Business Development is the stage in which the organization seeks more options to make more money and reaches the point where the business becomes a significant market player. Business development is the result of the business cycle, company growth, and owners’ desire for higher equity value creation for sale. There are many aspects to Business Development. They include: identifying the current competitive environment, analyzing market structure, acquiring new technological knowledge, analyzing competitors and developing new competitive strategies and marketing programs. A strong understanding of all these factors is essential.
As part of a growth strategy Small Businesses can adopt several measures to improve revenue performance. One such measure is to reduce operating costs. Many organizations lose opportunities for revenue growth by overusing fixed assets, over-pricing revenue items, or by not providing customers with good customer service. Reducing costs can achieve these reductions, but can also increase financial risk.
Identifying the competitive environment is another business strategy. Companies must analyze their products and services, competitive positioning, and customer needs to determine what tactics will be adopted to change customer perception and create competitive advantage. One strategy is to re-examine internal processes and develop better ones. For example, a small business can re-examine its advertising campaigns to determine if it is communicating with its customers effectively. Or, the company can re-examine its supply chain processes to identify bottlenecks and concentrate efforts on reducing them.
Another growth strategy is product development. Product development, or PD, is an investment for long term revenue growth. By investing in new products, businesses can capture a larger portion of the market share. PD includes research and development, marketing and advertising programs, and the production of new products. There are multiple approaches to product development including hiring new employees to work on the new products, purchasing new technologies, or tapping into existing market research and talent.
Other business growth strategies include mergers and acquisitions, which are a common practice for businesses to expand their operations. Merger means acquiring smaller companies to achieve larger profits. However, many companies find it difficult to integrate the different elements of a merging transaction. Some businesses expand their operations by buying land or a property and then developing the land into a profitable enterprise. Others expand their ventures by using debt funding to acquire land and then using the proceeds to develop the land into a business operation.
A third strategy that most businesses use to expand their operations is to expand internal processes. Internal processes refers to those aspects of any business that are not made visible to customers. Internal processes include policies and procedures, training, sales techniques, and customer service. These aspects can be neglected because they are not visible to customers and can affect businesses’ profitability. When internal processes are expanded, businesses can ensure that these aspects of their businesses are not ignored and are made visible to all customers.
Growth in an Organization. Many small businesses often use the strategy of growth in an organization to enlarge their market share. In fact, some businesses have adopted the philosophy that size does not matter. Growth in an organization often means acquiring a portion of another company’s market. Although this strategy is popular among small businesses, this option has a number of drawbacks. First, expansion in an organization requires additional resources from the owners.
There are various other growth strategies available for small businesses. The best growth strategy for small businesses is to adopt one that is suited for the nature of the enterprise. Some growth strategies can be very expensive while other growth strategies can be inexpensive. The choice of growth strategy depends on the nature of the enterprise and the financial resources available.