How and Why to Create a Small Business Organizational Chart

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An organizational chart is a type of visual aid for businesses of all kinds. It is the representation of the internal work structure, defining employer roles, and upward communications.

If you were looking for a single-cum-reliable source that can give you a solid overview of these charts, you have landed in the right place! This article is an all-inclusive guide on organizational charts, explaining how and why every business should adopt one.


How and Why to Create a Small Business Organizational Chart

How to create an organizational chart?

How to create an organizational chart?

Choose the Appropriate Type:

There are various types of organizational charts to comply with the varying structures of different businesses. In this section, we will be giving you a brief overview of each type, so that it is easier for you to identify the one that is most relevant to your business. This is the first and foremost important step to follow in the process.

Hierarchical Chart

This type of organizational chart is the simplest to create and maintain. It starts with the person in the highest rank and successively goes down to the bottom. People working on different levels are connected with vertical lines and people on the same level with horizontal lines. This one is commonly used by small businesses because of the simplicity and flexibility it provides. As more people will join the workspace, you can input the new members into the chart without any difficulty.

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Matrix Chart

This chart is suitable for businesses where employers communicate with more than one person ranked above them. When working on projects, people often report to a direct supervisor and a project manager. Solid lines are used to connect employees with their direct supervisors and dotted lines are used to demonstrate a not-so-direct yet significant reporting relationship. This is particularly appropriate for engineering organizations where projects are very frequent. It also helps to show a project manager’s link to multiple teams at the same time.

Functional Chart

Functional charts are useful for large organizations that have several operating departments. Leaders of different departments can be identified along with the individuals that report to them. You are recommended to add information such as name, contact info, department, duties, etc. to each worker’s tab. This way you can easily distinguish between people. This chart has a more detailed structure.

Circle Chart

A circle chart consists of rings each of which represents a hierarchy level in the organization. The higher the rank, the closer the individual is placed to the center of the circle. The people in lower ranks tend to be located on the outer layers. This will match well with businesses that encourage open communication. An employee can reach out to any supervisor. There are no fixed connections.

Collect Necessary Information

By now you are aware of the fact that you will be needing a good deal of information to make a complete organizational chart. Therefore, the ideal thing to do would be to make sure you have a record of all employee details. Filling the chart would be easier and faster this way. It is even better if there are photos attached to every worker.

Pick a Good Tool

Once you’re done with data collection and have decided which chart to go for, you should be moving towards application. Yes, you can do it manually but let’s admit it, that won’t be as nice and neat! Also, it will be time-consuming which is not an option for busy people.

There are several tools and software that can be used for this purpose. Some basic tools include MS Excel, MS Office, and MS PowerPoint. A few of the most popularly used software are Edraw OrgCharting, Edraw Max, Creatlely, Organimi, and OrgChart Pro. Some payroll and HR systems generate charts based on the current employee database. Don’t forget to add colors to

Now that you have enough knowledge about creating a chart, let us move on to the benefits.


Why Should you Create an Organizational Chart?

Why Should you Create an Organizational Chart?

Produces a Clear Structure

It is a nice way of illustrating the communication channels present and the respective duties of workers. Making a chart gets you to work on your business structure, which you otherwise might not have done. This way, everyone knows where they stand, what is being expected from them, and more. This is highly suggested for new businesses!

On the other hand, old businesses can also make good use of it. Transparency leads to higher efficiency and speed in an organization. It also results in quality communication throughout the organization.

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A Symbol of Present Status

If you have a well-structured organizational chart, your business is more likely to be viewed in a good light. It shows that you are confident about your business structure and hence have a higher possibility to elevate in the future. It also adds bonus points when receiving loans, because financial professionals would prefer lending to more reliable and promising businesses.

Brings Improvement

When an organizational chart gives you a clear view of your business structure, there exists a possibility that you will end up finding loopholes. Certain things might be out of place, might be necessary or unnecessary. It’s easier to manage things once you know where and what to reorganize.

A Scope for Setting Goals

It is an intelligent move to create more than one organizational chart for your business; one for the present time and one for the future. The latter will be a representation of the type of business structure you wish to obtain overtime. This might keep you well on track. Also, as you would expect the employee numbers to increase with time, this could be a way of marking the empty spots for future reference. Lastly, you can keep backup charts which you can turn to in case of unexpected occurrences.


In conclusion, organizational charts play a crucial role in any business. You might fail to see the importance now but we can assure you that your organization, no matter how small, needs this to be done properly. Thank you for reading!

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