Tips for business development
Most companies believe that business development is easy. They couldn't be more wrong.
In these trying economic times, more and more workers are called up to perform more and more tasks. Once upon the time, companies had the financial luxury of having a CEO, CFO, VP Marketing, VP Business Development, Marcom, etc. Now, with layoffs, firings and the like, fewer people are performing more tasks. Gone of the days where companies have an experienced executive to handle one specific duty. Typically, the VP Business Development (BizDev) is one of the first to be fired. His/her duties are then taken up by either the CEO or the VP Marketing. I personally believe that this is a big mistake as bu siness development – if done properly – can be the key to the future success of any company. But, I digress. Why is the VP BizDev the first to go? Most companies believe that business development is basically easy. But they are wrong. Proper business development is more than just running around trying to drum up new business. You need to be creative, have a thorough understanding of the company’s product, technology, market and competition. You must be highly focused and have the ability to both open doors and close deals.
Today’s Enable is designed to help those of you new to business development area. We provide you with 14 business development tips taken from two different sources. The first eight tips come from iSherpa Capital, a venture capital firm focused on wireless and supporting technologies, and the last six which focus on the partnering aspect of business development come from Chavando Group International, a provider of strategic financial, due diligence and venture capital services.
14 Business Development Tips
- Identify the appropriate market and target the appropriate segments within the market -- Deep pockets; ability to leverage core product from one segment to another without major design/development changes.
- Make sure there exists a market problem/pain that currently demands a solution. Is the problem large enough to justify the price of your solution? Is someone with P/L responsibility willing to pay for the solution? Test: Are you able to clearly delineate a value proposition that gets a customer’s attention?
- Solve the customers problem, don’t just build cool technology. Value is always in the application of the technology, not technology per se
- Have a clear understanding of your value chain. Know who are your partners, competitors, and customers – it isn't always obvious
- Understand where you are in the market cycle, from a timing perspective: new technology, competitors entering, segmentation, consolidation, solutions offering, commoditized, etc.
- Don’t fight the market and where it is in its life cycle – you will lose
- Price based on value of solution, not to undercut competitors. Compete first on functionality, not price. If you truly are the only one solving the customer’s problem, you should be able to price your offering based on value of your product/solution to the customer You compete on price only after the product/solution has become a commodity – end of the life cycle
- Techies should never hire sales people; they don’t know what skill-sets and personality traits to look for. Test: If it's someone who is too aggressive and a person techies don't want to hang out with, it's probably a good sales guy
- Identify the end user of your product or service before you start thinking about Business Development. Even if you do not sell directly to the end users, you should know as much as possible about them. Don't be fooled by the misconception that your target market is "everybody".
- Write a detailed plan of action. Prioritize your opportunities and consider partnering with proven and profitable businesses first. It is very common to see announcements of strategic alliances between companies with so-called "ideas" and not solid business models. Don't invest much time talking to your suppliers or companies you have to pay money to. It is their job to give you the best deal. Always assign a monetary value to the deal before exploring it. Form alliances with companies that will bring you revenue first.
- Learn as much as you can about the potential partner and their competitors before you contact them. Determine how your deal can make your partner's company more profitable. That is, list all the ways in which your proposed joint agreement adds value your partner's business. What holes does it fill in your partner's product/service line? How does the deal enhance your partner company's core business? How will your product attract more customers to your partner company's business? How does "doing the deal" brace your partner against the trends of the industry, for which they might otherwise be unprepared?
- Identify the personal issues. What are the personalities of the people who will be influential in the decision to sign the agreement? What are their personal motivations? Growth/expansion? Hot buttons? Family? Loyalty and commitment to the company they represent? Business process simplification? Eventual merger/acquisition?
- Identify the PR potential of the joint agreement. Why is it hot news? To whom, in particular? How can you leverage these PR possibilities in negotiating the deal? How do they add value to the overall equation? Be careful in announcing so-called "strategic alliances" where only a purchase of equipment or services was made.
- To insure that the partnership will successfully evolve, commit the necessary resources to insure that the deal is implemented and periodically evaluated. Set guidelines and performance metrics as part of the deal. Involve senior management in every step of the way. Assign a single point of accountability for the deal.
- Business development is much more than simply going to trade shows and being a wheeler dealer. Business development is hard work and you must stay focused on the long term. Hopefully the above tips will help you whether you are experienced in biz dev or if the role of business development was thrust upon you due to layoffs, firings or other factors.
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