Business Development Explained: Definition, Strategies, Steps and Skills
Table of Contents
What Is Business Development?
In the simplest terms, Business development is a way to make a company grow and do better. It involves looking for new business opportunities, keeping good relationships with current customers, making important partnerships, and coming up with ideas to make more profit and get a bigger part of the market.
How Business Development Works Within an Organization
Business Development, often called BD, aims to make a company better and reach its goals, especially financially. It involves many parts of the organization and needs specific skills.
American Express, a big financial company, says, “Business development is like the string that connects all the parts of a company. It helps a business get better at selling things, making money, offering products, finding good people, helping customers, and making more people know about the brand.”
For Example
Sales and Marketing
Salespeople usually concentrate on a specific group of customers or a specific market, aiming for a specific revenue goal. For instance, a business development team might study the market in Pakistan and estimate that they can make sales worth Rs 1.5 billion there in the next three years. Using this goal, the sales team develops strategies to attract and sell to customers in this new market.
Business development often plans for the future more than traditional sales approaches. The Society for Marketing Professional Services says that sales are like hunting, while business development is like farming. It means business development takes time, effort and consistency, and the results may not come quickly.
Marketing is responsible for promoting the company’s products and services. It works closely with sales to meet their goals. The business development team, along with their leader, helps decide the right budgets based on the opportunities. More budget allows for aggressive strategies like personal visits, while smaller budgets use passive methods like online ads.
Legal and Finance in Business Development
When a business development team plans to enter a new market, they need to decide if they’ll handle all the legal requirements themselves or team up with existing companies through partnerships. Legal Consultants and finance teams assist in making this decision by analysing the advantages and disadvantages of each option. The chosen approach should benefit the business the most.
Finance also plays a role in cost-saving efforts. Business development isn’t just about growing the market and sales; it’s about improving the company’s profits. If an internal review shows high expenses in areas like travel, changes may be made, like using video calls instead of in-person meetings or choosing more economical transportation options. Additionally, non-essential tasks like billing or customer service might be outsourced as part of the development plan.
Project Management and Business Planning in International Expansion
When expanding internationally, a crucial decision is whether to establish a new facility in the new market or manufacture products in the home country and import them. If choosing the latter option, it’s important to consider whether an extra facility is needed in the home country. The business development team makes these decisions after carefully evaluating costs and time requirements. Following their assessments, the project management and implementation team takes charge to move forward and achieve the set objectives.
Product Management and Manufacturing
Different regions and countries have varying regulatory standards and market needs. For instance, a particular medicine may be permitted in Pakistan but not in the United Kingdom due to its composition. This raises the question: does the new market need a tailored or completely new version of the product?
Product management and manufacturing departments must align with the business strategy to address these requirements. The development plan includes evaluating costs, obtaining legal approvals, and ensuring compliance with regulatory standards. All these factors guide the adjustments needed in the product for successful entry into the new market.
Vendor Management in New Business Ventures
In a new business venture, it’s important to determine if external vendors are needed. For instance, is a dedicated courier service necessary for shipping products? Will the company collaborate with an established retail chain for retail sales? Understanding the costs associated with these partnerships is crucial.
The Business Development team collaborates with the relevant internal departments to address these questions and make informed decisions about vendor engagement. By carefully assessing the requirements and costs, they can effectively manage vendor relationships to support the successful launch and operations of the new business.
10 Potential Areas for Business Development
BD involves various parts of a company working together to gather information, plan, and make good choices. Here are ten areas where business development can play a role, depending on the organization:
- Market Research and Analysis: Studying the market to find new opportunities and plan how to make them work.
- Sales and Lead Generation: Finding potential customers and working with the sales team to turn them into actual customers.
- Strategic Partnerships and Alliances: Working with other companies to create beneficial opportunities for both.
- Product Development and Innovation: Creating new things or improving current ones by understanding what customers want and working with different teams.
- Customer Relationship Management: Keeping customers happy and coming back by making sure they’re satisfied and creating special programs to make them special.
- Strategic Planning and Business Modeling: Making plans to grow the company, set goals, and find ways to reach those goals sustainably.
- Mergers and Acquisitions: Looking at opportunities to join with or buy other companies, then figuring out the best way to make it happen.
- Brand Management and Marketing: Making sure the company looks good to customers, managing advertising, and using online and offline methods to reach people.
- Financial Analysis and Funding: Figuring out how to get finance for the company, whether it’s from Investments, investors, loans, or grants.
- Innovation and Emerging Technologies: Keep updated and see how new and exciting technologies can help the company grow and use them in the right way.
The Business Development Process in Six Steps
The business development process can vary based on a company’s unique needs, resources, leadership, and financial situation. However, there are common steps followed by many companies:
Step 1: Market Research/Analysis Start by thoroughly researching the market to understand trends, customer needs, and competition. Analyse data to find growth opportunities and learn how the market operates.
Step 2: Set Clear Goals and Objectives Based on the research, set specific goals for the business. These goals might include targets for revenue, expanding into new markets, gaining customers, or developing new products or services. Clear goals help guide the business development efforts.
Step 3: Generate and Qualify Leads Use various methods to find potential leads, such as industry databases, networking, referrals, or online platforms. Identify individuals or companies that match the target market criteria and have the potential to become customers. Evaluate and choose leads based on specific criteria to determine their suitability and potential value.
Step 4: Build Relationships and Offer Solutions Reach out to qualified leads and start building relationships through effective communication. Attend networking events, and industry conferences, and use digital platforms to establish trust and credibility. As relationships grow, present tailored solutions that meet the client’s needs, highlighting the benefits and advantages of your offerings.
Step 5: Negotiate and Expand Create proposals that outline the project details, pricing, deliverables, and timelines. Collaborate with legal and other relevant internal teams to ensure smooth contract execution upon agreement.
Step 6: Continuously Evaluate Regularly assess the effectiveness of business development efforts. Analyse performance metrics, gather feedback from clients and internal stakeholders, and identify areas for improvement. Adjust strategies and processes to adapt to market changes and improve results.
Creating a Business Development Plan – Step by Step
To craft an effective business development plan, follow these steps:
- Define Clear Objectives and Goals (SMART): Set specific, measurable, achievable, relevant, and time-bound objectives aligned with the company’s overall goals.
- Conduct a SWOT Analysis: Evaluate the organization’s strengths, weaknesses, opportunities, and threats to identify target markets, and customer segments, and define a unique value proposition.
- Focus on External-Facing Strategies: Outline sales and marketing strategies to generate leads, convert them into customers, and explore potential strategic partnerships and alliances to expand reach and offerings.
- Perform Financial Analysis and Resource Planning: Conduct a thorough financial analysis to determine the resources needed for plan implementation. Plan resource allocation accordingly.
- Develop Actionable Steps: Detail the steps required to achieve the set goals, specifying responsibilities, timelines, and milestones.
- Implement and Monitor Progress: Implement the plan and continuously monitor progress against key performance indicators (KPIs). Be ready to make adjustments and improvements as needed.
- Foster Continuous Improvement: Encourage a culture of continuous improvement within the team, using feedback and results to refine strategies and enhance outcomes.
By following these steps, a business can create a comprehensive BD plan that aligns with the company’s objectives and drives growth and success.
The Bottom Line
Business development offers a pathway for companies to overcome their everyday obstacles and plan for a prosperous future. Increasingly, companies from various industries are recognizing its significance and value.
PFOC offers several services to support business development:
- Engaging with customers to identify product issues.
- Collaborating with the Product Development Team to create desired products.
- Working with Marketing to design new branding and launch strategies.
- Generating potential leads for the sales department.
- Exploring new strategic partnerships to reach customers effectively.
PFOC simplifies the search for comprehensive accounting and finance services. Our main office in Johar Town, Lahore provides practical and efficient solutions for all your accounting and financial requirements. Our experienced tax and finance professionals at PFOC strive to reduce financial stress, making business models more efficient and lucrative while ensuring compliance with current regulations.
FAQs
Why Is Business Development Important?
In addition to its benefits to individual companies good for companies; it also helps create jobs, grows important industries, and keeps the economy progressing.
What Skills Are Crucial for Business Development Executives?
To succeed, business development executives need skills like leadership, vision, determination, and the ability to collaborate with different people to achieve a shared objective.
How Can I Succeed in Business Development?
Success in business development starts with having a clear vision and assembling a strong team. A successful developer also possesses the ability to create an effective business plan, which acts as the roadmap for progress and growth.
What Should a Business Development Plan Contain?
A business development plan, also known as a business plan, should outline the organization’s goals and the strategy to reach them. This includes financial targets, anticipated expenses, and specific milestones to aim for.