Maybe It’s Time To Go Back to the Old-School Approach to Business Development
The art of business development is the art of breaking into new social networks. And it’s the single hardest job in show business. The skill is as rare as spotting a wolf in the wild.
Almost every entrepreneur I know dreams of hiring someone who can help the business expand its reach. And many business services firms hire for business development positions but with little success. By the time management realizes that the person is a dud, eighteen months have passed. It’s nearly impossible for management to identify the markers that indicate a person is on his or her way to landing new business.
From the perspective of the business development person, management gives up too soon. It measures new business development like it does sales, but the two have different metrics and completely different cycles.
Perhaps the single biggest obstacle to new business development is the comfort of the old. It’s like throwing on your favorite pair of jeans. You call up your old network, set up lunch, play a few rounds of golf, and ask the question. In the wealth management industry, for example, relationship managers coddle existing clients with golf on Fridays, regaling them at the 19th hole, ingratiating themselves as “friends.” One day the relationship manager starts her own firm, tiptoeing around the non-compete, charting a new course. She thinks, “I’ll take my book of business with me. I can do this!” One person who did just that recently told me, “You’re always surprised who comes with you and who doesn’t.”
A few do, many don’t. And then the hard work begins: how do you break out of your existing network? Once you’ve worked your existing relationships for referrals, how do you jump to a new network?
An Old Pair of Jeans
In April, my oldest son and I were rear-ended by a semi tractor trailer in the Minneapolis area while on a college visit. It was a horrible accident, totaling our SUV, and we felt grateful to survive.
The hassle of a totaled vehicle is definitely a first world problem, but an annoyance nonetheless. One problem was getting reimbursed for the extended warranty that I had paid up front when I purchased the truck only eight months earlier. Extended warranties are a murky business. Dealerships push them hard because it’s where the margins are. It’s how executives make their bonuses in a low margin business. You can imagine how quick dealerships are to refund an extended warranty.
After several months of playing nice and working the system, I was angry. No return calls from the dealership. I even stopped by several times. I felt like a pariah asking for a crust of bread even though I had purchased three vehicles from the dealership in the past seven years.
One day, my youngest son had a friend over for a couple hours, and I remembered that this friend’s godparent was the CFO of a chain of dealerships, including the one from which I had purchased my vehicle. I made one call to the father of my son’s friend. The father made a call to the CFO, and the next business day, a senior level person from the dealership called me. In a week or so, the check arrived.
It’s always who you know, and since this is Chicago, that is even more true. It is the nature of social networks. It’s great if you have one, and a bummer if you don’t.
The downside of social networks for new business development, however, is the comfort with the relationships once they have been created. The high-in-demand skill is not how to transition one’s old book of business to the new firm. That’s not new business development; it’s old business in a new location. It’s easy to become lazy when you have a strong social network.
The skill is jumping (or connecting into) new social networks. The art of new business development is initiating relationships that lead to different social networks.
Time, Money, and New Business Development
I’m a part of a group of entrepreneurs who meet monthly, and recently one of them asked whether he should fly to a western state to meet with an executive. There was no guarantee of new business. No way to tie the expense to revenue. But the entrepreneur had been referred to the executive, who was definitely a prospect for the professional service.
I was struck by the question itself, given the quality of the referral. The entrepreneur was thinking only about sales and tying revenue to expense: how could he pay for the trip? He wasn’t thinking about the importance of the new relationship and how, geographically, that new relationship could help him break into an adjacent social network.
What if he never closed a deal with that executive, but the conversation with him lead the entrepreneur to meet five of his corporate board members who lived across the United States and Europe?
It’s never, ever about the presenting relationship; it’s always about the entree into his or her social network.
New business development always requires risk and a line item for travel that may appear to be unproductive. In an age of LinkedIn, where one can have a couple thousand online connections but rarely land new business, it’s the relentless pursuit and the care and feeding of new relationships that helps your firm push through its borders and take new territory.
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