We used to think that business growth depends on marketing and sales. But they are not of critical importance. Founders and CEOs are puzzled by growth issues. People launch businesses so that after a while they could live comfortably, a situation in which the company works for them. But not everyone gets there, because 80% of small businesses fail in the first 3 years, and another 15% remain small forever.
There are no “magic tools” or “incredibly effective strategies” in marketing. No marketer in the world has learned all the secrets of all advertising channels and can now organize a massive flow of cheap leads for any business.
What we call “marketing” today is only a limited set of tools and channels you need to learn how to use wisely. It doesn’t matter if you’re an owner of a big business or a small one – the tools are the same, and the game rules are the same. The difference is only in budgets. So, let’s figure out what is important for your business development!
3 Key Aspects of Business Development for a CEO
Business development focuses on creating strategies that will propel the organization to greater heights. However, this cannot be achieved without having a clear understanding of the core aspects that enable business development. Without a proper understanding of these core aspects, it will be difficult for small businesses to craft and implement strategies that will aid them in business development. These three core aspects of business development are:
One thing that startupers should keep in mind is that the products they are rolling out or the service they want to render should be aimed at specific people. These people are customers. Customers could be potential or active customers and could also be individual or corporate customers.
Potential customers are those that have not had any interactions with the organization but are willing to when provided with the right stimulus or signal. This stimulus or signal could be a low price, extra value, a discount, or promise of after-sales service.
Active customers are those that already have transaction history with the business i.e. they have purchased from the businesses and are willing to remain loyal to the organization when provided with value-added or improved services.
Individual customers refer to individuals that use the services of the business while corporate customers are existing businesses or companies that make purchases from the business.
Research Data Analysis – is another important concept that entrepreneurs and small businesses should keep in mind. Understanding this concept is important because customers are found in specific markets. You can’t find customers for your product in just any market. Therefore, you must understand your market by evaluating existing markets and picking up your target markets.
Customers can also be identified based on their lifestyle, demographics, or buying mindsets. Thus, as a business person who is willing to make the most of every opportunity, there is a need for you to have a clear understanding of your markets because this is where you are going to find your customers. Your task is to ensure you know who your customers are or will be when you find them.
Relationships are important because customers may not or will not just jump at any offer you make without an established relationship. You have to build a rapport with your customers because you want them to remain loyal to you irrespective of any competitive offers they will get elsewhere in the market. Therefore, make sure to build a relationship with them first as this will guide you in growing your business.
One thing you should understand here is that relationships don’t just happen automatically, you have to put in the hard work and the smart work. What will make customers choose your offers depends on the relationship that you establish with them. The relationship you want to develop with your customers, in turn, is based on extra values, discounts, samples for beta testing, and the extra service that you might want to offer.
Also, another approach that can boost growth for a small business is some solid competitive differences, thanks to which customers will choose you over others.
Such an approach to development issues is a transition to real strategic management. We stop copying other people’s solutions and start forming our own: from the market, from customers, and competitors.
In this approach, we are interested in only 3 questions:
- who do we sell to and what problem are we solving? Is there a market for the product and how big is it?
- What do we offer and how does it differ from other market players?
- Why will our solution be more in demand than others? How will we benefit from this?
Market Knowledge and Demand-driven Products and Services
When you launch a new venture, pick a product or service close to the ones you already offer. Success rates rise substantially when new businesses target familiar customers and are staffed by people familiar with the market. New businesses launched simply to commercialize research findings rather than meet market needs are best avoided. Unfortunately, most engineers prefer working on the latest and greatest technology. It’s therefore wise to ask: “What’s the pain point for customers, and how does our offering overcome that pain?” Without such discipline, new ventures are likely to end up as solutions looking for problems.
New ventures flourish best in open, exploratory environments, but most large corporations are geared toward mature businesses and efficient, predictable operations. When a company’s leaders recognize and support mavericks, encourage diverse perspectives, tolerate well-reasoned mistakes, and provide resources for exploratory ventures, employees are apt to embrace entrepreneurship. When leaders reward conformists and rule followers, insist on acceptance of the party line, demand error-free performance, and tightly ration resources, employees are likely to shun exploratory projects. New ventures whose operating sponsors are close to the action and know their businesses intimately tend to do better than those championed by the CEO alone.
Different Management Approach
Experimentation is only the first step in an extended, multistage process of business development. Each stage introduces a different set of questions and challenges.
Each stage also demands different talents and perspectives, and new leaders usually have to be brought in as businesses progress. The visionary who is well suited to leading a new business through its early experimental stages is often poorly equipped to guide the venture through the expansion and integration stages when sales and organizational skills become more important than bold thinking and creativity. Because new businesses are seldom profitable in their early, formative years, financial metrics make little sense as a starting point for evaluation.
Instead, milestones of various sorts – the number of prototypes in customers’ hands, the number of times analysts mention a hot, new technology, and the number of salespeople bringing in leads – are more useful indicators of early progress. During expansion, measures of market penetration and market share become important, as the business becomes established, traditional financial measures can be installed.
To sum up, as a startuper or an entrepreneur deciding to craft strategies to help develop your business, you need to consider the three core elements of business development which are your customers, the markets where you will find them, and the relationship you want to build with them. When these three are clearly understood, it will be easier to develop models that will rake in profit for your organization.
Sadly, many executives view all new businesses through the same filters and judge them on how well they conform. But few new companies can find the real answers. If they do, their business will firmly occupy a certain niche and will have loyal customers.
And if the answer to the question “How do you differ from your competitors?” is “We sell to everyone who needs it. We sell cheap, we have high quality, we are good fellows” – the business has no chance to show real growth. Because every other small business in the market responds the same way.