate a successful business.

There are different types of management structures that can be implemented depending on the size and nature of the company. For instance, a company president is common to oversee operations, along with other officers who play different roles within the business. While the business might be the brainchild of a single individual, it often takes multiple individuals to carry out this plan successfully.

Likewise, businesses need to decide whether to have a board of directors and how that board of directors should be structured. There can be different sized boards, with different responsibilities and degrees of activity imposed upon them and their members.

Ultimately, as with deciding on the corporate structure, the decisions involving management structure will vary from case to case. There is no single right model for Michigan businesses, as what works for one business may not work well for another. As a result, businesses should understand what works best for them before proceeding.

Source: Michigan Small Business Development Center, "Guide to Starting and Operating a Small Business," accessed on Nov. 7, 2015

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