White paper biz dev for startups
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This document discusses best practices for setting up a business development function in an early stage startup. It begins by defining common roles like business development, corporate development, marketing, and sales. It emphasizes the importance of hiring the right person with the right skills at the appropriate stage of the company. For example, an individual focused on exploring potential markets and channels is best early on, while someone who can validate assumptions and scale successes is more suitable later. The document also stresses the need for clear communication between business development and other departments to ensure proper hand-offs and alignment with company goals. Regular oversight and support from leadership is also advised to help the business development team succeed.
![Reward both team and individual effort. From the team reward perspective, this effort is vital as it
enforces the understanding that the organization must come together to support these efforts.
Ensure the BD team receives the necessary support.
Ensure that the BD team engages in the strategy process, as companies scale these team members
may get further from the leadership and since they are the front lines of execution they must understand the drivers
Business develop is an outward
siderable time away from the
R&D, operations and leadership
What was the potential target’s
How did Partner X react to the
additional features were called
should be captured for analysis
facing role and spends conrest of the team such as
so regular dialog is critical.
response to BD’s messages?
proposed agreement? What
out? [This information
and potential future action.]
Help your business developinformation they need to make a
targets. Not everyone attends
functions, create a central remation. Equally important, not
message the same way, so
other is critical.
ment person acquire the
positive impression on her
the same conferences or
pository to share this inforeveryone hears the same
bouncing ideas off each
Make sure company expectations are established for
every engagement: Is the goal
new customers, reduced
costs, drive revenue, access new
channels? Make sure the
justification is clearly identified
before beginning the business development exercise, and have it results stated in a quantitative way versus qualitative to avoid to
produce a less subjective way to measure results. Having a formal methodology around this process reduces resistance to new opportunities and provides a way to measure the benefit that each opportunity
realized: Are we getting the return we expected when we signed up for this deal? If not, are we not approaching it as we intended to? Did something change? Were our assumptions out of whack and need to
be modified for the next time?
A company needs to be doing the right deal and not do deals for the sake of doing them. That is why
having the right metrics to measure success and progress is key. For every wrong deal, there’s an opportunity cost as resources and time could have been focused on the right deal, and momentum are lost.
Part of this work includes BD understanding how a larger company (as they are frequently the target)
views how this deal aligns with their strategic goals. This is the first priority of any BD person before they
can event start the conversation. Without obvious alignment this deal will not start.
Just because your business development person comes with a good rolodex, that may not be the right
target group. The decision maker in those big companies is not often a fellow BD person. More likely, the
influencer of decision maker is a business or technical lead that has the pain your product addresses. BD
should not focus on other BD.
Business Development knows when to walk away from a potential deal. She understands that if the effort or terms to reach a deal out weigh the ROI for the company and can make the decision to scratch the
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A l l r i g h t s r e s e r v e d!
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Getting Started | Business Development](https://image.slidesharecdn.com/whitepaper-bizdevforstartups-131021123007-phpapp01/85/White-paper-biz-dev-for-startups-5-320.jpg)
White paper biz dev for startups
- 1. B U S I N E S S D E V E L O P M E N T S e t t i n g u p t h e P e o p l e a n d P ro c e s s e s EARLY STAGE START UP WHITE PAPER Prepared by: LOUANN CONNER, FOUNDER + CEO S a n F r a n c i s c o | B a y A r e a • t e l e p h o n e : 4 1 5 . 5 1 7 . 2 5 3 1 • i n f o @ s a g a c i o u s t h i n k . c o m • w w w. s a g a c i o u s t h i n k . c o m
- 2. Business Development Ideas for Start Ups Many founders and early stage CEOs confront the day when they recognize they need a business development (BD) person probably a bit less enthusiastically than necessary. The business development role is critical, but confusion often arises as it means something different to just about everyone. This inconsistency compounds the problem for a company making a first hire because they may not get what they anticipated. For example, one company I know thought they had hired a business development person but all her hiring material and description targeted marketing, needless to say the alignment was off. This paper offers ideas and lessons learned that a startup company’s leadership may consider in developing this part of their organization. We will take you though the following: • Common definitions for business development and other related roles • Management suggestions of position • Additional risk related factors to consider LETS’S START WITH THE BASICS - COMMON DEFINITIONS What is business development, and how does it differ from corporate development, marketing and sales? This is not a frivolous question as the answer depends entirely on who you as as companies combine often merge roles or have their own international definitions. That said, consensus can be found around the following definitions: Business Development or Biz Dev identifies new opportunities such as partnerships with other companies that drive revenue, distribution or enhance the product. Typically the first hire, once a company is seeking to acquire customers, is a business development person. Once the BD has identified and established a customer. a sales person is brought in to “own” the subsequent accounts. Business Development should not be focused on sales, otherwise they will compete with the sales team. Corporate Development involves M&A, investments, divestitures and potentially incubation of new businesses. Marketing creates awareness for the firm and supporting the business development and sales activities. This role focuses on identifying the needs and types of customers, and creating the best way to get the products and services to the customers. There is different types of marketing, strategic marketing focuses on customers as segments, while tactical marketing concentrations on getting customers closer to the sales transaction (in an e-commerce scenario) or handing them off to sales to convert the customers’ interest into a transaction. Sales sells a specific product with a clearly defined price and value to an identified customer. They assume responsibility for an account Business Development identified. They drive revenue. Given limited budgets, in a startup up overlap of these roles is likely to occur, but as a company grows, they will become their own areas as each function starts to specialize. SagaciousThink,LLC A l l r i g h t s r e s e r v e d! 1 Getting Started | Business Development
- 3. STARTING OUT - HIRING THE RIGHT PERSON AT THE RIGHT TIME Given the many definitions of these roles, careful consideration is required that the person applying for the business development role has the skill set to match the intended title. Otherwise a frustrating, expensive and brief relationship results if the business development new hire only has experience in cold calling with a practiced script, and is really a sales person as defined in your company. Make sure you hire the right person a the right time, map out how the business development, marketing and sales processes will look for your organization and plan your staffing to align with the needs at each stage. It makes no sense to bring on a big rain maker too early as the company will not be ready to meet the commitments, and the return will not support the compensation. What are you looking for in each expert? Here are some desired attributes Strong network in the area(s) that the company is focusing on Consultative style Good attention to detail, trend spotter Strong persuasive communicator Good insight into industry pain points and how products can solve them Knowledgeable about the buying process and the key decision makers and influencers Strategic thinker: they’re looking at how these relationships can be leveraged in the future Experienced enough to recognize false signals and avoid diverting critical time and resources Cultural understanding (critical for global businesses) Curious and creative thinker Enthusiastic self starter Team player Good listener How might you find someone? Leverage your network Research LinkedIn If you have taken on equity partners, leverage their networks too Use websites such as Angellist Ask a business development professional who they would recommend If you are looking for the first hire, most often this person assumes the lead in the business development team and so having leadership, team building and mentoring skills is also key. This person needs to develop a cohesive team around a shared vision. She is bringing more skills than an individual contributor. In any of these roles, the person filling them must be a powerful communicator, able to articulate the value of the deal. No deal gets done via email, this requires some face time, and the person must be a good representative of the company. Consider hiring someone early on and bringing them in to develop a strong, cohesive relationship with the leadership team. Allow them to get into the product or service and understand the drivers, and market. Ramp up time will be required for this position, so the earlier someone comes up, the soon results will be seen. SagaciousThink,LLC A l l r i g h t s r e s e r v e d! 2 Getting Started | Business Development
- 4. Understand What Skill-Sets are Required (and When) You can bring on the most skilled business development or sales guy or gal with the biggest Rolodex but if you are still iterating on your product design, this is a recipe for disaster. Strong performers generally have a sweet spot that they are good at because they’ve had ample opportunity to hone their skills. What are the areas? 1.: Exploring: Here the company is in its infancy and business development is about seeking possible markets, channels, etc, with no company data to use as a basis. It is at this point that the company is starting to get some market feedback and may “pivot” as a a result. A person who succeeds here must be able to collaborate with the technical teams and a deep understanding of the product. 2.: Validating: By velopment has can offer input sumptions made (part of that choices are growth, and to success. The key internal framework on deal and concompany’s this time, business declosed a few deals and into validating the asin the business plan feedback loop). Now the where to focus to drive analytical skills are key BD team together with stakeholders develops a what to measure for each firms it aligns with the strengths and goals. 3: Scaling: The company nows has confidence that they have the right focus on partnerships and customers so the goal is here to replicate success by seeking out comparable deals and putting the structure in place. Make sure you hire the right skills at the right time. COMMUNICATION IS KEY Help BD understand the company constraints and goals - the vision statement of this team needs to be as clear as the vision statement for the product. Initially, those requirements should be taken from the business plan or planning process, but they should continue to adopt as the company incorporates market feedback and other lessons learned. Educate the business development team on the constraints in which they are to operate. This is true at all stages, but especially early on as the company tests assumptions to improve or gain an understanding of what the market requires. The mission of the business development person must be as clear as the company’s mission and alignment is critical. Hand-offs between departments are weak links in any organization, and the hand offs between Business Development to Sales and Marketing must convey the thought process that went into securing a customer or partnership, the message that resonated with that party, and the expected return that validated the effort to pursue that sale or relationship and its alignment with the company goals. Oversight of these roles requires that leaders: Understand the challenges the BD team face Monitor the closed loop communication Create metrics to ensure progress is made and aligns with the goals of the organization. Make sure the right metrics/incentives are used otherwise behaviors will drive unintended consequences. SagaciousThink,LLC A l l r i g h t s r e s e r v e d! 3 Getting Started | Business Development
- 5. Reward both team and individual effort. From the team reward perspective, this effort is vital as it enforces the understanding that the organization must come together to support these efforts. Ensure the BD team receives the necessary support. Ensure that the BD team engages in the strategy process, as companies scale these team members may get further from the leadership and since they are the front lines of execution they must understand the drivers Business develop is an outward siderable time away from the R&D, operations and leadership What was the potential target’s How did Partner X react to the additional features were called should be captured for analysis facing role and spends conrest of the team such as so regular dialog is critical. response to BD’s messages? proposed agreement? What out? [This information and potential future action.] Help your business developinformation they need to make a targets. Not everyone attends functions, create a central remation. Equally important, not message the same way, so other is critical. ment person acquire the positive impression on her the same conferences or pository to share this inforeveryone hears the same bouncing ideas off each Make sure company expectations are established for every engagement: Is the goal new customers, reduced costs, drive revenue, access new channels? Make sure the justification is clearly identified before beginning the business development exercise, and have it results stated in a quantitative way versus qualitative to avoid to produce a less subjective way to measure results. Having a formal methodology around this process reduces resistance to new opportunities and provides a way to measure the benefit that each opportunity realized: Are we getting the return we expected when we signed up for this deal? If not, are we not approaching it as we intended to? Did something change? Were our assumptions out of whack and need to be modified for the next time? A company needs to be doing the right deal and not do deals for the sake of doing them. That is why having the right metrics to measure success and progress is key. For every wrong deal, there’s an opportunity cost as resources and time could have been focused on the right deal, and momentum are lost. Part of this work includes BD understanding how a larger company (as they are frequently the target) views how this deal aligns with their strategic goals. This is the first priority of any BD person before they can event start the conversation. Without obvious alignment this deal will not start. Just because your business development person comes with a good rolodex, that may not be the right target group. The decision maker in those big companies is not often a fellow BD person. More likely, the influencer of decision maker is a business or technical lead that has the pain your product addresses. BD should not focus on other BD. Business Development knows when to walk away from a potential deal. She understands that if the effort or terms to reach a deal out weigh the ROI for the company and can make the decision to scratch the SagaciousThink,LLC A l l r i g h t s r e s e r v e d! 4 Getting Started | Business Development
- 6. agreement. She does not let ego or sunk costs in terms of time and effort distract her from the right outcome for the company. Tight communication with leadership is critical as these decisions cannot be made in a vacuum. Once a deal is signed and the drops from the champagne have been wiped up, the new partnership needs to be nurtured by business development until an account executive assumes control and ensure a good internal handoff occurs. PROPER INCENTIVES With all of these positions, aligning incentives to the results, not the performances. For example, securing a customer that ends up producing repeat business, or a partnership that allows 10% savings. Rewards for these results may be deferred but this approach allows closer alignment to objectives for both the company and team member. An example of a bad alignment is in sales where the reward was based upon the number of calls made. Nothing in the requirements states that the calls lead to some business or even be good leads. Its a lot like hits on a website, it doesn’t matter how many times people come if they do not convert to paying customers, what good is a high number? Misalignment, may not be felt immediately, but it will be felt. Outlining the desired outcomes and tying the goals to them along with having consensus on how they will be measured ensures that the business development Will you get this right the first time? Probably not, but that is why it is important to be able to measure the results and monitor the behaviors the incentives are driving to ensure they are the ones you expect and want. Additionally as your teams scale the metrics help to track how each person is contributing and identity high performers, people that may not be incentivized the same way and potentially other differences that the company should take into account. OTHER POINTS TO CONSIDER Consistent Framework to Measure Opportunities Develop a consistent framework to assess each business development opportunity. Each option should be reviewed as objectively and consistently as possible. An important element of this review is considering the post-deal management - what is required to ensure success, such as the administrative costs to maintain a joint venture relationship. If there are known deal breakers, make sure that business development is aware of them. Addressing Risk With each agreement some risk is assumed, does the company understand what is the risk, how it can limit its exposure? What if we cannot deliver, what happens to our reputation in this market? Can we afford a loss of service penalty? What are the minimum standards we want to have in a business partner so we reduce the possibility of being left in a lurch should things go wrong? This sort of criteria can be established ahead of time to filter out unqualified candidates. Post Deal Lessons Learned Will this relationship or partnership still look rosy post contract execution? What are some of the potential pitfalls that may come from this type of agreement or aligning the company to this specific entity? What steps should be taken to mitigate a bad (or worse) outcome and based on the analysis is this deal still worth it? SagaciousThink,LLC A l l r i g h t s r e s e r v e d! 5 Getting Started | Business Development
- 7. The distinction between addressing risks and lessons learned is that one is in the planning session and the second activity is post deal, “What did we learn that we can apply to the future.” Both activities are critical. Contracts & Legal Advise Have your legal team involved in the process so you get a sense of what the risks are and how best to protect your company? You may not want them or need them early in the process but they are critical at some point to reduce a company’s exposure to risk. Now you have a sense of what traditional business development is, ideas on how to get you first hire on board, some steps leadership can take to improve the odds for success, and some general considerations around risk that companies need to address. Good luck! Further Reading Friedman and Partners - Rich’s Top 20 Business Development Tips Seth’s Blog: Understanding Business Development What, Exactly Is Business Development?, by Scott Pollack, via Forbes SagaciousThink,LLC A l l r i g h t s r e s e r v e d! 6 Getting Started | Business Development
- 8. If you found this paper, valuable please check us out on • LinkedIn • Facebook and sign up for our newsletter Have feedback or comments? Please contact us at: info@sagaciousthink.com Sage Ideas SagaciousThink,LLC Fresh Perspective A l l r i g h t s r e s e r v e d! 7 Sustained Success Getting Started | Business Development