Sales research is the process that sales representatives go through before they do their client outreach. The goal is to remove unqualified leads from the sales process before more time is spent on them. Tools typically involve Google searches, LinkedIn, and company pages. Sales Research Process and Tools Here’s a quick process you can…
What is business development?
Business development is the process of identifying and securing partnership opportunities between organizations. These are typically long-term projects that each firm puts resources towards because the partnership will generate value for each. These can be relationships with your clients, vendors, competitors, or other firms operating near your industry. The goal of many biz dev projects is to grow your firm into a new market.
Who performs business development functions?
Biz dev activities can be performed by a number of roles. Some firms have dedicated Business Development Representatives (BDRs) who research opportunities, find prospects, and qualify them. Other firms (typically smaller ones) encourage their outside sales reps to engage in initial biz dev activities. The smaller the firm, the more business development is concentrated at the top of the org chart.
Is business development sales?
That’s a vague answer, but it’s difficult to nail down the differences. Biz dev is similar to sales in that it requires relationship building and management, and you actually are selling the value of the partnership. Biz dev managers also typically use pipeline management software or CRMs and they have target “customers” just like sales teams. The thing is, they’re not just selling the firm’s product or service, they’re selling the firm’s entire set of capabilities.BUSINESS DEVELOPMENT IS ABOUT FINDING SYNERGIES AND SELLING THE OTHER FIRM ON THE FACT THAT THESE SYNERGIES WILL PROBABLY PAN OUT.
It differs from sales in that there aren’t quotas or really defined, repeatable processes. Biz dev also has a much broader scope than sales.
Business development examples
Here are a few examples of how biz dev can be implemented and how the deals could affect various functions and departments.
Partnership description: A CPA firm and a law firm both want to attract new startups as clients. They decide to partner and offer one another’s services as a package deal to all new startups who sign with either firm. They create the package offer and a marketing campaign and secure new startup clients through this blended offer approach.
Value description: Each firm gains additional clients who may not have chosen them had they not had a full-service offer. The clients get a better experience by using the two firms who are used to working with one another than they would using two separate firms.
Who it impacts: This kind of deal will directly impact the operations side of each business, along with marketing, and IT. It needs to be structured in a way that allows clients to easily find the offer, sign up for it, and work with the respective professionals.
Partnership description: A really good micro-brewer has been hearing from their customers that they’d really like food options, but that’s not the brewer’s specialty. They’re friends with the owners of a locally loved deli that’s located on the other side of town. They decide to partner up and offer a small deli menu at the brewery and an assortment of bottled brews at the deli.
Value description: Both the companies benefit from greater exposure and a greater customer experience at each location without the risk of setting up an entire new location themselves.
Who it impacts: This kind of partnership primarily impacts operations (specifically distribution for the brewer, and staffing for the deli), and marketing.
Partnership description: A management consulting firm notices it is spending a lot on outsourced IT services to implement many of the changes it suggests to clients. It realizes it can save the margin it’s paying to these firms by brining those operations in house. Unfortunately, it doesn’t possess the necessary skill sets or knowledge bases to do this by itself. So it acquires one of the smaller firms it used to outsource these activities to.
Value description: The management consulting firm saves money by bringing the IT operations in house and it also updates the IT offerings to better fit with its own offerings. The IT firm gets a comfortable exit while many executives stay on to operate their business inside the management consulting frim as a new division.
Who it impacts: Significant acquisitions have an enormous impact on the companies involved. Everything from sales, to operations, to accounting, to marketing is impacted for both firms. Special care needs to be taken to ensure a smooth transition and that the expected value is generated.
Types of business development
There are many different types of business development. Here is a high-level list of the main types:
Partnerships – Strategic partnerships can allow you to expand sales to new markets, reduce costs, or develop new products among other things.
Investments – Investing in growing firms in and around your market can provide strategic benefits later on.
Acquisitions – Acquiring another firm can enable revenue growth, cost reductions, ensure resource supplies, or provide product capability expansion.
Business development process
Your success with your biz dev efforts rests almost entirely on the research you perform at the beginning. The core of biz dev is creating win-win scenarios and to do that, you need to know a lot about your market, your business, your potential partner’s market and their business. This is why biz dev strategies are typically crafted by experienced industry veterans and analysts. Here’s a quick list of some key questions to answer at the start of your process:
What is the profit profile of your firm and is that normal for the industry?
Where does your firm derive most of its profit?
What are the main revenue and profit strategies currently being employed by your firm?
What are your firm’s true capabilities?
Where are your firm’s weak spots?
What do your firm’s customer profiles look like?
What are the main opportunities available to your firm?
What are the main threats posed to your firm?
What’s your firm’s required return on investment for new projects?
What is the current state of your industry?
Where is your industry headed?
What are things that firms in your industry typically do well?
Where are firms in your industry typically weak
What are the big opportunities in your industry?
What are the big threats facing your industry?
Who are your key competitors?
What is their customer profile?
What is their profit profile?
Your target market
What is the current state of this industry?
Where is this industry headed?
What are things that firms in this industry typically do well?
Where are firms in this industry typically weak?
What are the big opportunities in this industry?
What are the big threats facing this industry?
Who are the big players in this industry?
What is required to enter this industry?
What are the ways my firm’s capabilities could impact this industry?
What ways would my sales and operations need to change to participate in this industry?
What companies in this industry could my product compliment?
Keep in mind these questions are starting points to get your research moving. With any potential deal, there will be many more questions specific to that deal.
At this point you’re very comfortable with the research you’ve done, and you have a solid idea of who can benefit from a partnership and specifically how they’ll benefit. Similarly to sales outreach, your best bet here is an introduction. Business development deals are often much more delicate than traditional sales so a “spray and pray” approach is unlikely to give results. They also often require buy-in from top-level decision makers, so perform your outreach accordingly.
This is the part of the process where you flesh out all the details of your partnership idea. This is a delicate part in the process because deals can easily slip away over seemingly small details. Our recommendation is to have a broad structure agreed to before any attorneys are brought on board. Then be sure to negotiate in good faith. If the expected value is large enough (and it should be for all the effort this requires) you should be willing to make small concessions to secure the deal.
Now that the deal is done, it’s time to execute. Be sure your team is fully prepped on the reasoning behind the deal. This understanding will let them make better decisions that support the deal throughout the implementation process. Invite everyone who will be impacted to the table for this.
Finally, be sure to regularly check up on the deal’s progress. Too many firms go through all the trouble of setting up great deals to have them wither on the vine. It’s good practice to set up deal metrics and objectives prior to the implementation stage, and then monitor these throughout the deal’s lifetime.
Business development summary
Biz dev is about making win-win deals with other organizations to provide value to each. It is similar to sales but differs in some key ways. Research plays an incredibly important part in the process so be sure to expend ample resources here. Finally, remember to track your deal’s metrics to determine how successful it was.