Business development is extremely important for the life and longevity of a company, but let’s be honest, most people don’t know how to go about doing it correctly. Oftentimes the sales and biz dev teams are one in the same and have no differentiation, but the two practices rest at opposite ends of a spectrum.
Dave Balter, founder of BzzAgent, cofounder of both Smarterer and Intelligent.ly, and some could say an expert on the topic of business development, illuminated the differences between the two last Thursday night in his class “The Business of Business Development.”
Sales v. Business Development
Sales is the idea that you have a product that you’re going to get someone to buy. Salespeople are in the business of closing deals for their company and focus on relatively short term wins and bringing in revenue to the organization. To be good at sales, you must have the ability to find the budget, sell the idea, and be a closer.
“Business Development, on the other hand, is the process of creating partnerships that generate long-term value. Successful business development may not lead to immediate revenue – instead it may foster co-marketing, create a new distribution channel or solve a critical production issue,” says Dave in his recent article on BostInno. Skills for a great biz dev team include researching, listening for the other company’s needs, patience because deals can take a long time, and problem solving.
4 Steps of Business Development
We here at Intelligent.ly love food metaphors, so we like to think of business development like preparing a dinner. The four steps should include:
- Setting the table.
- Planning the meal.
- Preparing to feast.
It’s all about setting a clear vision for the company and mapping out your knowledge. Let’s take a closer look at each step.
Setting the Table
Business development is all about logic and making sure you understand where all the pieces fit together. To make it easier to see the big picture, map your industry and then use that map to bring people to your table via ego traps. Create large segments where you think consumers gather, and then plan those ego traps to call out companies by name. Some of these strategies include using the PRESS to tell your story for you–they have more reach and credibility, and using your blog to create your own content to flag users in it. Just remember, no matter how good you think you are, not everyone feels the same, so don’t act that way–be slick, but humble.
Planning the Meal
“The thing that makes business development fascinating is that the best deals have never been done before. There’s no template, no cookie cutter grind it out approach to making it work,” according to Seth Godin. Take the opportunity here to be creative and explore the plethora of options you have available to grow.
Once you have an idea of what you’d like to accomplish, choose a company from the industry map you created when you were setting the table and then map that organization. Know everyone’s role and then plot out how they all fit together. After you’ve done that, pair the players by matching up your people with theirs. Pair up your employees with their counterparts in the other company and have them interact. Use the phone to send a signal, as it’s more direct and personal than an email.
Beware of the troublemaker that resides in every company. He will screw up the deal if you don’t keep a close watch on him. Make friends with him and use him to your own advantage. Finally, after this is all set, write the brief.
Preparing to Feast
It’s very unlikely that you’re just going to clinch a deal and then everything will be all set and done. It takes time to win someone over, so it’s extremely important map the how. Know your documents:
- MOU – memo of understanding – shows how we are working together
- Terms sheet – really important because it signifies that across their organization, they have enough buy-in
- LOI – letter of interest – says the terms aren’t finalized, but shows they’re serious by sending a letter, terms aren’t finalized, says you should bring this to your board
Run a pilot in this stage and set ways to test the effectiveness of it. Set goals and two KPIs, or key performance indicators. The first one should be a firm numeric goal. The second one can be softer. Based off of those results, you can roll out the real thing.
This is the part of the process where you’re either energized by reaping the benefits of your hard work or you have to take tums as you feel the pain of an unsuccessful venture.
There are a few red flags to watch out for along the way to avoid that type of pain. Time is (often) your enemy. If someone is taking too long to make a decision, it’s usually not a good sign. One shot thinking can also ruin a deal, so you should aim for optimized thinking. Finally, narrow internal knowledge can show that employees are uninformed and that the company may not have clearly defined goals for themselves. Keep those warning signs in mind as you aim to strike a partnership.