Business Development looks for opportunities to expand the business by evaluating products and markets.
Mergers and Acquisitions (M&A) are a big component of Business Development as well as strategic investment.
It differs from sales in that it’s more strategic, sales is more tactical.
Biz Dev looks for all sorts of deal. From expanding current markets to opening up whole new ones.
There is a marketing component that centers it mostly around place (i.e. the market to expand or go after).
Business Development (BD) has always puzzled me. It’s like a cross between a strategic sales guy and a tactical marketing guru. Defining it seems to restrict it yet the goals are right there in the name — developing new business. In order to develop new business, the BD professional looks for opportunities. These opportunities can be in the companies current market, adjacent market or a completely new one. Whichever it may be (mostly likely all of them), the task of business development strives to keep a steady flow of new business opportunities to feed the corporations growth and innovation.
Deals Are Everywhere
BD looks for deals anywhere and everywhere. Some focus is required but deals can come from the most unlikely places. Being open to different deal structures, markets and strategic plans makes the BD professional more of a frontier-mans as opposed to a more rigid sales or marketing role. Mergers, acquisitions, joint developments or exclusivity are all deal structures that BD can use to get things done.
Keeping the Pipeline Full
The most important thing about BD is the deal flow. Resting on what you have achieved is a dangerous state that dries up the deal pipeline. Deals take time so it’s critical to always be scouting for the next thing to do. Getting deal flow is mostly about being known for doing deals. Word gets around, so doing deals is the best way to get more deals. It also pays to monitor the vast amount of reports, data and conferences that are literally peppered with potential deals.
It’s best to have a dedicated group or job function that does BD. Make it part of marketing or sales or within the business unit management. Doing this will keep them connected to the companies new product development pipeline, potential competitors and customer base. BD takes a while to see results. It’s more of a practical strategy for sustained growth. BD relies on a good mix of being in the right place at the right time, understanding the market dynamics, keeping track of your competitors and knowing what your customers want. All of these things mixed together will provide a constant source of deal flow.
Things To Ponder
Examine your competitors. Which one would you buy if you could? What capabilities do they give you? Write a paragraph on why you should buy them.
Analyze your competitors. Which one would want to buy your company? How would you encourage or protect against them buying you? What other companies might they buy?
What adjacent markets might your company get into via merging with or acquiring another company? Write a paragraph or two on why it would be important to pursue an adjacent market.
Research a recent merger or acquisition that your company or your competitor did. Write a couple of paragraphs about the deal. How does it change the marketplace? What does it buy the purchasing company?
Go have lunch with your companies business development person. Ask them how they find deals. What criteria do they use for evaluating a potential deal?