There is a difference between the departments a new business needs and those it can afford, at least during the start-up phase. As a business grows, the number of departments often grows along with it. The number that a specific business might need also depends on the nature of that company's product line or services. Almost every business needs an accounting department, for example, but others such as R&D (research and development) or public relations may be considered unnecessary or optional.
The evolution of departments in a business closely parallels the evolution of the business itself. Imagine for a moment that two college friends want to start the Acme Widget company. At first, one friend may handle the production side of things, while the other manages sales side. Both may handle the fledgling company's finances, which would be considered an accounting department. Since both of them would be considered officers of the company, they would also have an administrative department to handle paperwork and the legal matters surrounding the business' formation.
All of these sides, or departments — production, sales, accounting and administration — would be immediately beneficial to a new business. If these two original company owners decide to hire a staff to handle these tasks, then a need for a human resources (HR) department may arise. HR would oversee the hiring, retention and performance of future employees.
Meanwhile, the sales department of a growing company often branches into several different departments, such as inside sales, outside sales or retail sales. Promotion of the company may involve creating advertising and public relations departments. The original production department could expand to become more efficient. A shipping and receiving department would keep track of inventory or deliveries, while quality control could ensure that the quality of the widgets remains high.
The challenge for many businesses is to control growth without sacrificing quality or efficiency. A typical business should only have the number of departments it can support financially. As long as the existing departments can handle the company's needs without undue hardship, a growing business should be careful not to expand too quickly. Some functions, such as accounting and sales, may be vital to a company's success, but others such as public relations or creative services are not always financially feasible for smaller businesses.
There is no definitive answer concerning the total number of departments any business needs to be considered viable. Every new addition brings with it some benefits and some liabilities. A new advertising department may improve the name recognition for the business, but the salaries of trained artists and copywriters could be significant as well. The creation of new departments is a topic best served by executive meetings between the owners or officers of a growing business.
