The Taxonomy of Business Development

What is business development? This is a frequently asked question with as many answers as there are people calling themselves business development professionals. What unifies the discipline of business development is not so much the activities that comprise it, as these are immensely diverse ranging across a myriad of subfields. It is rather the goal or the objective: In one way or another, business development is about implementing business growth opportunities.

Business development involves all tasks and processes concerning both the analytical preparation, monitoring and support of growth opportunities. Of course, growth can be achieved in many ways. There are a plethora of activities, conceptualizations, methodologies, tools, frameworks, models, subfields, and buzzwords employed across industries and geographies when implementing growth opportunities for firms. Thus, it is often difficult to make out what is what with respect to business development.

This paper will discuss and distinguish key concepts of contemporary business development for a more comprehensive and translucent picture of this important yet ambiguous field. A particular interest will be taken into how business development activities differ across company sizes and growth stages, from early-stage startups to fully-grown companies, and the various institutions that can support companies on their paths to growth. Lastly, the value of business development services is discussed from the perspective of small and medium sized enterprises (SMEs).

1. The people of business development

“I do biz dev”, you hear people say frequently. But yes, business development is indeed something that one can do, and the actors of business development are called Business Developers. Business developers can be internal employees hired to identify and expand a company´s business, and their strength lies in their deep insight into the organization they work for. On the other hand, there are external professional service providers, such as management consultants, who leverage their experience from helping other companies develop, identify, and execute growth opportunities. Whether internal or external, individuals of this professional breed are usually generalists by nature with the skills and know-how to collaborate and integrate knowledge and feedback from a company´s functional units such as sales, marketing, R&D, operations, and finance, and in turn synthetize that information into actionable roadmaps, also called business plans. The business plan can be thought of as a formal statement of a set of organizational goals, including the motivations and criteria for why they are attainable, and a plan for reaching the goals. The tools and methods utilized by business developers are countless, yet the objective remains to answer one fundamental question: “How do we make money?”

While business developers work to address how firms can sell more of their products or services and make more money both today and tomorrow, business development activities are typically skewed towards forthcoming business opportunities and strategy. Many sales representatives claim to be business development professionals, but this does not fully capture what business development is. One of the principal activities a business developer does is identify new opportunities. To do so, the business developer must have insight into a range of business related fields, and have access to key information that can allow new parallels to be drawn. First of all, he/she must hold a fundamental understanding of the company in question, stay abreast of industry trends, and monitor the competition. Secondly, but perhaps more importantly, the business developer must be able to take a holistic perspective, use his/her intuition when analyzing results, and show proof of creativity and ingenuity when synthetizing information in order to conclude which next steps the business should take.

Working in business development is an excellent way to develop skills in strategy, negotiations, and managing partner and client relationships. Moreover, the job of a business developer is highly cross functional, as it requires collaboration with various internal and partner-company teams such as sales, engineering, and marketing to ensure that a deal is consummated. Last but not least, if done well, business development can have an incredible impact on the success of a business.

2. The institutions of business development

A common problem facing many firms, regardless of where they are in the company lifecycle, is that they get stuck in the trenches of daily operations, at the cost of conducting business development activities. When strategy and competitive advantage are no longer on top of the agenda, focus is lost and to the detriment of sustainable growth. The balance between running day-to-day operations and continuously developing the business further to hone the competitive advantage a firm holds is indeed difficult to manage. For that reason, there are a multitude of professional service providers in the field of business development. From the birth of ideas to early startups, to small and medium enterprises (SMEs) who seek second stage growth, and all they way to strategy implementation for corporate giants, many institutions exist to support firms in their business development efforts.

There are both niche specialists targeting specific business needs and generalists taking a 360° view of the firm and its strategy and objectives. They come in the form of governmental institutions providing funding and support to entrepreneurs, and private institutions in the form of business angels and venture capitalists, business incubators and seed accelerators, second stage business accelerators, boutique consultancy firms, and large management consulting houses. One way or another, these institutions interact with companies on their growth journey and provide all kinds of resources to support them, including funding and physical work spaces (offices), professional support, advice and mentoring, tools and frameworks, strategy development and operations efficiency, and access to important networks in the business ecosystem.

In the table below a classification of business development institutions are plotted out, based on the various stages in the company life cycle. While there of course exist much overlap between of these fields, it gives an idea of who, how, when and for whom various actors interact with firms on their path to growth.

Business Incubator

The idea of the business incubator is to provide support for the successful development of companies by means of an array of support resources and services, offering a nurturing environment where entrepreneurs can bring their ideas to life. Incubator services often include one or several of the following:

  • Shared office space
  • Marketing assistance
  • Accounting/financial management
  • Access to bank loans, loan funds and guarantee programs
  • Help with presentation skills
  • Business networks and links to strategic partners
  • Access to angel investors, venture capital and debt financing
  • Comprehensive business training programs
  • Advisory boards and mentors
  • Management team identification
  • Technology commercialization assistance
  • Help with regulatory compliance
  • Intellectual property management

The idea is to allow entrepreneurs and start-up teams to focus on their core value proposition and leverage key resources that a growing start-up needs. Incubators often employ a selective screening process assessing the feasibility and workability of the business plan of incubatee prospects before letting hem join the program. While many incubator programs are industry agnostic, 39% of incubators in the United States work only with the high-tech sector. A company spends varying amounts of time in an incubation program depending the type of business and the entrepreneur’s level of business expertise. For example, life science and other firms with R&D cycles require more time in an incubation program service companies. On average, incubator clients spend 33 months in a program.1 Oftentimes, graduation requirements are set by development benchmarks rather than time, such as revenues or number of employees. The successful graduation from a business incubation program typically increases the likelihood that a startup company will stay in business for the long term.

Seed Accelerators / Startup Accelerator Programs

The Seed Accelerator derives much of its characteristics from the business incubator; their services often include pre-seed investments (usually in exchange for equity) and the focus is on business model innovation. In contrast to an incubator, the seed accelerator views the startup period as short, and startups are often supported in cohort batches or ‘classes’ during a seed acceleration program. But accelerators are not considered “protected” nurturing environments, like the business incubator. They bring together entrepreneurs, mentors, and advisors and leave it to the entrepreneurs to figure out how to best take advantage of the opportunity that emerges. Being selected by a seed accelerator often brings notoriety to a firm, and it is a way to quickly create momentum in a startup, as long as the participants have the experience and drive necessary. Often, participants in seed accelerator programs are experienced startup professionals who are accustomed to the process.The assets provided by the seed accelerator come in the form of mentoring, funding and a strong network effect, but there are few or no internal resources, such as back office support functions, internal marketing or legal advisory experts or legal. It is a sink or swim environment.

Second Stage Business Accelerator

Second stage business accelerator services are very different from those of both incubators and seed accelerators. A second stage business accelerator can be thought of a management consulting firm targeting established SMEs looking to boost performance and ensure a continuous and sustainable growth path. Whether young or old, many companies sooner or later plateau in terms of revenue, and the growth bottlenecks vary greatly between organizations. One classic hold-up is the entrepreneur / founder who insists on having a finger in the pie across all decision and actions taken by the company – a sign that the company since long has outgrown the governance structure still in place.

A second stage business acceleration program typically lasts between 3-6 months and it is aimed to assess and improve the entire “business machinery” that a growing organization needs to have in place to succeed. Strategic focus, institutional strengthening, human resource training and financial strategy, are some of the dimensions that a second stage business accelerator may offer. The business accelerator’s emphasis is on accelerated and sustainable growth, and to eliminate organizational, operational, and strategic bottlenecks that prevent the client firm from growing. In essence, a second stage accelerator bears a strong resemblance to traditional management consulting firms, but adjusted to fulfill the needs of SME’s.

Boutique Consulting Firms

Boutique consulting firms offer organizations highly specialized advice that addresses specific problems or aspects of a business. The overall objective is to improve efficiency and increase profits, and the term “boutique” has more to do with the firm’s focus than with its actual size. One firm may consist of a single advisor, while another may have 200+ consultants employed. More specifically, “boutique” most often refers to the niches in which it offers its services. Examples of niches in which boutique consulting firms operate include human resources and staffing, IT, healthcare, business process outsourcing, and accounting. These firms tend to work with private sector companies but also with governmental institutions and nonprofits.

Overall, boutique consulting firms focus on a limited scope of industries, and resolve business issues quicker than large management consulting firms that require more time for a specific project. The solutions that boutique consultants offer also have more immediate impact.

Large Management Consulting Firms

Large management consulting firms offer a more diverse set of services compared to boutique consulting firms and are often international in scope. They target publicly held or large private companies, international conglomerates, international nonprofits, and governmental bodies. Large management consulting firms are able to draw from massive reservoirs of overlapping knowledge and expertise in contrast to the more narrowly focused boutique consulting firms, and can offer a single client support on IT, strategy, operational, human capital, and financial issues. Moreover, they create industry “best practices” by working across a wide range of industries and firms (though it is debatable to what extent such practices are transferable from one organization to another). Yet, management consulting has long been a booming market with numerous players, both large and small, offering their advice to firms.

3. The value of business development services for SMEs

It might be hard to decide if and when to use various business development services. What is the actual value that these services provide? Is it worth the investment in time and money? Given the growth stage in which your company finds itself it can indeed be worthwhile considering employing business development services in one way or another.

Early Stage

If your company is an early startup, the decision for joining an incubator or seed accelerator comes down to your personal confidence in your business model, the strength of your team, your capacity to execute, and not the least your fundraising skills. If you have a credible story, a business that is nicely progressing on its own and access to both finance and the right talent, you are probably just as well off on your own. In fact, entering any of these programs might just become a distraction. These environments can act to divert your attention by lots of related meetings and events with mentors and investors, getting in the way of focusing on your projects. Moreover they can be confusing, having ten mentors provide their own piece of advice; filtering advice can be a daunting task. But if you need help refining your business model or if you are a first-time CEO seeking guidance from proven peers and entrepreneurs, these types of services can be perfect. The likelihood of raising capital is vastly improved through the tight screening process many of these programs employ and the access to a strong investor network that these programs provide access to.

Second Stage

Similarly, if you run a small or medium sized company the determining factor for seeking external help lies more in the assessment of particular needs and issues facing the business and the overall growth ambition of decision makers / the owner. As is often the case, companies reach a certain size and then plateau for months or years, not sure how boost growth and reach the next level. Other companies achieve growth, but then face challenges to manage it as they run into the hurdles of balancing daily operations with business development. Be it a young company recently graduated from an incubator, or an established firm who seek to renew itself, the transformation of an organization into a solid business organization that can make way for sustained growth, involves many challenges:

1. Ensure relevance in the market place

2. Implement a sound governance structure

3. Identify, operate and deliver according to a core competitive advantage,

4. Build the right institutional capabilities and business processes

5. Continuous innovation

These are some of the most common challenges facing small and medium sized companies who seek to the reach to the next level. At this stage in the company life cycle business risk is beginning to decrease and the opportunity for true value creation presents its self, yet the path to that second level can be a long and tricky walk. Using the help from a second stage business accelerator can be one way to overcome these challenges; to (re)establish the entire “business machinery” required to allow growth to take place.

Later Stage

Firms of all sizes will sometimes find that they lack a particular skill or area of expertise, and seek the advice of a specialist. In such instances boutique consultancy firms come in handy to for example support a particular project or give advice on matters related to a specific topic such as law, finance or HR. Larger corporations often make use of larger management consultancy firms to identify existing organizational problems and development of plans for improvement. Management consultants often bring proprietary methodologies or frameworks to guide the identification of problems, and to serve as the basis for recommendations for more effective or efficient ways of performing work tasks. While most large organizations have their own business development staff in-house, external advice is thought to bring a more objective perspective to the table. Moreover, no company can house all expertise internally, thus the advice from external business professionals may at times come in handy.

Concluding Remarks

Just as when buying any service, when contracting for professional business development services it is important to have clear deliverables. A common mistake made by many business developers is to guarantee X% increase in sales or revenue. But we all know that growing a business involves a lot of risk, for which one cannot control. The deliverables should instead be based on activity: actions, engagement, meetings, introductions, opportunities, networks, events etc. Make sure to always discuss details of the engagement process and the scope of the services to be delivered. It is equally important that the paying party commits to the engagement and set out deliverables it needs to comply with. One should bear in mind that outsourced business developers put their relationships on the line to help grow your business and their future is dependent on the success of every client interaction. For that reason it is important for you as a contractor to do your part: come prepared, deliver on your end and be service-minded towards any business developer. Moreover, make sure to match your expectations with the price you pay. If not, the results of the service you are buying will most likely be disappointing.

As we can see, business development comes in many forms and is practiced by a broad set of actors. From the birth of firms through incubators and seed accelerators, to boosting growth for small and medium firms by means of second stage business accelerators, to advising corporate giants through management consulting firms, business development constitute an important element any phase of the company life cycle. Undeniably, business development is a crucial component of a firm’s success – the opportunities forged today will define what the company is doing on tomorrow.

[1, 2] 2006 State of the Business Incubation Industry – National Business Incubation Association (NBIA)

Watching a Business Develop Around You Is a Gift

Are you wasting time getting your business off the ground? The time we spending on building a business is never wasted. Entrepreneurs are consistent in their business efforts. So why does it take some of us longer to see the results? Is there something we’ve missed? No, it is not a race, you will see others there before you and that’s okay. Be happy for them, ask them how they did it. They are happy to share and you maybe surprised at what they tell you.

Everyone can start with the same opportunity, the way you approach it is different. Some of us have a wider learn curve then others. Training is your part of the equation. You have to take what you have learned and act on it. Learning is not a waste of time unless, you think it is. If you feel that it is,your letting your emotions over ride your thinking process. You have to stop giving your emotions power over your decisions. If you are having a negative emotional reaction, it is because your not getting what you want without doing the work that it takes to get there. If you are busy worrying about someone else you will never see what you have in front of you.

People that feel like they are wasting their time are busy complaining. They are not doing what they need to do to get the results they want. They are still hoping that someone will come in and do it for them. Building a business is work. When you feel discouraged, you are not feeling the rewards for your efforts. What are you thinking, you can’t complain and have a positive out look at the same time. Whining is a negative act fuel by emotions. If your personal business development is lacking momentum you are the only one who can change it.

Adding a new training task to your list that will benefit you and make it easier. You can start building up your tool box with positive acts. Volunteer or go out and do an act of random kindness if you want to feel good about something. Only you can move forward, I can’t push you or hold your hand to success. You are the secret to the success of your business or your career. Fitting in to the role as a success person developes as you act on the training and the informed decisions you make. Exercising positive thinking because if you are only putting your toe in to test the water, you may never get in. What I learn today I can use to help someone do what I do. It is part of my business model.

Be too busy to dwell on negativity. Everyone is different so their challenges are different, Waiting for your light bulb moment will keep you in limbo. Everyone that sticks to the training long enough is going to see results. When your moment happens you will be ready because you invested on it. People, you have to carry out the training or it will not work. Entrepreneurs do not get paid for time. They get paid for results. Entrepreneurs really are too busy to worry about your negativity, they focus on whats important.

Watching a business develop around you is a gift. You will see it if you stay positive through the experience, you are the secret to your success so don’t give up. When my business changed, it was when I realised that I am the business. I have to take this to the next level and treat this like a business not a hobby. I am responsible for the decision I made. Most entrepreneurs can tell you when things stared turning around for them. Now when an opportunity comes they are ready. The reason they can do this is because they are positive thinkers that are successful because the took advantage of the opportunity in front of them. They look at it with an open mind and then zoom in on the facts taking emotion out of the decision-making.

Training your mind to take action is the way an entrepreneur’s mind works. You can teach your mind to leave emotion out of your decision-making. You start by training it to take action on facts, so it doesn’t react to emotion. You want it, doesn’t mean you need it. Take some time, up to a day if you need it to make decisions. Give your brain time to wrap around it. Listen to your gut as the facts unfold and you will make the right decision. A business mind will zoom in and out putting their focus on what is the best decision for the business and the people the business supports. Leave the emotions at the door and look at all the ways you can make a positive impact versus a negative one. Celebrate small milestones as much as the big ones, because they keep your momentum growing. Be positive take one day at a time and keep the future where you can see it.

Business Development Advice from the Chair of the ABA Commission on Women

Pamela Roberts, Esq., a partner at Nelson Mullins Riley & Scarborough, has cracked the code to becoming a rainmaker: get active in a big national organization, focus on public service and let the referrals come in. Her story illustrates how any lawyer can do the same; and her questions at the end of the article can stimulate your own success story.

She is no ordinary lawyer. Roberts is the Chair of the ABA Commission on Women in the Profession, a prominent national position that gives her frequent exposure on the wide range of issues facing women lawyers. And she does it while being a mother of four, wife of another partner in her firm and full-time business litigator at a 400-lawyer firm.

Only 17% of women lawyers are equity partners, and most firms have just a lone woman rainmaker – statistics that Roberts finds distressing. “Becoming a rainmaker always been somewhat challenging. It’s so much more challenging for a woman,” she said.

But she herself is active in four local charities, which brought her referrals. She is a regular public speaker before audiences of clients, and she attends trade association meetings in the industries of her clients.

How does she do it all? “I gave up on sleep,” she joked. “Seriously, my husband and I made the decision that by having two people working full time, we have to pay for nannies and support help.” Help is essential, especially when one of your kids is on two traveling soccer teams.

Getting Business from the Bar (or other Organizations)

And so is focus. Roberts pursues activities and passions where she can build relationships. For her it’s been the American Bar Association, where she began more than a decade ago by working her way up the Litigation Section. Her husband gave her an early demonstration of networking.

“I was attending an ABA Litigation section meeting. My husband, who is also a lawyer and avid golfer, was with me and he went out for a round of golf. He came back to lunch with another couple: one, a potential client whom he had been golfing with, and his spouse, who was a litigator attending the ABA meeting. She and I had never spoken though it’s only a group of 200 people! Meanwhile, these two guys played one round of golf and had already exchanged business cards and followed up with notes to each other,” she said.

Roberts devoted herself to the ABA and today is a member of the ABA House of Delegates, the ruling legislative body. She served on the Board of Governors – the ABA’s board of directors – from 2002-2005, and is a former member of the commission on what is today named the Commission on Racial and Ethnic Diversity in the Profession. She was Chair of the Young Lawyers Division and served on the ABA’s Nominating Committee and Special Committee on Governance.

She was following a key rule of business development: to join an organization and become visible in it. “My continuing motive always has been the underlying work,” she said. “I’ve always been a believer in the public service aspect of the ABA.” At the same time she started seeing immediate business benefits, because South Carolina is a small state and lawyers around the country would refer local legal matters to her. “I’m not aggressive about business development in the ABA,” she said. “But certainly, yes, the ABA is a good arena to get referrals. Just like golf or trade association activity, once you’ve worked together with other lawyers you can build relationships.”

To achieve her success, she advises other lawyers: “You must treat bar association membership as you would treat a client: honor deadlines and respect other people’s time and input. It is not only rewarding, but you’ll succeed and will be around a long time and get the opportunities.”

Roberts uses several specific techniques to generate new business:

  • Speaking engagements. “A speech is absolutely a business development opportunity,” she said. “Sometimes it doesn’t even matter what you’re speaking on.” She said it impresses clients if they merely see their lawyer on a panel discussion at an industry event. “The ideal setting is when a client is in the audience and you’re speaking on something important that directly affects the client.”
  • Niche building. The bane of litigators is one-time engagements. Lawyers typically will work with a client on litigation for years, but when the case concludes, so does the relationship. To overcome this problem, Roberts built a niche practice to offer the same service to multiple clients. “I did a lot of securities fraud class action defense work. A lot of them were one-time cases. What I did was parlay my expertise so it worked for other clients. I can say to one client that I did this particular work for two others. That’s how you build a type of expertise into a niche practice,” she said.
  • Referrals from civic boards of directors. Roberts is on the board of the Trinity Housing Corporation, Claflin College, the local YMCA and the local children’s museum. “All four of them are outside the legal profession. They clearly introduced me to civic leaders and opportunities to talk about what our firm did. Those opportunities also led me to meet decision-makers of current clients. Board membership is a great way to solidify both the firm’s relationship and build my own expertise,” she said.

Rainmaking is the key to breaking the glass ceiling that stops women from moving up in law firms. See the other feature articles this month on the same theme. Lawyers who want to smash through the barrier should emulate Roberts’ example, starting with her