What are the basics of business development?
In simple terms, business development can be summed up as ideas, activities and initiatives that help the business become better.
These include increasing revenue, growth in terms of business expansion, increasing profitability by creating strategic partnerships and making strategic business decisions.
“Business Development Executive,” “Business Development Manager,” and “VP, Business Development” are all effective job titles often heard in business organizations.
Sales, strategic initiatives, business partnerships, market development, business expansion, and marketing—all areas involved in business development.
But often they are mixed up and mistakenly seen as the sole function of business development.
Understanding the basics of business development
Business development activities span various departments, including sales, marketing, project management, product management, and vendor management.
Networking, negotiation, partnership and cost-saving efforts are also involved.
All these different departments and activities are driven and aligned by business development goals.
For example, a business has a product or service that is successful in one region, such as the United States.
The business development team evaluates further expansion potential.
After all the due diligence, research and study, it is found that the product or service can be expanded to a new region like Brazil.
Sales personnel focus on a specific market or specific (set) of clients, often for a target revenue number.
In this case, Business Development evaluates the Brazilian market and concludes that $1.5 billion worth of sales can be made in three years.
With such set objectives, the sales department targets new market customers with their sales strategies.
Marketing includes advertising and promotion aimed at successfully selling products to end consumers.
Marketing plays a complementary role in achieving sales goals. Business development initiatives can allocate an estimated marketing budget.
Higher budgets allow for aggressive marketing strategies such as cold calling, personal visits, road shows, and free sample distribution.
Low budgets result in passive marketing strategies, such as limited online ads, print ads, social media ads, and billboards.
strategic initiatives or partnerships
To enter a new market, it would be beneficial to go it alone after completing all the necessary formalities or.
Would it make more sense to form strategic alliances or partnerships with local companies already operating in the region?
With the help of the legal and finance teams, the business development team weighs all the pros and cons of the available options.
And chooses the one that best serves the business.
Project Management/Business Planning
Does business expansion require a new facility in a new market, or will all products be manufactured in the country of origin and then imported into the target market?
Does the latter option require additional facilities in the home country?
Such decisions are finalized by the business development team based on their cost and time-related assessments.
Then, the project management/implementation team jumps into action to work towards the desired goal.
Regulatory standards and market requirements vary from country to country.
A drug of a particular formulation may be permitted in India but not in the United Kingdom, for example.
Does a new market require a customized—or completely new—version of a product?
These requirements dictate the work of product management and production departments in line with business strategy.
Cost considerations, legal approvals and regulatory compliance are all assessed as part of a business development plan.
Does a new business need outside vendors? For example, will shipping of the product require a dedicated courier service?
Will the firm partner with any established retail chain for retail sales?
What are the costs associated with this engagement? The business development team works through these questions.
Negotiation, networking and lobbying
Some business ventures may require expertise in soft skills.
For example, lobbying is legal in some locales and may be necessary to enter the market.
Other soft skills such as networking and negotiating with different third parties such as vendors, agencies, government officials and regulators may be required.
All such activities are part of business development.
Business development is not just about increasing sales, products and market reach.
Improving the bottom line also requires strategic decisions, including cost-cutting measures.
An internal assessment revealing high costs on travel.
For example, changes in travel strategy may include hosting video conference calls instead of on-site meetings or choosing a less expensive mode of transportation.
Management can implement similar cost-saving initiatives by outsourcing non-core work such as billing, accounting, finance, technology operations and customer service.
The strategic partnerships required for these initiatives are part of business development.
What should a business developer know?
Since business development involves high-level decision making, a business developer should provide information on:
- Current business situation in terms of SWOT analysis (Strengths, Weaknesses, Opportunities and Threats)
- Current status and growth projections of the overall industry
- Competitive developments
- Primary sources of current business sales/income and dependencies
- Customer Profile
- New and unexpected market opportunities
- Eligible new domains/products/areas for business expansion, which can complement the existing business
- A long-term approach, especially with regard to the activities proposed
- Cost areas and possible cost savings options
The business development scenario discussed above is specific to a business expansion plan, the impact of which can be felt by almost every unit of the business.
Business development goals can include new business line development, new sales channel development, new product development, new partnerships in existing or new markets, and even merger and acquisition (M&A) decisions.
For example, in the case of a merger, significant cost savings can be achieved by combining the common functions of the production, finance and legal departments of two companies.
Similarly, a business operating from five different offices in the city can be moved to a larger central facility, resulting in significant savings in operating costs.
However, if the new location is not convenient for everyone, will this reduce staffing? It is up to the business development team to assess such issues.
In short, business development involves making high-level decisions based on a realistic assessment of all possible changes and their impact.
Through new ideas and initiatives, it aims to improve overall business prospects that boost the performance of various business units. It’s not a sale;
That’s not marketing; It is not a partnership. Rather, it is the eco-system comprising the entire business and its various segments, which drives overall growth.
Perfect fit for business development
A business developer can be the owner(s) of the business or the employee(s) assigned to work in business development.
Anyone who can make or suggest strategic changes to add value to the business can contribute to business development.
Businesses often encourage employees to come up with innovative ideas, which can help improve overall business performance.
Businesses also seek help from external incubator companies, business development companies (BDCs) and small business development centers (SBDCs).
However, these organizations help in business establishment and necessary fine-tuning only in the early stages of business establishment.
What drives business development activity?
Due to the wide-open scope of business development and activities, there are no standard practices and principles.
From exploring new opportunities in external markets to introducing efficiencies in internal business operations, everything can fit under the umbrella of business development.
Those involved in business development must come up with creative ideas, but their proposals may be impractical or unrealistic.
It is important to be flexible. Employees charged with business development should try to take constructive criticism and remember that it’s a process.
business development ethics
Business ethics includes applying fair and just practices regarding issues such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities.
Laws and regulations often set standards for business ethics, which companies can then choose to adhere to and build on to gain trust and loyalty from customers and market participants.
Why is new business development important?
New business development is important for job creation, growth of key industries and for the economy to move forward.
What are the key skills for a business development executive?
Development officers must possess leadership skills, vision, drive and a willingness to work with diverse people to achieve a common goal.
How can I succeed in business development?
Having a vision and putting together a good team are factors that help predict success in business development.
But a successful developer also writes a good business plan, which becomes the blueprint from which they build their success.
What should a business development plan include?
A business development plan, or business plan, describes what the business’s goals are and how it intends to achieve them, including goals, start-up costs, and target milestones.
Business development can be difficult to define succinctly, but it can be easily understood using the concept of work.
Open mindedness, willingness to do honest and realistic self-evaluation and ability to accept failure are some of the skills required for successful business development.
Beyond the conception, implementation and execution of a business development idea, the end result is what matters most.
Bright minds in business development must be ready to embrace change to achieve the best results.
Every approval or disapproval is a learning experience, better preparing these professionals for the next challenge.