Business developmentBarry Copeland 07 / March / 20 Visitors: 19
What will you do if a business opportunity appears that seems appropriate for your organization but does not fit into your business model? It may be something strategically attractive where potential opportunities are visible in the distance, but the implementation is not clear to you. It is with such situations that business development begins.
Business development is the functional area of the company responsible for identifying and developing new business areas. All this requires a combination of new products, new markets and new distribution channels.
Business development: what is it?
Business development is to stimulate growth, mainly through the search for new partnerships, categories of customers and business areas. It is like being a researcher who is looking for opportunities even before the map has been drawn.
We list the main stages of the business development cycle with new partners:
search for new strategic relationships;
exploring mutually beneficial opportunities;
development and signing of an initial agreement;
implementation of cooperation;
identification of broader potential from this collaboration.
Suppose you have a restaurant and a new office building opens nearby. You can talk about business development with the management of the building. You can provide attractive discounts for lunch to employees of the building, arrange food delivery to the office, or perhaps the company management is looking for a partner in organizing receptions for important meetings in this office building. The goal of business development is the search for mutually beneficial relations between organizations.
After the field of activity is developed and the conditions are defined, the projects that were launched to develop the business are transferred to various departments of the company for further development. For example, the design department is working on improving the product, the marketing department is developing new conditions to attract more customers in a collaboration environment, etc.
Business development is aimed at identifying growth opportunities through partnerships, developing new relationships and developing long-term opportunities. In small organizations, these tasks are performed by the owner or founder of the company, but as the organization grows, it is often useful for them to have special teams that are able to look beyond the horizon of future relationships with customers, partners and suppliers.
Everything that is new, different or uncertain, but which ultimately leads to a sustainable business, is the basis of business development. Suppose you are developing a weight loss application, and your company is selling this application to consumers. Your business development team can explore partnerships with healthcare organizations that can offer the app to patients. Or with food companies that could print the QR code of your application on their packaging. The idea is to find a way in which the application will help other enterprises, and those, in turn, will help your business.
Why do organizations need business development? Because almost all departments of the company (production, marketing, sales) are focused on working in the current conditions. They sell products with well-known prospects, sell them to established market segments or improve their products for existing customers. Strategic teams plan for the future, but abstractly.
Let's say a shoe company wants to go into a bag business. Initially, the business development team will take the lead in researching the competitors of handbags, building relationships with manufacturers and distributors, and then they will determine how this business can work. They are developing a plan, which may include licensing, pricing, marketing, and sourcing.
As soon as the company is ready to include the production of handbags in its business, business development recedes, and the operating part of the company enters the business. The purpose of business development is to find new ways to expand the capabilities of the organization. Business development specialists review each part of the company's value chain to identify new opportunities and provide the organization with greater flexibility. This is achieved by building partnerships and exploring areas to deepen this cooperation.
Many people believe that business development can be replaced by the development of sales or sales. Most often this happens when sales are advisory in nature, that is, the seller has to spend a lot of time to determine the needs of the client and find the best solution. Whereas, business development is associated with uncertain and new growth opportunities.
Consider the difference between sales and business development. Even if there is some consultation, the role of the seller remains constant. The products and services that he can offer are fixed and the reward plan is predetermined (Fig. 1). For example, a clothing retailer will start any appointment by asking you what you are looking for and what your goals are. What is your budget? Do you pick up clothes for a special occasion? You want to replenish your wardrobe and so on. But the seller is limited to clothes and sells only to consumers, and their plan of bonuses and commissions is defined.
But if you plan to open a pop up store (pop-up store) of graduation clothes near schools or special clothes for a hotel chain, or add nail salons within the walls of a department store, then all this is beyond the scope of the seller.
Since marketers have a tendency to strategic planning and are focused on the future, it is worth considering the difference between this direction and business development. Marketing is the understanding of markets, transferring this information to the rest of the organization, and then, given the corporate strategy, passes it on to potential customers. Everything that is done in marketing should be scalable and consistent. Business development goes beyond mass personalization; in fact, we are talking about interpersonal relationships.
The third large group that is often confused with business development is strategic planning. This is a team in organizations that thinks about the future of the organization and develops a financial plan for a new product and access to new markets. But while strategic planning is focused on financial issues, business development should be connected with the uncertainty of how the business can be implemented, and who, in addition to the organization, should participate.
Business development is faced with many unexpected problems and opportunities, often associated with the unique specific situation of any company. Business development is the missing link between creating an idea and turning it into a regular job.
Currently, there is an increase in advisory sales and sales of solutions that are somewhat similar to business development. Many large consulting firms have people involved in business development who can explore the possibility of adding a new line of business. As part of their research, they conduct customer surveys to understand market needs. In many cases, these meetings lead to short-term business, although this is not the main goal.
For example, when hotels offer car rental. In these cases, the business developer does not actually sell, but supports and encourages both his company and the partner company to join the alliance. Business development in technology companies often means exploring new technologies and how to apply them in the future.
So why are there so many types of business development? Because the development of a business actually means going beyond the ordinary business to identify new ways of its development. And different organizations have different growth strategies: alliances, new technologies, trade partnerships and so on. It is important to understand the scope of any particular organization.
Essential Business Development Skills
It may seem that every organization should have a team aimed at identifying and evaluating long-term strategic goals, but this is not always practical. Some experts recommend investing in business development when income reaches a certain value, from about 2 to 40 million dollars. Others suggest that you need to focus on the number of employees.
If you are starting a new business, then it makes sense to focus on its development within the existing framework, rather than looking for a new business. The company is still trying to build infrastructure and processes.
In many cases, the owner of the company is a natural business developer, always thinking about what will happen next, and is looking for mutual cooperation with everyone with whom he comes into contact. The hiring of employees for business development usually occurs after the main business is flourishing, processes are established, and unformed, but interesting ideas regarding growth begin to appear among the company's management.
Who are these business development people? Such people are very curious and love to learn new directions. Each new transaction in the field of business development, returns a person to the very beginning of the learning curve. This means that a lot of homework is required, reading industry materials, attending conferences, and even attending classes. They are extroverts, like to communicate with people and learn different options of one process. People involved in business development are always looking for opportunities, and new contacts bring new opportunities and new ideas.
They should be able to quantify the benefits, possess analytical and research skills. Ultimately, they must make deals. But unlike sellers, they are not aimed at the quick implementation of the transaction, since it is more efficient to spend more time on exploration.