How to enhance your staying power with business development in an ever-changing market

So, what is business development?

Starting a business always involves hard work. Before you launch your product or your service into the market, you need to work on the capital, the manpower or the equipment to support your idea. Once you’re established, you need to manage costs versus revenue, in order to maintain operations of your business while earning a profit. All of this can be taxing for an entrepreneur, and always having competing priorities can leave no space to consider future growth. However, achieving long-term growth is vital for a business’ overall success. To reach this goal, entrepreneurs need to integrate the principle of business development into their strategy.

For some, business development is often confused with sales. On the contrary, business development is not sales, nor is it a new term to describe salespeople. It may have been seen as such because the end result of business development is improved sales. What business development really is all about is to drive long-term value into your company by seeking new opportunities, and creating partnerships and relationships to reach new markets and customers. It entails paying attention to the wider business landscape, and seeking new opportunities to ensure growth well into the future. This may involve studying your competitors, or the major players in your industry, and forming new relationships with them to explore new markets. For some established companies, they lend their brand names to other products and share in the revenue, such as what Starbucks did in partnership with Unilever, releasing a product line of ice cream inspired by the coffee chain’s drinks.

To form partnerships with other companies, you need to present your business well and illustrate the benefits of the relationship with your prospect. With this, you or the person acting as your business development manager will need to be familiar with your enterprise – including your company’s core values, mission and long-term goals. However, there are no certain patterns or templates for making business development work, since enterprises vary in their core characteristics. It is one of the most varied roles and is very much dependant on your organisation, its stakeholders and the industry at large. However, when business development is executed properly, companies are poised to enjoy long-term growth.

Starting out the right way to avoid typical frustrations with business development

Before anything else, you need to have a deep knowledge of your company to embark on business development. You need to know its core values to select the right partner and to tap the right market. In business development, it is quality over quantity; which means that it is more important to land the right partner/client than several that are not the right fit. The right deal will take your business to the next level.

When closing a business deal, you need to have a well-written proposal. It is optimal to write your proposal with the customer in mind to outline your strategy for generating demand or opening new markets. For companies that are seeking partners, this can work to their advantage. A customer-centric approach demonstrates to your prospective partner the benefits of the relationship to both of your businesses. When creating a proposal, get your team involved as they can offer you valuable insights on how to win new clients or business partners. If your team is the one tasked to deliver the proposal, this will be incredibly helpful. Take note of their questions and provide them with answers. You can also ask them why they would recommend going forward with the proposal and how it aligns with your company’s objectives.

What entrepreneurs can achieve through business development

a. Scalability – Entrepreneurs can expand the reach of their products and/or services without having to add more salespeople or resources through business development. For instance, partnering with a competitor or other companies can provide you the opportunity to tap into new markets and find new customers, without having to expand your sales team. Similarly, licensing or franchising your ideas with other companies can lead their customers to become interested in your enterprise. This can augment your marketing strategy without having to add marketing capacity.

b. Long-term growth – The goal of business development is to bring long-term value into an organisation for it to grow sustainably. “Business development determines how much of the business will grow and where that growth will come from, and defines the approach to capturing that growth,” said Satish Kanwar, co-founder and director of business development at design firm Jet Cooper.  In essence, business development encourages companies to go beyond their current markets or customers to seek new opportunities and streams of revenue, to enable them to support the growth of their enterprise well into the future.

c. Resilience to market changes – Since business development spurs companies to find new ways to grow, it allows them to have multiple sources of business to withstand market changes. For instance, cloud computing company Loudcloud would have gone into insolvency in 2002 if it weren’t for the business development discussions that it previously had with major companies in the IT industry. Back then, the market had floundered following the 9/11 attacks. Through its discussions, Loudcloud was able to get a major IT firm to purchase its managed services business, and it re-entered the market as a software company.

d. Innovation – To find new opportunities and new streams of revenue, companies are pushed to innovate to set themselves apart from their competitors. Entrepreneurs can formulate new ways of using their products or services to generate demand. For instance, Nike partnered with Apple to debut Nike+, a platform that tracks the workout of people using Nike shoes through Apple devices. The collaboration has driven demand for both of the products of Nike and Apple.

With a clear understanding of business development, entrepreneurs can survive fluctuations in the market and even innovate to differentiate your business. By integrating business development into your strategy, you remain focused on the identity of your company to be able to determine the opportunities and partnerships that will bring long-term value and sustain growth.

Donny

How to get venture capitalists to say ‘yes’ to your vision

In Australia, the number of female-owned enterprises is on the rise. Federal Small Business Minister Bruce Billson says that about 93.3% of women in the country operate small businesses. However, a 2013 study from the Australian Women Chamber of Commerce and Industry found that women entrepreneurs struggle to obtain enough capital for their startups. In fact, more than half of female business owners launched their enterprise with less than $5,000 in capital.

One possible factor that prevents women from securing funding is the lack of female partners in venture capital firms. In the process of selecting an enterprise to support, venture capitalists are often influenced by the natural traits human beings possess of self-selection, pattern recognition and homophily. That is, they are more inclined to communicate to and be comfortable with people who are similar to them in terms of gender, race or other characteristics. In VC firms where males make up the majority, the tendency is to reach out to male entrepreneurs who are like them and invest in their businesses, putting female entrepreneurs at a disadvantage.

In addition to this, investors are less confident to back women-owned enterprises because of the way some female entrepreneurs present their pitches. When presenting, women entrepreneurs tend to frame their venture as a “side hustle,” or an enterprise that they manage single-handedly to augment their income. They may not display the intention of expanding it into a multimillion-dollar company. On the other hand, male entrepreneurs highlight how their businesses can grow worldwide, given enough funding. Authors Erin Kepler and Scott Shane noted in a Small Business Administration report that compared to male business owners, female entrepreneurs have a smaller vision of what their businesses can achieve, which makes investors more hesitant on providing funds.

Aside from this, female entrepreneurs tend to not be specific regarding the amount of money that they need. Instead of confidently stating the amount upfront, women request the capital they will need as “backing” or “support.” Venture capitalists will not have confidence in the investment and this will prompt them to move on to other promising business proposals.

How can women improve their pitch? To win an investor’s approval, you need to know what they are looking for in a business proposal. Here are some tips to get venture capitalists to say ‘yes’ to investing in your business:

1. Talk about your business from the investor’s point of view – Venture capitalists think about business, and how their investment will generate returns. When they look at a business proposal, they judge it based on its market potential. This means they will evaluate how your business will generate demand. Will your product or service sell? Emily Weiss, a 29-year-old blogger, considered this perspective when she was pitching her skincare line to venture capitalists. She explained that her blog, which reaches 8.5 million readers monthly, provides a wide market for her product and how her skincare line can address consumer demands in the cosmetics market.

2. Be confident about your business idea – To draw the attention of venture capitalists to your pitch, you need to be confident and assertive throughout your presentation. Demonstrate to them how your business can be a game-changer in the industry, as this will help your proposal stand out and persuade your listeners. As mentioned above, you also need to be upfront about the amount of funding needed, because this will put value on your business and help ensure its growth.

3. Build relationships with investors – The process of investing inherently involves trust, especially on the part of venture capitalists. To gain their trust, you need to establish strong rapport with them before raising funds for your enterprise. Venture capitalists essentially see entrepreneurs as a “dot” in an x-y axis when meeting them for the first time. This means investors do not know yet about the potential of the business owner. As time goes by, however, VCs will see a pattern or a “line” in the performance of the entrepreneur, which is crucial to winning their trust. The pattern and consistency in a business owner’s performance will influence a VC’s decision to invest.

4. Don’t take no for an answer – When an investor says “no” to your proposal, you should never give up in presenting your pitch to other VCs. Rejection is part of the process when it comes to raising funding for your business. Ask for feedback from VCs to determine which areas of your pitch require improvement. You may need to refine your vision and your market, and prove to them that your business is worth the investment. Aside from this, you can also learn from and talk to entrepreneurs that were able to secure funding successfully, and apply the lessons that they have learned in presenting their proposal.

5. Understand the financials – know your numbers!

Raising capital for your enterprise requires hard work, but with the right strategy backing a disruptive business idea, you can get venture capitalists to say ‘yes’ to your vision and yes to invest.

Donny

Innovation – Just a Buzz Word or a Critical Element?

Businesses that are still operating in the same manner they did 3 to 5 years ago against a backdrop of the world trying to recover from the financial crisis, an ageing population, slow consumer spending, Australia on the brink of signing its fourth free trade agreement and 11 other countries proposing joining it in the Trans-Pacific partnership, plus the dominance of social and digital media, could have a problem, a serious problem.   

If your business is not continually exploring ways to capitalise on emerging opportunities or changing business processes in line with the new world order we now operate in, you need to hurry up or risk getting left behind.  However, if you are actively capitalising on identified opportunities, you are to be congratulated as you probably have your competitors on the back foot.

While all this is happening, the word ‘innovate’ has crept into the business lexicon. Innovation is about creating and installing new ideas into your organisation. It could be new products or services, new internal processes or simply better ways of working.

Consider on one hand where former world market leaders Kodak and IBM, who failed to innovate, are today and on the other hand where younger innovative companies Apple and Microsoft now rank. Apple, now the world’s largest company, was close to broke until Steve Jobs returned and reincarnated it through innovation.

A structured innovation program has the potential to place an organisation at the forefront in the market place, with staff, shareholders and the bank.

Innovation is a creative process. Developing its culture in today’s environment is vital to success. A recent Boston Consulting Group survey found that companies applying innovative strategies outperformed those that did not.

Traditionally strategy and innovation have been treated as separate activities. Strategy was about things you could plan and innovation was about what you could not plan. But with the speed of change and dynamics in the business world, strategy and innovation are converging.  Innovation is now a critical element in strategy.

Those who identify and implement innovative ideas, like Apple and Microsoft, will return a far better bottom line. These companies differentiate themselves through innovation.

It is senior management’s responsibility to drive innovation or live with the consequences. They must ensure the dynamic is driven, falls within the organisation’s core financial targets, and does not get bogged down in detail.

The driver is easy – the establishment of a ‘think tank’, a commitment to meet regularly forever and most important, acting on and measuring the agreed initiatives.

When introducing innovation, the temptation is to say ‘we need to think outside the square’. However, by attempting to innovate without guidelines, the risk can be losing efficiency by opening the door to too many wild ideas. Innovation think tanks are more productive if a set of simple guidelines are established that fit within the organisation’s vision, corporate strategy and financial criteria.

Worthwhile innovative ideas are more likely to emerge through the team brainstorming ideas than solely from an individual. While innovative strategy is the responsibility of management, the returns from the ‘think tank’ will be greater if key staff are on the team.

There is no proven formula for successful innovative ideas. Human nature being what it is usually ensures most ideas will relate to the market place, new products or services, but with good stewardship, ideas can be generated that can improve internal performance.

The skill is to challenge what you and others do, then identify possibilities and cost effective ways of doing things better.

Resist the temptation to ignore a possibility because ” it ain’t broke so why fix it?”  With the speed of change, someone may just challenge the status quo and beat you to it.

Is innovation just a buzz word or a critical element?  No contest!

 

The author of this article is Ken Meek, a BCD and Bottom Line mentor and Principal of M2 Strategic Management.