Life in Business Development at a Startup. How it’s Different from Sales.
Do you want to enter the exciting world of Business Development during a startup? If so, congrats!!! the great news is that it’s an unbelievably rewarding career within the tech world that involves an excellent deal of strategic thinking. The bad news is that for several companies Business Development may be a sexier name for sales. At some point within the last 5–10 years, Business Development as a career became intertwined with sales.
That’s unfortunate because it results in confusion for people looking to urge into Business Development and limits its scope. Business Development may be a highly strategic function during a startup that permits you to develop hypotheses about markets/tech trends and their potential impact on your business.
Below you’ll find a perspective on what Business Development actually means, how it’s different from Sales, and the way successful Business Development professionals spend their time.
Definition of Business Development
To get a far better sense of what Business Development entails, it’s useful to require a step back and define what it means.
Business Development is the identification of opportunities, either externally or internally that drive growth for the corporate. this is often done mostly through third-party partnerships, but it also can involve evaluating new business/product lines and company development.
To be clear:
Business Development = New Opportunities in existing markets with existing products that leverage partners.
Corporate Development = New Opportunities in new or existing markets with M&A. counting on the stage of the corporate, Business Development responsibilities may include Corporate Development.
Product Development = New Opportunities in new or existing markets with new products. Business Development works closely with Product as they need an excellent perspective on what’s happening within the market. Business Development is often valuable in recommending /evaluating potential new business/product lines.
In summary, Business Development spends time working with the groups above to assist identify new opportunities in new or existing markets with new or existing products.
Difference between Business Development and Sales
Business Development as a term is thrown around quite a bit which results in confusion. In my world, Business Development isn’t sales. There are similarities between the 2 functions (i.e. generating revenue), but Business Development may be a highly strategic sales process that tends to specialize in large-scale partnerships that align with the long-term strategic goals of the corporate.
Most Business Development deals take time to develop and are driven by networking/relationship building, whereas sales are more transactional and have a tendency to involve shorter sales cycles. Sales are about driving revenue today, whereas Business Development is about selectively targeting partners which will have a cloth impact on the expansion trajectory of the corporate. I’m defining growth trajectory as revenue-generating activities or partnerships that add incremental value to a company’s existing product offering.
For example, this might be adding third party data sets or other features to your product to reinforce the user experience, which creates stickiness with the customer. When Business Development is completed well, it can have a serious impact. One of my favorite examples is Yahoo selecting Google in 2000 to be its default program.
So how should Business Development professionals spend their time?
I’m outlining how Business Development folks should spend their time.
- Networking / Relationship Building — You got to be an extrovert and luxuriate in speaking with others. You’ll be sending cold e-mails and having many phone calls/meetings to speak your company’s value to potential partners. Developing relationships is that the lifeblood for a Business Development exec as they cause partnerships and help drive Corporate Development efforts (if you’ve got the coin to spend on Corp Dev). If a corporation is looking to fill a niche in its product offering you would like to be in their consideration set if what you offer meets their needs. If you aren’t, that’s a drag, especially if TechCrunch publishes a story about a few partnerships that XYZ company made with one among your competitors.
- Getting “Stuff” Done, And by stuff I mean deals, More specifically good deals — This seems like a no brainer, but it’s not. In most cases, less is more when it involves Business Development. The cardinal rule for any Business Development professional is……DO NOT BURN YOUR FINITE TECHNICAL RESOURCES!!!!! This was hammered into me early in my career. It’s so important, especially at the first stages of a startup’s lifecycle. Whatever deal you bring forward, it must have concrete value supported by a business case for justifying tech time.
- Competitive Intelligence — The Business Development team is the eyes and ears about what’s happening within the marketplace. They thoroughly understand the competitive landscape and keep the broader organization au courant major initiatives by competitors. Google alerts, Twitter, etc. are your friends. you ought to know what’s happening at an equivalent time or before your organization does by leveraging your contacts, reading news articles, scanning competitor’s job postings, etc. Having a granular understanding of competitors and new tech trends (see #4 below) will aid in your Business Development efforts.
- Being a Futurist — an honest Business Development professional is brooding about the longer term and “connecting the dots” so your company can maximize future technological developments. It’s such a cliche to use the Gretzky quote about skating to the puck. Instead, I’ll use Steve Jobs’ quote speaking about Wayne Gretzky’s quote, so it’s not as cliche.
For example, how does the “Fight for $15” raise impact delivery for restaurants? If you think that it’s getting to cause restaurants to pass along costs to diners, that would reduce delivery demand, which could have a negative effect on online ordering companies’ volume. otherwise, you might imagine it’ll cause restaurants offering their own delivery to try to away with the service altogether. If either of these occurs, you’ll make the business case that developing your own delivery capabilities could also be a worthwhile endeavor, especially if delivery checks the box on other strategic initiatives.
You need to critically believe how technical advances (e.g. AI bots, self-driving cars, IoT, etc.), proposed legislation, etc. may impact your business. From there, you’ll develop hypotheses about how you would possibly be able to cash in of those new trends.
5. Scaling Business Development — Business Development as a discipline is tough to scale, given the number of interpersonal communications that occur. Whenever possible, you ought to use application Interfaces (APIs) to enrich Business Development efforts. APIs are an incredible thanks to getting your product functionality within the hands of other developers/companies as to how to assist in scale your business. A “build it and that they will come approach” with APIs doesn’t work. APIs got to be supported and productized to assist gain adoption. I’m an enormous fan of using APIs to enrich Business Development efforts. Adding functionality to your API will reduce the necessity for personalization in partnership conversations and your tech team’s time.
6. Owning some time — You’ll get plenty of inbound e-mails/calls from people pitching why your company can’t live without their product. 95% of those inbound solicitations are pure noise and an entire distraction. stick with your deal priorities. My favorite e-mail inbounds at GrubHub went something like this……
Hi, my name is [insert ad network rep’s name here]. I’m with [insert ad network name here] and that I have how to fill your advertising inventory at a rate of $x.xx CPM. Would you be interested? If so, I’d like to find a while to attach it.
This would are an awesome opportunity for Swiggy if they only had ad units to be filled within the first place. Is it that tough to try to to a touch of pre-work? Lift finger…press delete button on e-mail.
7. Prioritize, prioritize, prioritize. — I can’t say it enough. You’ll see some crazy e-mails come your way. Enough to create an excellent top 10 list. Stay focused and keep the distractions cornered. Also, confine mind that not everything is of the utmost importance. You’ll haven’t any shortage of parents coming to you saying something like this……” so then the corporate, really wants to be a partner, they are doing XYZ and that they would be great for us to figure with.” You can’t do anything. If there’s one thing I’ve learned in my career is that focus wins (learned from two great co-founders). It’s okay to say no or put something to the side for a later date. As a Business Development Executive, you can’t boil the ocean. You don’t have the time. Again, focus wins.
8. Business Development with an eye fixed towards the exit — Many companies do a poor job of this, largely because they’re heads-down building their business and aren’t necessarily brooding about the exit. The thinking is that if they’re focused on building an enormous business the exit will lookout of itself. There’s truth therein needless to say, but within the current environment of few tech IPOs, the trail to exit for several companies will presumably be to a strategic acquirer.
This is important to risk capital firms looking to urge liquid on their investments. Identifying potential exits for your startup and using Business Development as a way to develop a relationship is advantageous. Corporate Development teams love this path if possible because it provides them insight into a possible acquisition target. It helps to mitigate risk, which may be a major component of all dealmaking.
The Business Development partner path to acquisition happens quite you think that . for instance, Yelp bought Eat24 last year, after a year or two of Eat24 being a web ordering partner on their platform. an honest Business Development exec networks their way into Corporate Development groups to know what they appear for in acquisitions. there’s an unlocked value during this aspect of Business Development.
More to return on Business Development
Hopefully, this post has been helpful to realize a perspective on what Business Development does and the way it’s different from sales. I’m getting to write a couple of different posts on Business Development for those curious about Business Development as a career path. I’ll break it down into the topics below:
- Defining Business Development in startups, and the way you ought to spend some time (today)
- The skills required to achieve Business Development
- Tactics for reaching bent prospective partners
- When to think about adding a Business Development function within your organization
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*Note with an ode to Mark Suster: any spelling or grammar errors during this post were purely intentional and designed to make certain you were actually listening.