People always ask me, “How important is it to have a small business development plan, Tim?” Well, my answer will always be - it is vital.
Creating a business development plan is a matter of life and death in business.
Oh yes! I believe that without it, business growth is impossible. You will understand what I mean precisely in just a second.
In today’s article, I will discuss:
- The definition of business development.
- The differences and similarities between business development and sales.
- How to create a business development plan for small businesses.
Here we go!
What is Business Development?
Just like any other business term, business development has many definitions.
Here are excellent definitions from a few reliable resources:
According to Novancia, Business School Paris,
Business Development is the art of identifying opportunities, turning them into business and implementing growth strategies, leading to the creation of value for all the stakeholders of the company (employees, customers, partners, suppliers).
According to Scott Pollack,
Business development is the creation of long-term value for an organization from customers, markets, and relationships.
According to Sherrie Lawson,
At its basic level business development is defined as growing a business by making it more competitive, expanding products or services, and/or focusing on specific markets.
Growth and value are the key terms of these definitions.
Now, let me put a personal spin to the definition of business development.
#BusinessDevelopment is a strategy that creates more value and more opportunities to grow a business beyond its current state.
A business development plan extends across different departments, including:
- Strategic partnerships
- Project, products, and vendor management
- Negotiations, networking, and lobbying
- Cost savings
However, who exactly can contribute to business development? I’d say anyone who can suggest a valuable strategic change to the business can contribute towards business development. It could be a business owner or a designated employee working in business development.
If you are the one assigned to business development, then you should have a clear view of the following:
- The current situation of the company in terms of SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).
- The current status of the overall industry and growth projections.
- Competitor progress analysis.
- The customer profile or buyer persona.
- New and untouched markets.
- New lines of business eligible for expansion, which may complement the existing business.
- The long-term view of the proposed initiatives.
- The cost areas and the possible choices for cost-savings.
- Primary sources of sales for current business.
Speaking of sales, is it different from business development? How?
Let's find out in the next section.
Business Development versus Sales
“Oh! so you’re in sales?”
“No! I’m in business dev!”
“Oh no, you ’aren’t!”
“Oh, yes, I am!”
Have you had this kind of conversation? If you have, then you probably ended the discussion with a long face.
Well, sales is different from business development!
Let me explain.
A business development person is responsible for driving qualified leads further down the sales funnel, but he or she DOES NOT close deals.
That’s where salespeople come in.
The primary function of a salesperson is to generate revenue. The salesperson's responsibilities are:
- Qualifying potential customers
- Product/Service demonstrations
- Sales presentations
- Sales negotiations
- Handling sales objections
- Closing the sale
On the other hand, a business development person is responsible for:
- Brand placement
- Market expansion
- New user acquisition
- Brand awareness
- Partnership development
While their respective functions are different, sales and business development aim to achieve the same goal - BUSINESS GROWTH.
The chart below is a nice visual of the typical sales process. If business development is working well, it should make the prospecting part of this process easier.
How to Create a Business Development Plan
Now that we have defined what business development is and business development vs. sales, it’s time to teach you how to create a business development plan.
Creating a business development plan is crucial because it provides focus and direction for where you are headed and what you are trying to accomplish.
Buckle up, and here we go!
Know Where You Are Headed
First thing’s first, identify your goals!
Identifying the business development goals you want to achieve in a specific time - a week, a month, a year - will set your course in the right direction.
The rule of thumb is to identify 3 to 5 business development goals.
If you can’t come up with 3 to 5 goals, here are a few business development goals you might consider:
- Customer Retention
Customer retention lets you measure the level of service that your company provides. The key to retaining customers is to offer an impeccable customer service experience.
- Customer Lifetime Value
Customer Lifetime Value or CLV is the average revenue that you can expect from a customer over the lifetime of their relationship with your company.
- Enter New Markets:
This one could mean introducing a new product or service or penetrating a new market to expand your business.
- External Network Expansion:
This one means finding prospects and increasing visibility from external business organizations, industry associations, or other related groups.
In creating a business development plan, knowing your target market and who your ideal clients are is beneficial.
Here are a few benefits of a focused business development plan:
- It lets you analyze and calculate your prospects to match with your current sales and marketing resources.
- It allows you to create content for every phase of the customer journey that will help increase revenue.
- It lets you create and personalize products or services, specifically for your target audience.
Identify Your Marketing Channels
Once you identify your goals and target market, it’s time to identify the different marketing channels where you can generate the most traction.
Here are some marketing channels you can choose from:
- Inbound Leads - leads created by your website.
- Paid Search Advertising - leads generated by Google Ads.
- Paid Social Advertising - leads created by social media platforms.
- Outbound Leads - leads generated by email campaigns.
- Referrals - leads created by delighted customers, aka Referral Marketing.
- Networking - leads generated by trade shows, events, and conferences.
- Channel Sales - leads created by channel partners.
- Cross-sells - leads generated by selling new products or services to customers.
- Up-sells - leads created by selling higher levels of products or services to customers.
Establish Metrics to Track Your Success
Choosing the right metrics to track is as important as selecting the right marketing channels.
If you choose to track too many metrics, you might be wasting time and money.
Here are five metrics to help you track the impact of your business development efforts:
Reach looks at the overall impact your business has across all your marketing channels. Any channel you use to communicate a marketing message should be included in reach. For example, your email database, blog subscribers, social media followers, and your current customer base.
- Conversion Rate
It is the total number of people who took the requested action over the total number of visitors.
- Number of Leads Generated Per Month
How many new leads came in from phone calls, form fills, emails, referrals, and your website?
- Pipeline Value
This is the total value of all the opportunities in your sales pipeline.
- Sales Revenue
This is the total amount of sales of goods and services less any sales returns for a given period.
Have a Smooth Transition From Business Development to Sales
How you make the transition from business development to sales will depend on how you choose to have each set up within your company.
The end goal is the same no matter what, to have a seamless transition for the customer from business development to sales.
According to Lisa Woods with Managing Americans, there are four ways you can set this up for your company.
In this approach, business development is a component of every salesperson's job. There is a distinction between sales and business development activities, but they are handled under one position.
In this approach, business development is entirely separate from sales. Each department is responsible for its activities and goals.
- Growth Transition
In this approach, sales and business development work together on longer-term opportunities. As business development generates interest from potential clients, sales is there to support their efforts.
- Build & Handoff
In this approach, business development is responsible for building the entire business channel/model before they hand it off to sales.
There is no right or wrong approach here. It's a matter of which one will work best for your business structure.
The important thing is to make sure you eliminate any gaps or shortfalls in the handoff process between business development and sales.
There you go! That’s how to create a small business development plan. That wasn't so hard, was it?
Recommended Business Development Plan Resources
Why Business Development? Finally, a clear definition!
Business development vs. sales: What’s the difference and which should you hire first?
Striking the balance between selling and educating: 5 tips for creating a business development plan
So what do you think about this article? Are you ready to create a small business development plan?
Let's discuss in the comments section below.
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