How to Convince Your Organization They Need a BD Team
Starting a BD team can help your organization create long-term value through the creation of partnerships or improving your overall product. A strong business development function can be the catalyst that creates the long-term sustainable revenue that your business needs.
Starting a BD team can help your organization create long-term value through the creation of partnerships or improving your overall product. A strong business development function can be the catalyst that creates the long-term sustainable revenue that your business needs. Communicating the value of business development is the key to getting your organization to agree to start a BD team.
The Value of Business Development
If you’re a part of an early to growth-stage startup, your organization probably has an established sales team, a scrappy marketing team, and maybe one person who is in charge of channel partnerships. There are a number of ways business development partnerships bring value to an organization including expansion into new markets, increasing revenue, and scaling aggressively.The real value business development can bring to early-stage companies is being able to scale growth. Andrew Chen, General Partner at Andreessen Horowitz and previously head of Driver Growth at Uber, believes there are only a few ways to successfully drive growth at an organization. “Products mostly have one or two major growth channels, which they optimize into perfection. These methods are commonplace and predictable[...]think of them as the moonshots,” Chen says. One of these moonshots is forming partnerships with more established, high-profile organizations. This is where the role of BD comes into play within an organization: Forming strategic partnerships to create long-term value.
Activities BD Teams Do To Create Value
Mark Jeffrey, Director of Business Development at Carta, also knows a thing or two about the power of BD within an early-growth company. Before moving into a business development role, Jeffrey was doing sales at Silicon Valley Bank. At Carta, he was instrumental in developing the BD function. “I fundamentally understood that sales was always going to be a 1-to-1 relationship. Every salesperson closes one deal at a time—you talk to one person and you close one deal and then it's done. In the BD world, especially here at Carta, we’re creating leverage by creating a one-to-many relationship. We talk to one person who might be able to refer us to 10 clients,” says Jeffrey.Now let’s look at other ways BD teams create value and how you can convince your organization to establish one.
How to Convince Your Business it Needs Business Development
After Mark Jeffrey’s previous company got acquired by Carta, he found himself at a crossroads: Continue down the sales path he was on or forge a completely new path and build out the burgeoning partnership and channel function.“I actually pivoted away from sales and told them I really liked what was going on here at partnerships and channel BD side of things, and that I think I can add a lot of value there. I had a unique chance to make a choice and choose if I wanted to go down the sales path or go down the BD partnerships path,” says Jeffrey.“I couldn’t be more happy I chose the latter. It helped me join a newer team and help scale it and leverage a lot of the network I built at SVB, along with my sales skills and merge that together into a full blown partnerships role.”In Jeffrey’s case, he was able to use his previous experience in sales roles to convince leadership that building out a BD function would be a valuable undertaking. In the next section we’ll look at other ways you can convince stakeholders that your organization needs a business development team. These reasons, which can become arguments in convincing your business to dive into BD, include:
- Expanding into different markets
- Scaling aggressively and intelligently
- Forming strategic partnerships
- Strengthen your internal structure
Expand Into Different Markets
A big reason companies invest in BD is to tap into unrealized markets. Before you enter into a new market, it’s vital to perform a market analysis, which is an exercise in which you gather information about a specific market to determine the viability of a business or product. Think of it as a way to understand how your business is positioned against all the other organizations in the same industry.Market analyses help you understand data like customer segments and buying patterns, competitor positioning, and barriers to entry. Without a BD team in place, your organization will have a harder time entering into new markets without knowing the answer to fundamental questions such as:
- Is there a desire for your product or service?
- How many people would be interested in your offering?
- Market saturation: How many similar options are already available to consumers?
Entering into new markets is an essential way to grow any business, having a BD team at the helm is the surest way to do it successfully.
Scale Aggressively & Intelligently
Scaling is hard. Doing it quickly and effectively is even harder. The issue of scaling is something that every startup faces in one way or another. A surefire way to scale growth successfully is by having a business development team leading the way.As Mark Jeffrey said before, a traditional sales relationship is 1-to-1. It’s hard to scale that up effectively without having a lot of capital to burn—which startups generally don’t have a lot of. Business development, on the other hand, is all about forming relationships with other companies to scale faster. For example, building a channel partner program is a great way to scale faster. Channel partner program is an umbrella term for when a business sells their product through a third-party partner. Affiliate marketing, referral programs, and value added resellers would all fall under the channel partner program banner.Businesses that build robust channel partnerships are able to scale faster, build brand recognition, and expand into new markets to seek out fresh audiences or prospective customers. Having a BD team at your organization will allow you to build channel partnerships to scale more aggressively, bringing long-term value to your company. No business is going to turn that down.
Forming Strategic Partnerships
A strategic partnership is when two companies enter into a mutually beneficial agreement while remaining separate entities. In Mark Jeffrey’s case, he was responsible for forming partnerships with law firms and venture capital firms to sell their product to their clients. “Our largest partners are law firms who are the ones that manage equity for customers, but now instead of doing it manually, they do it in Carta. So building relationships with law firms and encouraging them to adapt to new software in a changing environment and how companies manage ownership, that was fundamentally the number one part of the role,” says Jeffrey.Jeffrey and his team were also trying to get these law firms to adapt to change at a firm-wide level which can be difficult for older law firms that move at a slower pace. “The other aspect was building a referral pipeline through VCs and any other entity that touches startups. Our product is sold to primarily venture-backed companies so we are able to narrow down who we partner with,” says Jeffrey. Channel partnerships make up 40% of Carta’s revenue, a pretty outsized portion of the company’s topline, according to Jeffrey.
Strengthen Your Internal Structure
Most of the time, you won’t have all the answers or you’re not able to do everything yourself. When Mark Jeffrey first started at Carta working in BD and partnerships, he was only one of two people on the team.“I spent a lot of time advocating for the importance of the BD and channel team internally. Ultimately, I was able to convince them to hire a VP of channel and BD who had built out channel teams before,” says Jeffrey. “He came in and was able to convince leadership that we need the resources to be successful and start hiring not only additional BD members, but also hire in operations and marketing and other functions to support the BD team.” Jeffrey was able to make strategic hires and convince leadership to invest in business development, instead of trying to captain a sinking ship himself. When you’re first starting out, it’s important to know your limitations in experience and look for people who can fill in the knowledge gaps.Convincing leadership to form a business development team is no small undertaking. Clearly laying out the value that a BD team brings to an organization like new revenue streams, scaling growth, and tapping into new customer bases, will help bolster your argument and get stakeholders on your side.
Starting a business development team can be rewarding and make the difference in the long-term success and sustainability of your organization. By pointing out these four specific reasons to your organization, you’ll be able to make a solid case for why your company would benefit in the long-term from having a BD team in place. We believe that most, if not all, organizations looking to grow should have a BD team.
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