Business development

What Are the Basics Of Business Development?

In the simplest terms, business development can be summarized as the ideas, initiatives, and activities that help make a business better. This includes increasing revenues, growth in terms of business expansion, increasing profitability by building strategic partnerships and making strategic business decisions.

“Business Development Executive,” “Manager of Business Development,” and “VP, Business Development” are all impressive job titles often heard in business organizations. Sales, strategic initiatives, business partnerships, market development, business expansion, and marketing—all of these fields are involved in business development but are often mixed up and mistakenly viewed as the sole function of business development. 

 

KEY TAKEAWAYS

  • Business development encompasses a wide scope of ideas, activities, and initiatives that a business owner and management implement with the goal of making the business better.
  • Business development can include many objectives, such as sales growth, business expansion, the formation of strategic partnerships, and increased profitability.
  • Successful business development impacts every department within a company, including sales, marketing, manufacturing, human resources, accounting, finance, product development, and vendor management.
  • Business developers should be aware of new market opportunities, possibilities for expansion, competitor developments, and the current sources of the company’s revenue.

Understanding the Basics of Business Development

Business development activities extend across different departments, including sales, marketing, project management, product management, and vendor management. Networking, negotiations, partnerships, and cost-savings efforts are also involved. All of these different departments and activities are driven by and aligned with the business development goals. 

For instance, a business has a product or service which is successful in one region, such as the United States. The business development team assesses further expansion potential. After all due diligence, research, and studies, it finds that the product or service can be expanded to a new region, such as Brazil.

 

Sales

Sales personnel focus on a particular market or a particular (set of) client(s), often for a targeted revenue number. In this case, business development assesses the Brazilian markets and concludes that sales worth $1.5 billion can be achieved in three years. With such set goals, the sales department targets the customer base in the new market with their sales strategies.

Marketing

Marketing involves promotion and advertising aimed towards the successful sale of products to end-customers. Marketing plays a complementary role in achieving sales targets. Business development initiatives may allocate an estimated marketing budget. Higher budgets allow aggressive marketing strategies like cold calling, personal visits, roadshows, and free sample distribution. Lower budgets tend to 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, will it be worth going solo by clearing all required formalities, or will it be more sensible to form a strategic alliance or partnership with local firms already operating in the region? Assisted by legal and finance teams, the business development team weighs all of the pros and cons of the available options and selects the one that best serves the business.

 

Project Management/Business Planning

Does the business expansion require a new facility in the new market, or will all the products be manufactured in the base country and then imported into the targeted market? Will the latter option require an additional facility in the base country? Such decisions are finalized by the business development team based on their cost- and time-related assessments. Then, the project management/implementation team swings into action to work towards the desired goal.

 

Product Management

Regulatory standards and market requirements vary across countries. A medicine of a certain composition may be allowed in India but not in the United Kingdom, for example. Does the new market require a customized—or altogether new—version of the product?

 

These requirements drive the work of product management and manufacturing departments, as decided by the business strategy. Cost consideration, legal approvals, and regulatory adherence are all assessed as a part of a business development plan.

 

Vendor Management

Will the new business need external vendors? For example, will the shipping of a product need a dedicated courier service? Will the firm partner with any established retail chain for retail sales? What are the costs associated with these engagements? The business development team works through these questions. 

 

Negotiations, Networking, and Lobbying

A few business initiatives may need expertise in soft skills. For example, lobbying is legal in some locales and may become necessary for penetrating the market. Other soft skills like networking and negotiating may be needed with different third-parties, such as vendors, agencies, government authorities, and regulators. All such initiatives are part of business development.

 

Cost Savings

Business development is not just about increasing sales, products, and market reach. Strategic decisions are also needed to improve the bottom line, which includes cost-cutting measures. An internal assessment revealing high spending on travel, for instance, may lead to travel policy changes, such as hosting video conference calls instead of on-site meetings, or opting for less expensive transportation modes. 

 

Management can implement similar cost-saving initiatives by outsourcing non-core work, such as billing, accounting, financials, technology operations, and customer service. Strategic partnerships needed for these initiatives are a part of business development.

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