When asked what business development means, the answer often turns toward something related to the sales process.
While new business development does involve B2B selling, there’s so much more for a company to consider. Our guide will show you how business development works, what it looks like in each department, and how to create business development goals for your company.
At a glance: How business development works
- Business development is a process for determining how you can improve your company, including its results, financial standing, reputation, and overall value.
- Business development involves more than just sales. Every department has some role to play in planning, deciding, developing, and executing activities that help improve the company.
- Many of the goals associated with business development are also interconnected because one goal can positively impact other areas of improvement in a company, driving even more value.
- Business development is different for every company due to variations in size, scope, purpose, and overall strategic directives.
What is business development?
Instead, it’s a general term for all the ideas, company strategies, and departmental activities that go into improving a business and navigating through the stages of the business life cycle.
That’s why growing sales and company expansion are only some of the many potential business development goals, and why the entire company should be involved in the process.
For example, one company might focus their business development efforts on adding revenue, which means that sales and marketing, as well as product development, may be involved. For another company, business development might involve adding strategic partnerships or expanding into a new geographic territory or service.
With such a diverse set of objectives, business development requires a wide array of skills. These skills include knowing how to develop a strategy, how to understand the market needs and trends, how to close a sale, and how to nurture customers or clients.
How business development looks in each department
From marketing, sales, and product/vendor management to business planning, project management, and finance, numerous departments are involved in business development.
The marketing department is responsible for attracting prospects to help achieve the company’s goal to raise awareness, expand its markets, and raise revenues.
Working in collaboration with sales, marketing produces promotions, campaigns, and content that illustrate why the company can solve a targeted audience’s issues.
The sales team targets certain opportunities to add revenue through leads, market expansion, and service/product development and diversity. They set certain goals to achieve as part of business development in line with the company’s overall strategic objectives.
As such, the sales department puts together a business proposal for each prospect, sends a follow-up email to these prospects, and manages all the information they have on the market and prospects often through tools like a CRM software.
Product and vendor management
A significant amount of work goes into managing business development activities, especially when they reach across geographic lines and involve markets and products. This work typically involves legal, product management, and manufacturing departments that work together to ensure business development in certain countries makes sense and goes as planned.
This business development activity may also include the assistance of outside vendors. These vendors will need to be managed and directed in order to efficiently handle supply chain and logistics issues that are critical to growing the business beyond its present size.
The business planning department often includes executives who must make decisions related to new facilities, manufacturing locations, and additional resources like local talent to assist with the expansion efforts. They work in close partnership with the project management and implementation teams that then execute on what business planning decides.
Working with legal, finance, marketing and sales, and business planning, the strategic partnership takes on the task of determining and identifying local strategic partnership candidates that may help achieve certain business development goals.
Finance plays an integral role in business development in terms of cost savings. In order to improve a business, it’s important to look beyond the sales pipeline and consider what cost-cutting measures can place the company in a better position to take advantage of available growth opportunities.
Finance undertakes internal assessments and audits that look at spending across the company to see where money can be saved on certain tasks and processes and then be better utilized elsewhere to achieve certain business development goals.
The main goals of business development
As you can see, no matter what department, function, or role in a company, everyone is part of business development. To direct the type of work that gets done, you will need to develop some specific goals that link to your focus on company improvement.
1. Increase profitability
Every company wants to turn a higher profit because it means more funds are available to reinvest in processes aimed at achieving other business development goals. The extra money can be used to expand into new territories, create new products and services, and hire more talent.
As we discussed earlier in this business development guide, one of the goals of profitability improvement involves finding ways to reduce operational costs while adding revenue.
Therefore, your goal about profitability might be to reduce rent costs by downsizing into a smaller office and allowing staff to work virtually while focusing on adding a certain number of new clients. In addressing both areas simultaneously, you have a better chance of achieving that increased profitability.
2. Improve customer response time
The faster a company can respond to customers’ needs or address a complaint or question, the more satisfied that customer will be. In turn, that could mean easily repeatable sales that drive revenues for business development objectives. Or, this improvement could lead to these customers telling others about their great experience, which leads to new customer growth.
To improve customer response time, a company will first need to look at why this goal is even part of the business development strategy. Is response time currently lagging because there are not enough customer service team members? Or does it involve a lack of training? Knowing the answers to why customer response time needs improving can then direct the tactics and quantifiable metrics put into place to achieve that business development goal.
3. Drive greater operational efficiencies
This business development goal focuses on improving some aspect of operations that can drive the ability to further develop the business. In doing so, more results can be achieved in less time and with fewer dollars. That frees up time and money that can be spent prospecting elsewhere or used to invest in more salespeople.
A good example is the sales department — this can be an ideal place to look for how efficiency can be improved. Efficiency goals might involve improving the sales closing ratio by a certain percentage or speeding up salespeople’s lead/conversion time by a certain number of hours. As part of the business development goal for operational efficiency, a specific timeline for achievement should also be included.
4. Expand business operations
This business development goal focuses on the physical expansion of your business so you can serve more customers. In this way, it connects to other goals like adding revenues and increasing profitability. You may also be able to gain economies of scale through greater production and negotiate a better rate for materials due to the higher volume.
For example, your expansion goal might be to open a certain number of locations or enter a designated number of countries in the next three to five years.
Spearheading business development
Business development can mean many things to many people — sales, partnerships, customers, new products or services, or additional markets. And all of those things are correct interpretations.
That’s because each of those meanings shares a common purpose: Business development is about creating long-term value for a company through continual improvement.
That improvement can come from the type and number of customers or relationships, markets or territories, products or services, or operational processes. Whatever you determine is the most important area for long-term value is where you should focus your own business development efforts.