Business Development Defined (With Answers to FAQs)
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Business development refers to the process by which companies grow and become more profitable. Understanding this process can help you succeed in many business careers because it can help you understand the context for decisions in your own department, from sales to marketing and finance. This process can also help you further your career and help you become a leader in your field. In this article, we explain business development and why it's important, with an overview of common elements of this area of expertise and answers to some frequently asked questions.
What is business development?
Business development is the process by which professionals create new value for businesses, companies and organisations to increase revenue and profits. This includes developing ideas, coordinating activities and leading initiatives to improve a business' success. They often use key performance indicators (KPIs) to plan strategies and measure their success. This process is often important in the new stages of creating a business and throughout a company's lifespan whenever important, high-level decisions are made.
Why is business growth important?
This process is important because it can help increase a company's financial well-being, increase revenue and boost profitability. Using targeted strategies to reach these goals can often enhance a company's overall success. This important element of strategic planning encompasses almost all parts of a business, including marketing, sales, finance and analysis. When a business succeeds overall, it can have positive implications for all those involved, from leadership to employees.
Difference between development and sales
Business developers and sales professionals are two overlapping yet distinct parts of a company's growth. Both occupy a portion of the sales funnel or the process customers go through when making a purchase. This process involves generating consumer awareness of a product, garnering their interest, motivating them to make a decision and acting on that decision by making a purchase.
Business developers and sales professionals generally specialise in different parts of the sales funnel. The development team works with customers earlier in the process, increasing the brand and consumer awareness and generating and qualifying leads. Sales personnel then work to close each sale and confirm purchases. Sometimes, sales is considered an element of developing a business. When a company includes professionals in both specialities, they may learn more about their own speciality and further increase profits.
Elements of business growth
Developing and expanding a business for maximum profit can involve many complex and interrelated elements. Many of these factors are particular to specific industries and even individual companies. Some aspects of development are common across many different business types and industries. Here are some common elements of business development:
Marketing professionals help grow a business by increasing brand awareness and encouraging potential customers to learn more about their products. In this way, marketing can complement the sales element of a business. Some strategies within marketing include cold calling, sample distribution, print advertising and online methods, such as email and social media campaigns.
The sales division of a business can help drive the company's growth by establishing new customers, retaining current customers and closing sales. This can be an important part of generating revenue and building profitability. Sales professionals often set measurable targets using KPIs and then evaluate their success based on those criteria. The sales team's success can often support strong development for an organisation as a whole.
Deciding whether to partner with other businesses and then developing a strategy for doing so is also an important part of developing the business. When expanding, consider whether it makes more sense to do so independently or by connecting with established companies in a particular geographic or demographic area. Business developers often collaborate with the legal and financial experts on their teams to make these important decisions and drive their company's growth.
Project management is a process that contributes to growth by managing the complexities of specific projects and initiatives. Project managers, like business developers, often work with many departments to achieve their objectives. Here are some examples of business initiatives that may benefit from project management to increase growth and profitability:
Building new facilities
Expanding into new markets
Managing imports and exports
Developing new products
Implementing new technology
Product management differs from project management in that it focuses on a specific product, rather than an entire project as a whole. This important part of developing a business involves managing all aspects of that product. This can include legal matters, logistics, materials and regulatory concerns. Specialised professionals usually collaborate on the product management process as a part of a company's development strategy.
Business developers leverage strong vendor relationships to help facilitate their company's growth and drive profits. Part of their work may include sourcing materials, developing contracts with couriers, tracking costs and overseeing the supply chain. Sound decisions regarding vendors can help drive business growth and increase revenue.
Building relationships with other businesses, customers and even government agencies can also support a business' development. A company may need to participate in lobbying for a cause that is important to their business, for example. Other networking relationships involving negotiation, such as those with vendors, partners and clients, can prove integral to a business' growth.
Managing and minimising overall costs can also help support the development and growth of a business. Fewer costs can sometimes correspond to increased profit, which is one main objective of development. Cost management as part of developing a business often involves identifying costs, analysing spending patterns and modifying policies and procedures to help save money.
Frequently asked questions about developing a business
Here are answers to some frequently asked questions about developing a business:
What are the most important skills and knowledge for a business developer?
Successful business developers usually understand the following:
SWOT analysis: This method of business analysis involves evaluating the company's strengths, weaknesses, opportunities and threats. Developing a business involves knowing the company's status regarding these factors at any given time.
Competitor activity: Strong development strategies can provide a competitive edge against other companies in your industry. It's important to stay apprised of competitors' activity and growth.
Sales profile: Understanding where your current business comes from can help you identify where to focus your next development efforts. This can include geographic locations, demographic information and customer profiles.
Industry trends: To successfully develop a business, it's important to know the most up-to-date information and trends in your industry. This can include projected growth across your sector and speciality.
Business opportunities: Understanding the current state of your market and anticipating market opportunities can help you make strategic business decisions. This can help make your business more profitable.
Creative problem-solving: Professional business developers often encounter complex challenges that affect every aspect of a business. Creative problem-solving strategies and critical thinking skills can help them find effective, innovative solutions.
What's the relationship between business growth and a business plan?
A strategic business plan can help structure your company's vision for growth and development. These plans usually involve every aspect and department within a company and seek to achieve overarching development goals. Business leaders analyse and anticipate all potential outcomes of major business decisions and how they might trigger dependencies between units, such as an acquisition impacting personnel decisions. Here are some other development goals a business might achieve using a business plan:
Creating a new line of business
Leveraging new partnerships
Developing a new product
Establishing a new sales channel
Expanding into new markets
Negotiating mergers and acquisitions
Are business ethics part of developing a business?
It's important for those working in this aspect of business growth to make decisions in line with their professional ethics and those that support increased revenue and profits. This often means making knowledgeable choices in the context of applicable laws and industry regulations. Business ethics can also help guide decisions in the context of corporate governance, fiscal responsibility and equity in the workplace. Strong, ethical decision-making can help businesses establish trust among the public and build their customer base.
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