Business Development: Everything You Need to Know
If you are thinking of starting your own company, then chances are you will need to do some business development, or hire people to do it for you. But where should you even start? In this article, you will learn more about what business development is, how it applies to overall business strategy, some tips and tricks on how to be more effective at it, and how you can start creating your own business development strategy.
What is business development?
Put simply, business development (BD) refers to the processes, strategies, and tasks intended to increase and expand opportunities within and between different companies. This could mean business expansion, increasing revenue, making strategic business decisions, or improving profitability through strategic partnerships.
More generally, BD is the creation of long-term value for a business from partnerships, clients, and markets. The term can apply to any activity, no matter the size of the business, whether it is a for-profit one or non-profit, which is aimed at ‘developing’ the company in any manner.
Business Development can be conducted internally or externally with the help of a contractor or consultant. If a company chooses to use an external party to do their business development, the activities can be streamlined through Planning Systems, which governments put at the disposal of small businesses to help them.
Furthermore, building strong foundations and a good reputation has been shown to greatly facilitate business development.
What is the difference between sales and business development?
Both business development and sales aim to grow new business. However, there are differences between the two.
BD plays a crucial part in the sales process. The business development department is in charge of leading qualified leads further down the sales funnel. However, business development representatives are not the ones who actually close the deals.
This is where the sales team comes in. The main role of the sales team is to bring in revenue for the business. Sales representatives are in charge of doing product demonstrations, handling negotiations, and closing deals. If the sales and business development teams work together effectively, then it becomes a lot easier to convert prospects into paying customers.
Making a difference between the two roles within your business enables each team to specialise and fully focus on their own function. This means your company will be able to grow a lot more efficiently.
Both sales and business development require similar skills, meaning BD representatives who want to go further down the sales funnel and close deals are perfectly equipped to do so.
Business development across departments
Business development activities span throughout different departments within a company, such as project management, marketing, sales, vendor management and product management. Partnerships, networking, negotiations, and cost-management activities are also a part of it. All these different teams and activities are integral to a business development strategy.
For example, a company is successfully selling a product in the US. The BD department decides to investigate the potential for further expansion. After having done their research, they determine Brazil as a good prospect for expansion.
Let’s take a look at how this business development team’s findings impact other departments within the company.
The sales department will most often focus on a specific set of customers or a specific market, with a revenue figure to aim for. In this example, the business development team determined that the market in Brazil is worth 1.5 Billion dollars in sales over three years. With this goal, the sales department will be in charge of targeting a customer base in Brazil with its own sales strategy.
The marketing department is in charge of advertising and promoting, with the end goal of successful sales of products or services to end-clients. The marketing team will play a part in achieving targets set by the sales team, meaning the sales team might actually include a marketing budget within their own plan. If a higher marketing budget is allocated, then the marketing team can pursue a more aggressive strategy, with personal visits, free sample distribution, cold calling, or even roadshows. If a smaller budget is allocated, then the marketing team will implement a more passive strategy, with online ad campaigns, billboards or print adverts.
Strategic Initiatives or Partnerships
If a company decides to expand into a new market, they need to decide whether they want to do it on their own or through alliances and partnerships with companies already active in the area. With the help of the finance and legal departments, the business development department will have to consider both the benefits and drawbacks of their options and determine which strategy will serve the company best.
Business planning and project management
When going into a new market, the company will have to determine whether they will need new facilities in that region or if their products will be manufactured in the home country to then be shipped to the target country. Shipping the goods might also need new facilities in the target country. The final decision is down to the business development team and based on their time and cost-related analysis. Once this is done, the project management department is in charge of actually implementing these decisions.
Market standards and regulations will vary from one country to another. This means a company might have to change its product around slightly or even design a whole new one in order to conform to specific country requirements.
These requirements will be behind the activities and tasks of the manufacturing and product management teams. They will have to take into consideration things such as costs, regulatory compliance and legal requirements as part of the business development strategy.
When entering a new country, a company might have to consider new external vendors. They might need a dedicated courier service for shipping goods, or it might have to partner up with new retail partners as part of the already-established retail chain in the country. This might incur extra costs which will have to be considered by the business development team.
Lobbying, networking and negotiations
Some businesses, by the nature of their products or services, will be needing experts with soft skills. Some countries allow lobbying, which might be necessary for a company to be able to enter a new market. Negotiation and networking might also be needed with external third parties like government authorities, vendors, regulators and agencies. This is all part of business development efforts.
The role of the business development team isn’t only about market reach, products and increasing sales. They also need to make strategic decisions when it comes to improving the baseline, which accounts for cost-cutting measures. An internal investigation which reveals excessive travelling costs, for example, might lead to changes in company travel policies. The business could decide to host more video conferences or choose more affordable travel options. Management could also decide to outsource non-core activities in order to save money, such as financials, technology operations, billing or customer service.
Business Development Ideas You Can Implement
Business Development ideas are strategies which you can apply to your own business to improve it in a range of different ways. These ideas can help you find great prospects, discover new opportunities, increase brand awareness, and network more efficiently.
Here are a few ideas which can set you on the right path. It is important to remember that every company, its structure, and its staff are different, so some of these ideas might be more relevant to one business rather than another.
Think of new innovative ways to network
It is a truth that cold calling doesn’t work as well as it used to. This means you should think of new ways to network and develop strong relationships with your potential partners and prospects. This could be done through face-to-face meetings at events, trade shows or conferences related to the industry you are in.
Go through your online networks such as your relations on LinkedIn to find potential clients and partners. Contact the people who sign up to your newsletter or complete other forms on your company website.
It can be extremely helpful for prospects if you offer them consultations or assessments. By explaining your goods or services fit in with their own needs, you will help your prospects in their decision to become a partner/customer or not.
On the other hand, conducting assessments or consultations can help you figure out whether they are a good fit for your company or not. This information is just as important, as it will avoid you wasting any more time on them or running the risk of ending up with unsatisfied customers.
Organise sales demos for leads and prospects
Offering a demonstration of your products or services to your leads and prospects will allow them to see how it works in action. Make sure that your demonstration is tailored specifically to your lead or prospect, so that they can have a clearer understanding or how your product or service can serve their own company.
Keep your prospects engaged
It is really important that you keep your prospects engaged, either by calling, meetings, emailing or any other way of communication you might see fit. When you are nurturing your leads, the aim is to give them as much information as necessary about your goods or services, so that they can make an informed decision about whether to make a purchase or not.
By doing so, you will be able to make your content specific to your lead when it comes to product and brand. This means your lead will be better able to see how your products or services can solve their pain points. This will also demonstrate support for your prospect and make them feel understood and heard by your business.
Give your prospects different kinds of content
By putting different kinds of content such as videos, blog posts and social media posts in front of your prospects, you give them different ways of ingesting information. This will make it easier for them to process and understand your brand, services, or products.
It is often much more effective to meet your leads where they are and give them content which they prefer to watch or read. Make sure that all the content you provide is easily accessible and shareable so that they can then forward it onto other staff members. This will make it easier for them to explain why what you offer is the best solution.
Marketing and Communication is crucial
Even if business development is traditionally associated with the sales team within a business, that does not mean that business development activities within the company only involve the sales department. You should make sure you organise regular meetings and maintain open communication between departments that have a part to play in your success, such as product development and marketing departments.
One way to look at it is that the marketing department develops campaigns and content for the audience you are targeting about how your products or services can solve their business issues. So it makes sense that you would want to discuss social media posts, blog posts, website content, and campaigns with them.
You sales representatives and Business development representatives can share the content that the marketing department produces directly to leads. This will help with prospect conversion, as well as help the marketing department figure out if there are any gaps or elements missing for leads.
The business development process
A business development process describes all the different tasks and activities a company will conduct to grow their business effectively, better relationships with leads, increase revenue,… This is what the business development department will be in charge of on a daily basis. This will include everything to do with pleasing clients throughout the buyer’s journey.
By going through the business development process, your employees will gain a better understanding of the company’s goals, targets, present situation, target audience, and more.
By bringing all these elements together and communicating it within your team, you generate a business development strategy which is actionable and will encourage your employees, encouraging both growth and success for your business.
The goal of elaborating a business development strategy is to set achievable targets that enable your company representatives to grow the business, find new prospects, coordinate better with other departments, convert more leads, and seal more deals. Here are a few steps you should follow when thinking about your business development strategy:
1. Write your elevator pitch
You can make initial conversations with leads a lot simpler by preparing an elevator pitch ready to use whenever. Your elevator pitch should make clear your company’s mission and how your goods or services can solve the pain points of your target audience. It should be attention-grabbing and get your leads excited to hear more about your business and what you can offer.
Furthermore, preparing this will help your team decide which elevator pitch is most successful in successfully turning leads into business. You can then use this information and share it within your other departments.
2. Set SMART goals
Establish SMART goals for your team to follow. SMART stands for specific, measurable, attainable, relevant, and timely. By determining this set of goals for your business development plan, you will be able to make sure that they fit in with the wider goals of your business.
3. Do a SWOT analysis
A key role of business development teams is to keep updated on industry and market trends, making sure they have a good understanding of the competition. A SWOT analysis will come in useful here. SWOT is an acronym for strengths, weaknesses, opportunities, and threats. In order to successfully conduct a SWOT analysis, you first need to set a clear goal.
Next, consider what your core strengths are. What is your company best at? It is possible for your company to have multiple strengths, so do not hesitate to list all of them and how these will best influence your customers.
You should then think about your weaknesses. What might put your business at risk? This could be at any level of the company, and could also be influenced by external factors. For example, market demand could increase faster than your ability to provide your services or goods.
After that, consider the opportunities for your business. Here, you should consider the future of your business and what you can accomplish. For example, think about how past partnerships could lead to further ones down the line.
Finally, consider what the threats are to your business. Consider who your current competitors are and who might become competitors further down the line.
Conducting a SWOT analysis will enable you to identify strategies for creating opportunities to grow your business. It will also help you develop new processes and spot weaknesses and threats, which you can prepare for and counter.
4. Decide how you will measure your success
Taking into consideration your SWOT analysis and your SMART goals, you will also have to determine how you want to measure your business development activities and successes.
Here is a list of business development KPIs which are commonly used and will help you measure and understand how your efforts are coming through:
- Lead conversion rate
- Leads generated per month/ quarter/ predetermined time
- Prospect and customer satisfaction
- Company growth
- Changes in revenue
- Pipeline value
5. Determine your budget
The type of business development goals you set for your employees might mean you need to set a budget. Think about the resources you have, how much previous business development strategies have cost, and what other elements you might need (who you need to be involved, what items you need,…)
Here, you should involve the greater team to determine how much you are ready to invest and how much you are able to invest in your business development strategy.
6. Do not forget about your target audience
No matter your goals, you should always remember your ideal prospects and target audience. Evaluate what their needs are and figure out exactly how your company and its products are services will solve their issues.
This is the group which most probably will make a purchase, so make sure your business development plan takes them and their needs into consideration. This will make it easier for your team to then convert more of them and expand your business.
7. Determine an outreach strategy
A key part of business development is identifying new prospects and leads. In order to do this, you will have to decide how you will reach and connect with these potential leads and prospects. You could:
- Cross-sell and upsell
- Organise sponsorships and advertisements
- Use referrals
Measuring your business development progress
The Key Performance Indicators (KPIs) you choose to evaluate your business development strategy will change depending on your business and its sales cycle. The main function of business development is to find new opportunities to sell. One of the easiest ways to evaluate your progress is by looking at your sales pipeline and how it is influenced by the activities of the business development team. You could also look at the number of possible deals that we generated through the business development team’s activities.
Many business development departments will use metrics that are aligned with the company’s overall revenue goals. This means the BD department needs to consistently generate a healthy pipeline of leads and prospects.
Metrics and KPIs will vary from company to company, but some common ways to analyse business development activity are through the number of appointments booked, cold calls, emails sent, or the number of leads generated. A company will generally use CRM software to store all this data.
Using a platform for your online business development
When thinking about your business development strategy, you might want to consider using an online platform. Especially since the start of the COVID-19 pandemic, more and more people have had to work from home and find new ways of doing business that doesn’t require face-to-face interaction. Business development departments have been left untouched.
However, if many companies have had to move towards much higher use of digital technology, it has also raised questions about online security. Indeed, how can you trust someone you have never met?
One way of doing so is by using CONNECTS. CONNECTS is an online business matchmaking platform that enables entrepreneurs to find new leads, prospects and opportunities worldwide. By working with Chambers of Commerce, we ensure that each and every member of the platform has been vetted and meets the high standards set by the Chambers. By using CONNECTS, you can do business wherever you are, with trust.
If you found this article interesting, you might also want to read our article about How Business Continuity Planning Can Help Your Business and our article about How to Write a Business Plan.
Are you an entrepreneur wanting to develop your business? Join our Business Matchmaking Platform and take advantage of a 1-month free trial.