Business Development: 8 Steps to Grow Your Business (2024)

Remember the spark that launched your business? Maybe you nailed a DIY version of your favorite candle or received an uninspired gift basket that whispered, “You can do better.” It was probably exciting—the promise of building something uniquely yours.

But as day-to-day responsibilities consume your energy, that entrepreneurial spirit can dim. The good news is there’s an entire business strategy dedicated to what’s next. You’re older and wiser now, but business development harnesses that initial sense of possibility and channels it into a plan for the future.

Here’s what business development is and how to create a business development strategy that moves your company forward.

What is business development?

Business development is the process of identifying and pursuing opportunities that align with your long-term goals. It can involve researching new markets or audience segments, innovating products or services, forming strategic partnerships, or adopting any other activity designed to help your business grow.

The goal of the business development process is to create long-term value. Although near-term growth opportunities can yield quick wins, business development involves figuring out what you want your business to look like in the future. It is about looking beyond daily operations and implementing sustainable growth strategies to help you move in that direction.

Sales vs. business development

Business development and sales both target revenue growth, but they’re not the same. Sales focuses on directly selling products, like a sales rep pitching to potential clients over lunch. Business development, on the other hand, more broadly prioritizes relationship building and understanding client needs through strategic interactions. For example, a business development representative exploring potential partnership opportunities during the same lunch meeting.

Here’s an overview of each:

• Sales. The sales process is tactical. Your sales team identifies new leads, nurtures them through the sales funnel, and encourages them to convert.
• Business development. Business development is strategic. Business development representatives are responsible for providing target audience insights and leveraging market research to help your sales department generate and qualify leads, but they don’t nurture prospects or convert leads into customers.

Essential business development activities

Although it often targets business expansion, business development can pursue cost reduction, talent acquisition, customer satisfaction, or other initiatives to improve your business’s competitive advantage.

Strategic business development often involves multiple areas of operation. Here are eight common business development activities:

Market research and analysis

Business development teams use market research to track market trends and identify any unmet needs. They can also explore new markets and use market analysis to evaluate profit potential.

Product development

Product development teams can improve products based on customer feedback. They can also develop new products or services in response to market demands.

Partnership strategy

Strategic partnerships help businesses strengthen their financial position, gain market share, and amplify their individual capabilities. Your business development representatives can attend industry conferences or networking events on behalf of your company. They can also establish relationships with industry peers or organizations, and help you identify and approach potential partners.

Financial planning

Business development can also involve acquiring and managing the financial resources needed to reach a goal. Development activities involve pursuing investment capital, applying for grants, and long-term financial planning.

Industry research

Business development professionals monitor industry developments and adjust strategies to protect market position as needed. They can also anticipate the impacts of emerging technologies or major global events and look for opportunities to strengthen your position.

Customer relationship management

Customer experience teams build strong relationships with clients, improving your competitive position and growth potential. They’re also responsible for gathering customer feedback, which can support other business development efforts like product development or audience research.

Brand management

Your business development team can work with your marketing team to protect your company’s reputation and identify marketing strategies that increase your brand’s long-term value.

How to plan and implement a business development strategy

1. Define your value
2. Calculate TAM, SAM, and SOM
3. Conduct market research
4. Perform a SWOT analysis
5. Determine budget and goals
6. Create your plan
7. Implement strategies
8. Measure and adjust

Effective business development starts by analyzing your current state and ends when you reach your business goals. Here’s how to create a business development plan:

1. Define your value

Revisit your business’s value proposition and market positioning. Your value proposition is a statement that articulates the unique benefits you provide to customers. Market positioning is how your value proposition differentiates you from competitors. The most effective propositions are brief, specific, and authentically reflect your company’s core strengths.

If you don’t have a value proposition, create one. If you do, confirm it accurately reflects your unique value. Then evaluate your market position, taking note of which type of positioning strategy your company uses and how effectively it differentiates you from competitors in your market.

2. Calculate TAM, SAM, and SOM

Effective business development requires a high-level understanding of your market and industry.

Start by calculating the following:

• Total addressable market (TAM): Your total revenue if every potential customer bought your product or service.
• Service addressable market (SAM): The portion of TAM that you can realistically target and serve.
• Service obtainable market (SOM): The portion of SAM you expect to capture.

Comparing these figures to each other and to your actual revenue can help you identify market opportunities. Consider the relationship between SAM and SOM, for example. If SAM is significantly larger, there’s room for your company to grow: You aren’t serving every customer as you theoretically could.

If SAM and SOM are equal, you’re already serving every customer you can under your current business model. You might therefore develop new products or expand geographically to claim a larger percentage of TAM.

3. Conduct market research

You can’t plan for the future without a solid, detailed understanding of your current market and where it might be heading. Market research helps you map that future.

Use primary and secondary research tactics to gather data about the customers and companies in your target market. Primary research includes focus groups, surveys, customer observation, and interviews. Secondary research relies on sources like trade journals, government reports, and industry analyses. You can also conduct a competitive analysis to gain insight into the competitive landscape.

Here are some of the questions you’re trying to answer:

• What customer groups make up my target market? What are their primary needs, pain points, and decision drivers?
• Who are the major players in my market? What value do they offer, and how does it differ from the value my company offers?
• Are there any unmet needs in my market?
• How do customers perceive my company and product?
• How is my market changing? What external factors influence market dynamics? What will my market look like next year, or in five or 10 years?

4. Perform a SWOT analysis

A SWOT analysis (short for strengths, weaknesses, opportunities, and threats) is a strategic planning tool that helps businesses minimize risk exposure and identify growth opportunities. It can help you understand your current state and plan for the future.

The SWOT process involves answering questions like “What advantages do we have over our competitors?” and “What external factors could harm us?” Multiple perspectives maximize benefits, so large businesses often involve department leadership in the conversation. Small businesses can invite input from industry peers or hire a consultant with business development experience and market-specific expertise.

5. Determine budget and goals

Set clear primary goals for your business development strategy using the SMART goal framework, to define specific, measurable, attainable, relevant, and time-bound objectives with specific key performance indicators (KPIs). Then work backward to identify subgoals, or targets you need to meet along the way. For example, if your primary goal is doubling revenue in three years, you might aim for an increase of 20% in the first year and 55% in the second.

Intermediary targets help you stay organized and evaluate your progress. Avoid choosing a strategy for now, but incorporate concrete, measurable sub-goals that provide direction, like “Open two new markets in year one.”

Once you know what you’re trying to accomplish—and in what timeframe—set a budget for your business development activities. Consider available resources, urgency, and expected return on investment (ROI). Successful strategies can take time to pay off, so think of business development as a long-term investment, and reserve plenty of capital to keep your company running in the meantime.

6. Create your plan

Create a business development plan, factoring in your budget, SWOT findings, and market research. The complexity of this step depends on your goals. You might create a one-page document outlining how you’ll reduce overhead expenses. Or you might write a 10-year strategic plan charting your path from small made-to-order cookie business to major consumer packaged goods (CPG) retailer.

Here are six tips for creating your business development plan:

Keep it simple

You can break any planning process down into two activities: brainstorming and analysis. First, think of every possible way to reach your goals, then use cost-benefit analyses to weigh the options.

Move large to small

Start with your end goal and work backward, adding broader goals before more specific ones. The aspiring CPG company might start with intermediate revenue targets and then add general goals. These might be “Scale up manufacturing” and “Ship products nationally,” sequencing and spacing them over the 10-year time frame. It can create a more detailed plan for the near term (e.g., the first six months or year.)

Assign responsibilities

Determine who is responsible for implementing strategies. If your business development team includes employees from other departments, you can also nominate a team lead or project manager to monitor workflows.

Write it down

Record your decisions, including goals and subgoals, dates, metrics, tactics, channels, and responsibilities.

Plan to regroup

Schedule your next meeting at a strategic interval. It should be distant enough to allow substantial progress, but soon enough that team members won’t have to make strategic decisions alone.

Bring in help

The bigger your goal, the more complex the planning process—so if you’re shooting for the moon, consider hiring business development professionals to help.

7. Implement strategies

Put your plan in motion. Business development is a long game, so strike a balance between losing track of your strategy and clogging your day-to-day operations with business development tasks.

Small businesses might block off one to two hours a week for business development activities. You could reserve the same amount of time for business development team members and ask them to schedule development-related conversations during that period.

8. Measure and adjust

Use your KPIs and intermediary goals to monitor your progress. If you fall short, identify the reason and adjust your strategy.

If you repeatedly struggle with a certain metric, ask yourself whether you can meet your long-range goals given current performance. If so, adjust your plan to reflect your new expectations for that metric. If not, revisit the planning stage and identify a path that doesn’t rely on the trouble spot.