Business development is one of the functions that every company, from inception to exit, performs at one time or another. It’s also one of the most “unbounded” roles within a company. For some companies, business development means acquiring new customers. Others, it means raising capital. And, for yet another set of people, it means to build alliances and partnerships.
Whatever the term ultimately means to anyone, it is a function that clearly requires a multitude of skills. Let’s take for example, raising money. A business development person in a small startup company would be responsible for building relationships to raise venture capital and/or general financing for startup operations. Oftentimes, the reason this function falls under business development is because the business developer is building strategic partner relationships. Some of these strategic partners deem the relationship critical to grow new business opportunities. In that respect, the strategic partner will then invest money in return for an equity stake in the startup company.
In the case of building and managing partnerships, the business development team is often called Alliances. In this example, business development or Alliance is responsible for recruiting, managing, and supporting partner companies. In addition to this, the Alliances organization would also have a responsibility for driving a certain amount of revenue through the partners, as well. This alliance function essentially builds a core ecosystem around the host company. The ecosystem effectively allows the host company to be in more markets, capture certain geographic territories, or even drive more revenue than it could on its own.
Building joint ventures is also a form of business development activity. There are times when a company needs to work together on a specific business opportunity. The opportunity could be related to driving new business in a specific country or perhaps in a particular industry. The two companies would develop an operating agreement under which they will work together. Shared revenue and expenses, team alignment and sales targets are examples of agreements created as part of this joint venture relationship.
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