Your business development strategy plays an important part in your company’s success. Choose the right approach and you will scale quickly. Make a mistake and you will lose revenue or even market share to a competitor. That’s why it is so crucial.
This guide will walk you through everything you ought to know about business development. You’ll learn about the skills you need to master as a business developer, and some important concepts to understand. Let’s start off with a simple definition.
Definition: Business Development
Business development is the process of identifying opportunities for growth and increased profitability. You can achieve this by reducing expenses, improving productivity, acquiring new customers, or increasing profits from existing customers.
The scope of business development is broad. It is a multidisciplinary skill.
Your approach to growing a business will depend on your company. A coffee shop owner with three staff will have different business opportunities than a multinational company like Microsoft. The ultimate goal for both companies is the same, “to make more money.”
How Is Business Development Different to Sales?
The goal of your sales team is to acquire new customers. Your sales team might generate sales by cold calling customers, email outreach, or networking. The success of your sales team is measured by how many customers they convert.
Business development, on the other hand, covers every part of your business operations.
For instance, you might hire a consultant to identify how to reduce your expenses. Or you might hire a consultant to help you come up with a business development plan to enter a new market or promote a new product.
How is Business Development Different to Marketing?
A marketing team is traditionally responsible for promoting the products or services to your target audience (you might need to create a customer persona if you don’t know your target audience). The marketing team will promote the service across various online and offline channels. Your team will create the marketing material, and ensure that it aligns with brand guidelines.
There is a lot of overlap between business development and marketing. Many marketing departments will combine the roles of a marketer with a business developer. The modern title for that would be a “Growth Hacker”. The growth hacker is responsible for identifying opportunities for growing a business.
Creating a Business Development Strategy: 4 Avenues for Growth
There are four basic growth strategies for business development. The four business strategies are market penetration, product development, market development, and diversification. These are part of the Ansoff Matrix.
Let’s look at each of these four business development strategies in detail:
Market penetration measures how much of your market you control. Essentially, it’s a measure of how you compete against other firms offering the same product or service. For instance, there are several soda products. The market leader is Coca-Cola. Pepsi Cola comes in second, followed by other brands.
Your market penetration will impact your marketing and growth strategies. For example, if you’re the market leader, you will have good brand recognition. Your goal will be to retain your position and watch out for competitors who are trying to steal your market share.
The best way to maintain your position is consistent innovation. Amazon is probably the best example of this. Each new improvement they release makes it harder for a competitor, especially a new startup, to compete.
If you don’t have market penetration, you will need to figure out how to steal market share from competitors. Companies often do this by reducing the cost of a product or service. Or, you might try to create a product or offer a service that is better than the market leader.
An alternative to trying to compete with established market leaders is to try and establish a new niche. That might not be an option for your business. However, it offers the best opportunities for rapid growth. A nice example of a company that took this approach is Clickfunnels. Rather than positioning themselves as a landing page builder, they created the sales funnel software niche. They are the market leader in this niche that they established.
Product development refers to all the stages of bringing a product to market. It starts with coming up with an idea. You then test demand, add features, test, and release the product. Once the product is released, you might then make updates to the product.
The Lean Startup methodology is one of the most important theories related to product development. The basic idea is that you test the demand for your product by releasing a Minimum Viable Product (MVP). You then improve the product once you’ve seen there is a demand for your product or service offering. Startups should use this model.
It’s more difficult for an established company to use the Lean Startup methodology. Releasing a product with a lot of bugs, for example, can result in negative press that can impact your brand reputation.
Market development is a growth strategy for identifying new places to sell existing products. The new market could be a new city, country, or target market. Business development processes can help firms come up with a strategy to enter a market.
Examples of market development, include Amazon trying to enter the Indian market. Or Tesla building an automobile factory in China. Both of these strategies are about finding new customers for existing services and products.
Diversification is where a firm creates a new product for a new market. It is a high-risk growth strategy. Many companies have attempted diversification and failed. For example, Google spent billions of dollars on Google Plus. The product was supposed to compete with Facebook. The product was a failure.
However, diversification can also lead to rapid growth. There are many examples of companies that have pivoted into a new niche and grown fast. Again, Google is a good example. The purchase of YouTube paid off big time. The company is now the dominant player in text search and video search.
Diversification can change your business model. That can be a positive or a negative thing as well. For example, Nintendo originally created card games. They no longer create card games. Diversification completely changed their business.
5 Important Skills Every Business Developer Needs
There are many ways you can get involved in business development. Some of the essential things you’ll need to master if you want to be successful in this field include the following.
1. Ability to Learn Fast
If you want to succeed as a business developer you need to quickly get to grips with how a business works. You should be able to spot business opportunities that can increase profits. Sujan Patel, a successful entrepreneur who manages various businesses had this to say on the topic.
“I think a key part of your success in business will be down to your ability to analyze information and make decisions fast. You won’t always make the right decision, which is why it’s important to assess the outcome and pivot if necessary.” – Sujan Patel, Kickstart Careers
A business developer should have what journalist Thomas Friedman calls ‘curiosity quotient’. Curiosity quotient is the ability to analyze staff, culture, industry, budgets, client’s pain points, etc. Those skills are important. You’ll rely on them when creating a business plan or business strategy.
2. Analytical Thinking
Analytical skills are important. You need to be able to think through business problems and come up with practical solutions. For example, imagine you are hired by a struggling company. Sales are down 50% this year. You would need to identify the cause of this loss in sales and come up with a business development strategy to boost profits.
The ability to come up with an effective strategy will require analytical thinking. You will need to assess a lot of information, consider your competitive advantage, and come up with a strategy that you think would be effective.
3. Think Outside the Box
As a business developer, you need to find effective solutions to challenges. For example, you might need to consider how to attract and retain clients. You’ll need to come up with an improved sales process, and put in place policies and programs that help the company achieve business growth.
You need to generate, prioritize, evaluate and validate your ideas. Then you need to implement your plan. This is known as the innovation management process.
4. Highly Organized
Planning is an important skill. You need to be able to come up with a great plan and execute the strategy effectively. You will need good personal organization skills. After all, you’ll be juggling multiple tasks and often working to tight deadlines.
You also need to be able to organize teams, explain targets, and get everyone working towards a common business development goal. That will require various skillsets.
5. Good Interpersonal Skills
Good interpersonal skills are important for anyone considering a career in this field. Regardless of the size of the business you work for, you’ll be working with various stakeholders. You need to be able to talk with others, listen to their views, and receive suggestions.
Lobbying skills are also critical. Once you have come up with your business development plan, you’ll need to convince people that your suggestions have merit. You have to earn people’s trust to achieve your goals. It’s important to have business development ethics as well.
Is Business Development a Good Career?
A business development career can be challenging and rewarding. There are a lot of consulting companies that look for talented consultants for their business development teams. Many corporations hire specialists.
According to Zip Recruiter, business development staff earn an average annual salary of $70,991. That works out to around $34 an hour, $1,365 per week, and $5,916 per month.
Payscale shares more information about salaries. An executive with less than five years’ experience earns an average annual salary of $54,893. A mid-career executive is paid an average of $71,074. Glassdoor’s data shows that executives can earn over $100,000 a year depending.
Business development can be a path to the top of the corporate ladder. Some organizations, look for people with a background in growing a business for senior roles. Linkedin did a study of over 20,000 employees across 20 countries. Most of the CEOs in their study started their career as consultants.
The primary job function of a CEO was business development. Sales is the secondary function for most CEO’s.
What Should I Study for Business Development?
Most schools don’t offer degrees titled Business Development. There is a wide range of courses that can set you on the towards a career in business development. For example, a degree in economics, finance, marketing, or a related field, is useful.
Many businesses look for people with a graduate degree. A good academic background is essential if you want to join a top consulting firm and lack hands-on business experience. However, if you’re not yet at the point of pursuing a graduate degree, an associate degree in business can still be a valuable stepping stone toward building the necessary knowledge and skills for a future in business development.
How to be Successful in Business Development?
There’s no guarantee you’ll be successful in business development. However, there are a few things you can do to improve your chance of success.
First off, always be a listener and a learner. Spend time learning about things like smarketing. Make sure you understand the ins and outs of an organization before trying to make improvements. It may require patience to get a good understanding of how the business runs. It is only after you understand a business that you should make suggestions.
To be successful in business development, you need to be good at nurturing relationships. You have to learn how to grow and maintain your professional networks.
A willingness to learn from others is also important. Read books from your peers. People like Paul van den Brande, Gennaro Cuofano, Tito Borth, Whitney Kippes, and David Gram, share a lot of great advice. You might also want to join courses over the summer at educational institutions.
Great Books & Useful Resources
There are a lot of great books and other resources for growing a business. You will find content that looks at the theory of running a business. These are often written by business leaders and academics. You will also find personal stories about running businesses.
As a startup business owner, I read a lot of books about business. Some classics you might have heard of include:
- The Lean Startup – Many people in the tech scene talk about this book. The book provides a framework for startups to test the market and grow fast.
- Blue Ocean Strategy – Another great book. This one discusses how to identify business opportunities competitors have overlooked.
- Revels & Innovators: How Rebels & Innovators Create New Categories & Dominate Markets – The authors of this book run a consultancy firm. The authors review the business strategies of billion-dollar companies.
One of the best pieces of advice I can share is the importance of continuous personal development. If you want to learn about how to grow a business, learn from your peers.
I hope you’ve got a lot of value from this guide. The guide provided a basic definition of business development. You also learned some of the skills you will need if you want to run a business or work as a consultant. Finally, we covered the four factors that underpin most business development strategies.