In large companies, business development usually means establishing and managing strategic relationships and alliances with other companies. Despite whole departments focused on this, it often remains a mystery as to what they actually do.
In early stage companies, the definition is a lot more fluid, but in general is an opportunity to test products or theories, gain some customer traction and make some money. It is often the early stage company that can be flexible and creative enough to get some of these deals done.
Early stage companies are often paralyzed on this front. The team is so busy thinking about and building the product and getting adoption (both very important) it is easy to miss potentially big opportunities with partners, licensing or other arrangements that would allow the business to reach new customers or extend the product or brand into other areas.
Here are some thoughts on approaching business development:
Keep your company’s goal(s) in mind. Examples include (and likely in this order):
Be creative. The best deals are the deals that haven’t been done before. This is a huge competitive advantage for early stage companies and few take advantage of this. Help your potential partner think about their business in a different way, show them opportunity, help the guy on the other side of the table look smart.
Find the decision maker. Don’t start discussions until you know who makes the ultimate decision. Although not a requirement, it is always better if this person is part of the discussions. Limiting the number of people who can say “no” is not a bad tactic either.
Make a real connection. Not unlike dating, you want to make a real connection. Do your homework, find out everything about their background, if they have kids, and what their interests are. Make the effort – visit the partner in their office and don’t make them come to you (or worse, if you are an early stage company, a random coffee shop). Treat your potential partner with respect, address their needs and genuinely care if they are successful.
Focus on execution. Don’t walk in to the meeting with grand ideas, but grand ideas and a way to get those ideas into reality. The “how” will help keep the door open for further discussions. It will help to have a quick discussion with your tech team before entering into the conversation to get a sense of what you can and can’t offer and the level on investment or difficulty.
Create solutions. Early stage companies are inevitably resource constrained and are not optimized for partnerships. Superstars don’t complain that they can’t get a particular feature created or partner highlighted. Superstars figure out what they have at their disposal, what can and can’t get done within the team and create opportunities to optimize these strengths.
Always on the lookout. I’ve seen this described as “sitting in the exit row” or “never eating alone.” It is the idea that you should be creating opportunities to meet to people, get ideas, or find the next potential partner. Sometimes you will be surprised where you will find them.
The best business development deals are the deals that bring value to both sides. The more value you bring to your partner, the more leverage you ultimately have. These are just a few tactics that I could think of this morning…