Business development is not an event, it’s a process. The basis of business development is about creating long term growth opportunities that delivers long term value in the minds of all stakeholders.
Yet many in small business confuse sales with business development. Often when they speak about business development, they really mean prospecting for new business and growing profitable sales.
What is business development?
Let’s examine what business development really is.
The activity of pursuing strategic opportunities for a particular business or organization, for example by cultivating partnerships or other commercial relationships, or identifying new markets for its products or services.
“Roy brings with him over 17 years in strategy planning and business development”
According to Wikipedia, business development is the creation of long-term value for an organization from customers, markets and relationships.
Business development covers everything from sales and marketing to new product development and even managing strategic relationships with suppliers, customers and potential partners.
Let’s translate what this means into a small business environment.
Unless you have the economies of scale a larger business has, business development takes on a different meaning for smaller businesses.
Let’s look at what business development means to a small business.
Why customers leave
Developing new business is essential for any business because customers will leave, and you must keep replacing them with new customers. In any business there is such a thing as natural attrition. Customers will leave for any one of the following reasons.
- 1 % because they die
- 3% will move away
- 5% find an alternative to your product or service offering.
- 9% will do business with your competition.
- 14% will be dissatisfied with your service
- 68% will leave because of the way they were treated.
Sometimes a small business fails to protect itself by not developing ongoing new business. They rely on a handful of customers or one or two large customers. This is a tremendous risk to a small business for if one of those customers leaves or fails, you could lose 30-50% of your business overnight. Therefore, its imperative to have enough new business in your pipeline to mitigate the risk of customers leaving.
Sales versus business development
Sales should not be confused with business development strategies. Sales is a single component of a business development strategy whereas business development is the entire process. Business development identifies growth opportunities and forms part of an overarching marketing function.
Business development goals includes new product development, new customer acquisition, customer retention, brand awareness, market expansion to name a few.
Sales on the other hand is where a product or service is exchanged for money while maintaining a profit margin. Sales deals with a single output whereas business development covers a broader range of activities.
Sales, marketing and business development activities are not to be confused with prospecting. Let’s examine what prospecting is.
What is prospecting?
Prospecting for new business is the process of searching for potential clients, customers or buyers to develop new business opportunities and grow your sales.
Cold prospects are potential clients, customers and organizations you’ve identified as well-qualified but that have little or no awareness of your company. They can be reached through advertising, public relations, cold calling and networking.
Prospecting is also the art of developing new business relationships where the person later becomes a customer.
Prospecting is the lifeblood of growing profitable sales.
Future proofing the business
Consider the Parthenon with its 8 columns on either end and seventeen along the sides. In spite of the Parthenon beings extensively damaged in 1687, many of these columns are still standing today because of its architecture. It was built in such a way that If one pillar should fail, there were enough other pillars to keep the structure standing.
Prospecting and developing new business, like the Parthenon, not only keeps your sales funnel full of new leads, it protects you against natural attrition. This builds a solid foundation from which to grow a profitable business.
Prospecting can take many forms
Most people when they think of prospecting think of cold calling. Cold calling is only one form of prospecting for new business. The purpose of prospecting is to find out where future clients might be. Developing new business can be achieved through a number of prospecting activities.
- Content marketing
- Personal networking
- Social networking
- Telemarketing and cold calling
- Email marketing
- Webinars and seminars
Developing new business should be a companywide objective
Very often a business owner might leave business development to a designated salesperson. This can be an effective strategy providing you hire the right salesperson who is properly trained in prospecting and the sales process.
If a small business owner can’t afford a dedicated salesperson then business development becomes everyone’s responsibility. Many small business owners underestimate the power of working together as a team to identify winning concepts for the business and brainstorming innovative ideas to develop and grow.
Business development can also incorporate developing and selling new products to existing customers.
Business development strategies
Conduct market research
You need to have a detailed understanding of what market you are in, what the opportunities are, who you ideal customers are and how to reach your market effectively.
In order to make the most of your business development strategies, begin with conducting market research. Understand your industry trends and how your product and service offering fits in with the market.
Develop a Value Proposition
Put together a value proposition that helps you understand who your competitors are and what makes your products and services stand out from the rest. Get to know who your competitors are and determine what your point of difference will be.
Know who your ideal customers are
The quickest way to determine who your ideal customers are is to create buyer personas. Buyer personas are fictional customers that inform you of their age, income, buying habits, what their goals and aspirations are along with where they hang out. By creating buyer personas for your business, you will be able to target both new and existing customers more effectively and use your marketing dollars more wisely.
Understand the power of your brand
Building a fine reputation and image is another major thing to concentrate on. It builds trust and plays a major role influencing them to do business with you.
Everything you do reflects on your brand from the state of a vehicle, signage, website, business cards and even uniforms. Even your place of business creates an image in the consumers mind. As you develop new business opportunities, you also grow your brand equity. Brand equity is like the equity you have in a home. As you build your reputation, trust in your brand equally grows.
Form strategic partnerships
A great business development strategy is to form strategic partnership with other companies to leverage the capabilities of existing successful companies. Seek out companies that supplement your business operations. For instance, if you are bringing a new food product to market but lack distribution, you might form a strategic partnership with a co-packer to expand your distribution. You might even join forces with a competitor on a big project where you both end up in a win-win outcome.
Attend networking events
Never underestimate the power of networking to develop new business. Networking is more than giving out and collecting business cards. Done well, networking offers partnership opportunities, mentoring and referral business. Regularly attending networking events gives you and your brand exposure as you build your reputation.
Look after existing customers
Always, always look after your existing customers. They are an invaluable source of repeat and referral business.
It costs approximately six times more to attract a new customer as it does to keep an existing customer. Stay in touch with them on a regular basis – at least one contact or more every 90 days.
Consistently get their feedback to continue to understand their wants and needs.
On a final note
Developing ongoing new business is a strategic marketing and business objective that will lead to more profitable sales.
In a Nutshell
- Business development is not an event it’s a process.
- Business development differs from prospecting and selling.
- It means pursuing strategic opportunities that creates long term value for all stakeholders.
- Developing ongoing new business protects you from losing customers due to natural attrition.
- Sales is a single output whereas business development is an ongoing strategy.
- Prospecting is the lifeblood of any business.
- Business development future proofs a business.
- Prospecting takes on many forms from advertising, to networking and email marketing.
- Developing new business should be a company wide objective.
Business Development Strategies include:
- Conducting market research
- Develop your value proposition
- Know who your ideal customers are
- Build your brand and reputation
- Form strategic relationships and partnerships
- Attend networking events
- Look after existing customers