What Is Business Development?
In the simplest terms, business development is a process aimed at growing a company and making it more successful. That can include seeking new business opportunities, building and sustaining connections with existing clients, entering strategic partnerships, and devising other plans to boost profits and market share.
KEY TAKEAWAYS
- The overarching goal of business development is to make a company more successful.
- It can involve many objectives, such as sales growth, business expansion, the formation of strategic partnerships, and increased profitability.
- The business development process can impact every department within a company, including sales, marketing, manufacturing, human resources, accounting, finance, product development, and vendor management.
- Business development leaders and team members need a wide range of both soft and hard skills.
How Business Development Works Within an Organization
Business development, sometimes abbreviated as BD, strives to increase an organization’s capabilities and reach in pursuit of its financial and other goals. In that way, it can impact—and also call upon the specialized skills of—a variety of departments throughout the organization.
As the financial services giant American Express puts it, “When it comes to organizational growth, business development acts as the thread that ties together all of a company’s functions or departments, helping a business expand and improve its sales, revenues, product offerings, talent, customer service, and brand awareness.”1
For example:
Sales and Marketing
Sales personnel frequently focus on a particular market or a particular (set of) client(s), often for a targeted revenue number. A business development team might assess the Brazilian market, for example, and conclude that sales of $1.5 billion can be achieved there in three years. With that as their goal, the sales department targets the customer base in the new market with their sales strategies.
Business development often takes a longer-range perspective in setting goals than many sales departments have in the past. As the Society for Marketing Professional Services puts it, “A traditional view of sales is akin to hunting, but business development is more like farming: it’s a longer-term investment of time and energy and not always a quick payoff.”2
Marketing, which oversees the promotion and advertising of the company’s products and services, plays a complementary role to sales in achieving its targets.
A business development leader and their team can help set appropriate budgets based on the opportunities involved. Higher sales and marketing budgets allow for aggressive strategies like cold calling, personal visits, roadshows, and free sample distribution. Lower budgets tend to rely on more passive strategies, such as online, print, and social media ads, as well as billboard advertising.
Legal and Finance
To enter a new market, a business development team must decide whether it will be worth going solo by clearing all the required legal formalities or whether it might be more sensible to form a strategic alliance or partnership with firms already operating in that market. Assisted by legal and finance teams, the business development group weighs the pros and cons of the available options and selects the one that best serves the business.
Finance may also become involved in cost-cutting initiatives. Business development is not just about increasing market reach and sales, but improving the bottom line. An internal assessment revealing high spending on travel, for instance, may lead to travel policy changes, such as hosting video conference calls instead of on-site meetings or opting for less expensive transportation modes. The outsourcing of non-core work, such as billing, technology operations, or customer service, may also be part of the development plan.
Project Management/Business Planning
Does an international business expansion require a new facility in the new market, or will all the products be manufactured in the base country and then imported into the targeted market? Will the latter option require an additional facility in the base country? Such decisions are finalized by the business development team based on their cost- and time-related assessments. Then, the project management/implementation team can swing into action to work toward the desired goal.
Product Management and Manufacturing
Regulatory standards and market requirements can vary across regions and countries. A medicine of a certain composition may be allowed in India but not in the United Kingdom, for example. Does the new market require a customized—or altogether new—version of the product?
These requirements drive the work of product management and manufacturing departments, as determined by the business strategy. Cost considerations, legal approvals, and regulatory adherence are all assessed as a part of the development plan.
Vendor Management
Will the new business need external vendors? For example, will the shipping of a product require a dedicated courier service? Will the company partner with an established retail chain for retail sales? What are the costs associated with these engagements? The business development team works through these questions with the appropriate internal departments.
10 Potential Areas for Business Development
As noted earlier, business development can require employees throughout an organization to work in tandem to facilitate information, strategically plan future actions, and make smart decisions. Here is a summary list of potential areas that business development may get involved in, depending on the organization.
- Market research and analysis: This information helps identify new market opportunities and develop effective strategies.
- Sales and lead generation: This involves prospecting, qualifying leads, and coordinating with the sales team to convert leads into customers.
- Strategic partnerships and alliances: This includes forming strategic alliances, joint ventures, or collaborations that create mutually beneficial opportunities.
- Product development and innovation: This involves conducting market research, gathering customer feedback, and collaborating with internal teams to drive innovation.
- Customer relationship management: This involves customer retention initiatives, loyalty programs, and gathering customer feedback to enhance customer satisfaction and drive repeat business.
- Strategic planning and business modeling: This includes identifying growth opportunities, setting targets, and implementing strategies to achieve sustainable growth.
- Mergers and acquisitions: This involves evaluating potential synergies, conducting due diligence, and negotiating and executing deals.
- Brand management and marketing: This includes creating effective marketing campaigns, managing online and offline channels, and leveraging digital marketing techniques.
- Financial analysis and funding: This includes exploring funding options, securing investments, or identifying grant opportunities.
- Innovation and emerging technologies: This involves assessing the potential impact of disruptive technologies and integrating them into the organization’s growth strategies.
The Business Development Process in Six Steps
While the specific steps in the business development process will depend on the particular company, its needs and capabilities, its leadership, and its available capital, these are some of the more common ones:
Step 1: Market Research/Analysis
Begin by conducting comprehensive market research to gain insights into market trends, customer needs, and the competitive landscape. Analyze data and gather additional information to identify potential growth opportunities and understand the market dynamics.
Step 2: Establish Clear Goals and Objectives
Leveraging that research, define specific objectives and goals for business development efforts. These goals could include revenue targets, market expansion goals, customer acquisition targets, and product/service development objectives. Setting clear goals provides a focus for the business development process.
Step 3: Generate and Qualify Leads
Use various sources, such as industry databases, networking, referrals, or online platforms to generate a pool of potential leads. Identify individuals or companies that fit the target market criteria and have the potential to become customers. Then, evaluate and qualify leads based on predetermined criteria to determine their suitability and potential value.
Step 4: Build Relationships and Present Solutions
Initiate contact with qualified leads and establish relationships through effective communication and engagement. Utilize networking events, industry conferences, personalized emails, or social media interactions to build trust and credibility. As your relationship forms, develop and present tailored solutions that align with the client’s needs. Demonstrate the value proposition of the organization’s offerings and highlight key benefits and competitive advantages.
Step 5: Negotiate and Expand
Prepare and deliver proposals that outline the scope of work, pricing, deliverables, and timelines. Upon agreement, coordinate with legal and other relevant internal teams to ensure a smooth contract execution process.
Step 6: Continuously Evaluate
Continuously monitor and evaluate the effectiveness of business development efforts. Analyze performance metrics, gather feedback from clients and internal stakeholders, and identify areas for improvement. Regularly refine strategies and processes to adapt to market changes and optimize outcomes.
While it’s common for startup companies to seek outside assistance in developing the business, as a company matures, it should aim to build its business development expertise internally.
How to Create a Business Development Plan
To effectively create and implement a business development plan, the team needs to set clear objectives and goals—ones that are specific, measurable, achievable, relevant, and time-bound (SMART). You can align these objectives with the overall business goals of the company.
Companies often analyze the current state of the organization by evaluating its strengths, weaknesses, opportunities, and threats through a SWOT analysis. That can make it easier to identify target markets and customer segments and define their unique value proposition.
A substantial component of a business development plan is the external-facing stages. It should lay out sales and marketing strategies to generate leads and convert them into customers. In addition, it may explore new potential strategic partnerships and alliances to expand your reach, access new markets, or enhance your offerings.
Teams should conduct a financial analysis and do resource planning to determine the resources required for implementing the plan. Once you implement, you should track progress against the key performance indicators (KPIs) you’ve chosen.
Skills Needed for Business Development Jobs
Business development is a fast-growing field across industries worldwide.3 It is also one that calls upon a wide range of hard and soft skill sets.
Leaders and other team members benefit from well-honed sales and negotiating skills in order to interact with clients, comprehend their needs, and sway their decisions. They have to be able to establish rapport, cope with challenges, and conclude transactions. They need to be able to communicate clearly, verbally and in writing, to both customers and internal stakeholders.
Business development specialists should have a thorough awareness of the market in which they operate. They should keep up with market dynamics, competition activity, and other industry developments. They should be able to see potential opportunities, make wise judgments, and adjust tactics as necessary. Because many of their decisions will be data-driven, they need good analytical skills.
Internally, business development practitioners need to be able to clarify priorities, establish reasonable deadlines, manage resources wisely, and monitor progress to guarantee timely completion.
Finally, people who work in business development should conduct themselves with the utmost morality and honesty. They must uphold confidentiality, act legally and ethically, and build trust with customers and other stakeholders.
Why Is Business Development Important?
In addition to its benefits to individual companies, business development is important for generating jobs, developing key industries, and keeping the economy moving forward.
What Are the Most Important Skills for Business Development Executives?
Development executives need to have leadership skills, vision, drive, and a willingness to work with a variety of people to get to a common goal.
How Can I Be Successful in Business Development?
Having a vision and putting together a good team are among the factors that help predict success in business development. A successful developer also knows how to write a good business plan, which becomes the blueprint to build from.
What, in Brief, Should a Business Development Plan Include?
A business development plan, or business plan, should describe the organization’s objectives and how it intends to achieve them, including financial goals, expected costs, and targeted milestones.
The Bottom Line
Business development provides a way for companies to rise above their day-to-day challenges and set a course for a successful future. More and more companies, across many different types of industries, are coming to recognize its value and importance.
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