You may have heard of Business Development (aka Biz Dev) departments in large organizations, but may not understand what they do or how you can apply their principles to your own business.
To help you get started, take some insights from our conversation with Neil Patel, Volusion’s Director of Business Development. Not only will you learn what business development is all about, you’ll also discover new ideas to supplement your growth.
What is business development, anyway?
Business development is the business unit within an organization that works to create long-term growth and profitability through three main activities. These activities include, but are not limited to, creating meaningful partnerships, establishing business in new markets, and increasing the value of a current customer base.
To be successful at business development, you need to keep in mind that this role is a mix of sales, marketing, negotiations, networking, project management, and contract review. One of the many joys of working in a business development capacity is that you’re provided the opportunity to work with various business units throughout the company, all while being allowed to influence the growth and direction of your business based on current business and market trends.
What are the most common ways for small businesses to start with business development? How do I go about pursuing new market opportunities?
Business development should be a core part of your business’ growth strategy. Every business, regardless of size, should have at least one person responsible for the company’s business development activities, even if it’s in addition to other responsibilities. A great candidate for this role would be an employee who already has connections to the sales and marketing organizations of your company. You should be looking for an enthusiastic, detail-oriented, and self-motivated individual, as this person will be actively “selling” your company to partners and customers.
To get started with business development, I would suggest doing some good old-fashioned research. It’s absolutely necessary that you understand your industry and all of its moving parts before you start making decisions that can affect your company’s growth, and ultimately your revenue.
Here are a few research topics to consider:
- State of your industry
- Where your current sales come from
- New and existing business opportunities
- Competitive and external threats
- New and potentially disruptive technologies or products
Now that you have an understanding of all the factors that may affect your business, it’s time to put them to use. The first step in using this data is to identify new sales or customer markets. Through your research, you’ve probably uncovered that some of your competitors are operating in markets or verticals that you’re not currently selling in.
Before you decide to increase your presence in these markets, ask yourself the following questions:
- Why are your competitors in this market?
- What types of customers are they attracting?
- What is the opportunity in this market?
- What is the return on your investment (ROI)?
- What would I need to do to enter this market?
- Does my core product cater to this demographic, or will I need to create a new product?
- Would I have to change my customer acquisition and/or marketing strategy to enter this market?
Based on the answers to these basic questions, you should be able to quickly determine if it makes sense for you to pursue these new markets. When looking at new markets, you want to make sure that the market will offer you a large customer base to sell to with limited changes to your operational structure (unless the opportunity is large enough). Simply put—find a pond that has lots of fish you can reel in without buying new gear.
How do I determine which companies I should partner with?
Now that you know which markets you should and shouldn’t be operating in, it’s time to take a look at other companies that are already established or successful in those spaces and determine if it makes sense to partner with them.
One of the easiest and fastest ways to increase the reach of your business is to work with companies that have a large customer base that would be interested in your product. As you begin to review potential partners, don’t limit yourself to partners in your industry or business segment. Instead, cast a wide net of potential partners. As you brainstorm companies to work with, think about how they can add value to your customer base while avoiding direct competition, and vice versa.
One fundamental rule to keep in mind when looking at a potential deal is that the best deals have never been done before! There are no bad ideas, and you shouldn’t discard a deal just because it sounds too difficult or odd. There’s no easy way to determine which deals may work best for you and your company—so think big. Early on, it’s important to speak to as many potential partners and explore new markets and verticals.
As you become familiar with your market and customer base, you’ll be able to quickly tell which types of partnerships will work for you. Finally, think of what you’ll be able to offer to your potential partners, as a partnership is a two-way street. For any partnership to be truly successful, both parties will need to be able to walk away from the conversation knowing that they’ve both gained something that otherwise would not have been possible if they hadn’t worked with you.
Last, but certainly not least, keep in mind that not every deal is going to work out, so don’t get frustrated! You may spend months or years working on completing a deal, only to find out days before signing the contract that the deal isn’t in the best interest of both parties. While it may be discouraging to spend a significant amount of time on a deal, only to have it fall apart in the end, don’t let it stop you from pursuing that market with other partners. Use these experiences to help identify why the deal didn’t materialize and any potential ways to work around this in the future. Finally, be sure to always leave a negotiation in a professional manner. You never know, you may end up working with that partner again in the future.
Big thanks to Neil for chatting with us! Still have a few Biz Dev questions on your mind? Feel free to ask away in the comments section below. We’ll be sure to have Neil get back with you.