What Different Departments does a Business Need?

Michael Pollick
Michael Pollick

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.

Most businesses need an accounting office.
Most businesses need an accounting office.

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.

Human resources staff interviews and evaluates potential new staff members.
Human resources staff interviews and evaluates potential new staff members.

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.

Some operations supervisors may oversee inventory control in a warehouse environment.
Some operations supervisors may oversee inventory control in a warehouse environment.
Michael Pollick
Michael Pollick

A regular wiseGEEK contributor, Michael enjoys doing research in order to satisfy his wide-ranging curiosity about a variety of arcane topics. Before becoming a professional writer, Michael worked as an English tutor, poet, voice-over artist, and DJ.

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Discussion Comments


Well noted! Every new business is growth oriented and competitive by nature, seeking the benefits of having more specialized departments and keeping cost down to maximize investments. It really boils down to starting capital and purchase power.


A great article. Two thumbs up!


i want to know the role of the public relations department and client relations department, and to which department the client relationship department belongs.


short and simple, but very effective article, i must say. Thanks for this!


simple article. thank you for it.


really good article -- ROhini


thanks. it helped me in improvising.


Simple and informative. Thanks.


excellent job to provide the information about the different departments in a nut shell. thank you very much.


Good! Simple yet comprehensive for a beginner like me. Logically developed and easy to understand. Thanks for this article.



what are the different types of functional areas for any businesses such as financial departments, sales departments, administration what other departments does every business need???


Thanks! Very informative to a newbie to biz!

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