Business Development for Early Stage Startup Founders
The term Business Development has become one of the most generically used in the business world. Ask ten companies what their “Business Development” team does and you’ll get ten different answers.
Business Development is not Sales
This post isn’t about clarifying organizational terminology. As long as your company is covering the functions needed to grow your business, call your teams whatever you want. (It does however make recruiting easier if you’re clear on functional descriptions). And for job seekers looking for that ‘sexy’ Biz Dev role – be sure to dig into actual job responsibilities. Don’t rely solely on a position title to understand what you’ll be working on.
So what is Business Development?
Sales focuses on activities directly tied to sales lead and revenue generation. Business Development focuses on growing your business through means other than direct sales. For example, identifying and implementing partnerships that put your business in a better position to drive revenue, add distribution channels, or make your product more appealing to customers.
But I’m an early startup – why should I be doing Business Development?
Bottom line – without a plan, you WILL get distracted by shiny new “opportunities”. With a plan, you can proactively target the partners you think are best. And as the inevitable shiny opportunities come your way, your plan provides a filter to evaluate them, quickly make a yes/no decision, and get back to growing your business.
Got it. Who should I hire to do Biz Dev at my startup?
No one. At least not yet. As founders, Business Development is a core function of your role. You’re responsible for planning the future of your business – you shouldn’t delegate that. Besides, you don’t have money to hire someone dedicated to Biz Dev. If you do happen to have the money, then go hire more developers or sales people. Or even Marketers.
The time to consider hiring for Biz Dev roles is once you start implementing partnerships. Your first hires should be account/project manager types. The myriad of tactical details required to make a partnership successful will quickly suck up a large portion of your time. You need people who can manage these details, not someone who only wants to identify and close deals. That “Strategic Biz Dev” person is you, the founder.
How do I get started?
- Grow your business
- Create a Business Development plan
- Grow your business
- Repeat #3 until you can offer value to partners
Grow Your Business
A partnership is about exchanging mutually beneficial value. Early in your startup’s life you have little to no value to offer. Growing your business is the best way to develop this value and gain leverage for Business Development discussions.
Create a Plan
The more proactive you are with Business Development, the more effective it will be. Having said that, early on you shouldn’t spend much time on Biz Dev. The time you do spend should be dedicated to thinking through your business’s strategy and identifying partners who can best help your business in the future. Determine what value you might be able to provide to these target partners. Does providing that value fit with your business model and your core mission? If yes, then you’ve identified a target for your Biz Dev lead list. Add the name to your list and get back to building your business.
I recommend incorporating Business Development planning into your regular planning processes. No, not one of those silly big company planning workshops with a lot of hot air and Powerpoints. Two founders sitting down for a couple of hours is enough to easily hash through a rough plan. If you need a forcing function to ensure you set aside 2 hours a quarter, then make “Business Development” a standing agenda item at your board meetings. It’ll force you to put thought into it, and also give your board an opportunity to provide advice.
Seriously, you don’t have time to not do basic strategic planning. If you don’t create a plan, your plan will default to checking out “whatever companies pitch me on partnerships” or “whatever company my lead investor thinks is cool and knows the CEO.” Both of these could very well turn into productive partnerships…but that would be a result of luck. Startups don’t succeed on luck alone.
Once you’re ready to start executing on your Business Development plan (i.e. you’ve created value in your own business), there are a number of resources to help you with the tactical aspects of identifying decision-makers, connecting with partners, negotiating terms, etc. Each of these areas deserve their own posts. In the meantime, here are a few resources you should check out:
- Scott Britton: Startup Business Development Handbook
- Ron Hirson: 7 Tips For Startup Business Development: David vs. Goliath