It is shown that biological networks with serial regulation (each node regulated by at most one other node) are constrained to direct functionality, in which the sign of the effect of an environmental input on a target species depends only on the direct path from the input to the target, even when there is a feedback loop allowing for multiple interaction pathways. Using a stochastic model for a set of small transcriptional regulatory networks that have been studied experimentally, it is further found that all networks can achieve all functions permitted by this constraint under reasonable settings of biochemical parameters. This underscores the functional versatility of the networks.