All right.
So the big question that everybody has is Should my business focus on business development or sales
or possibly both.
And it's a really interesting question especially when you're starting out as a startup because it's
going to determine how you are going to grow.
So to dive into it what I want to do is I want to explain the strengths and weaknesses of both sides.
So you have a very clear understanding of what you're getting into when you decide on which path to
take.
So the first of we're going to go into is sales you know what is the sales strengths and weaknesses
that you should consider when you're deciding to grow your startup.
So when it comes to strings Obviously the sales cycle is going to be faster.
And the reason is because you don't have to customize your product you're selling the same thing over
and over to everyone.
And as you get feedback you can improve the product but essentially you're selling the same thing and
because you're selling it so fast relative to business development you're generating revenue much more
quickly whereas a business partnership or business relationship like in beedi business development you
have to rely on other channels to generate sales for you then you're going to get your cut but if you're
doing it yourself and you know what you're doing and you're doing it fast and you can generate sales
for it now and you don't have to run any third parties which is a really big benefit for some people
if you don't have product market fit quite yet it's a lot more practical because the sales cycle was
a lot faster.
So when you approach a company and you have them meeting with them they're going to tell you yes or
no and you're going to know whether or not you have a product that's actually scalable for your startup
sales relative to business development.
It's much more straightforward and simple and you know it doesn't require you to do a lot of custom
work or strategic thinking in that sense although I wouldn't say it's easy but you know it's relatively
more straightforward.
And when you do Master CEOs you've got product market fit you've got your sales cycle down and you can
really scale your business in a very predictable way.
Once you start hiring salespeople and start training them the same way.
And so once you you know if you are a master in sales and you become one you can really scale your businesses
and a lot of companies for example or call scale their business by really developing their direct sales
team.
Now let's go ahead and talk about the weaknesses when it comes to sales.
So what are the big drawback obviously is if you want to scale you're going to have to hire more sales
people to generate more revenue and a lot of times you may not have the funds to do that when you're
hiring more people not only that but you're going to have to prospect into more businesses to see if
there's a fight on both sides.
You're going to have to send a lot of e-mails to get a lot of different meetings and really see if you
can sell something.
And a lot of people you know they may not want to build their own internal sales team and use their
own resources to do that.
And you know when you're building out a sales team especially when it's internal you're basically paying
for these people to go out and sell your product.
And if they don't sell enough product to cover the costs of themselves then you might be taking a loss
if you haven't figured things out.
And each sales person may be losing you money every year if you do it incorrectly.
Something that may be a weakness for some people is that because the product doesn't change that much
if the product is not good to begin with it's very difficult to sell it.
You have to make improvements so by having a fixed product is good that it's simple but if it's not
the best product out there that is going to be very difficult to solve.
Hiring a sales team and building it internally and getting them the prospect technically is more work
because it requires a lot more manpower compared to business development.
There are strings you know the main ones really is it's faster sales generate that is Sale more quickly
it's more straightforward you can repeat the cycle and really scale up if you know what you're doing.
The con is really the amount of resources you have to have to scale and that's really hiring salespeople.
So let's go ahead and dive into business development.
What are the strengths and weaknesses in that traces when Forbes's development you can actually scale
your business without hiring a large sales team and that's because you can get one person to go out
and build these relationships with other companies and those other companies may be able to sell your
product for you.
And so with that it technically is less work because it requires less manpower but I wouldn't say it's
more here just less manpower.
And so we're business development.
You can reach new audiences by tapping into other peoples audiences and you don't have to directly go
into it.
Other people will be selling for you.
And also when you do business development deals it's really easy for you to leverage the brand of other
business you're working with.
For example the genius and Spotify example genius can now go out to all these other companies and say
hey Spotify is working with us and you know essentially you can do that with sales as well and business
development.
It's a lot more strategic versus repetitive sales cycle.
So in sales you're basically going out and selling the same thing and doing the same dance over and
over for business development it's a lot more strategic thinking and it requires you to be a lot more
mindful in how you approach business opportunities versus for sales.
You can keep repeating the process and make mistakes and improve on those mistakes so you know it really
depends on what your style is that you like if you're someone that likes to repeat things over and over
and get better at it over time than sales might be a better fit.
But if you're someone that's more strategic and you rather make a big chess moves to get some big deals
because of Alba maybe the channel for you now is go ahead and talk about the weaknesses.
So this is development.
The sales cycles is typically much longer and then when it comes to sales it's because when you're selling
something you're basically just selling it in and you're out for business development.
You're developing a partnership.
And when you develop these partnerships they typically last for years and it's going to take a long
time for someone to decide whether or not they should work with you.
You're going to need a lot of internal resources to afford the long term and potential revenue in the
future.
And what I mean by this is that because the sale cycle is so long for business development you may not
be generating revenue right off the bat whereas sales it's something you can do because you get it and
you get the money you get out for business development.
You might be talking to somebody for months or years before they actually do a deal with you.
And so if you don't have the funds to fund your company until you get to that point when you start generating
revenue.
Business development may not be the best fit.
A lot of founders may not like this but for business development you are reliant on the success of your
partners.
Meaning no if you work really hard to get a deal with a really big company and if they don't do the
job or they don't do what they promised they would do then you put all that time into that deal and
nothing comes out of it and that may be very devastating for a lot of people.
And so if sales you can actually just do everything yourself and get the sales whereas development although
you can tap into new audiences and much scaled away if they don't do the job then you're not making
revenue anyway.
Now one of the drawbacks is that it's going to take a lot of time to scale.
Now business development is technically more scalable when it comes to growing your company but it's
going to take a lot longer because you're going to have to focus on a lot of the deals that may take
months or years before you know anything fruitful happens.
And the last part is it's only practical if you have product market fit.
So in sales you can go out try to sell something if they say no you can iterate on your pitch or your
product and you go back and do it again and again and again it for business development because the
sales cycle was so long.
Once you start these relationships you want to make sure that you can actually offer real value and
that you know it already is a good fit and it makes sense to work with each other from your end.
So if you don't have product market fit this is the helm and probably may not be the best for you because
other companies who are going to vet whether or not they should work with you can see if it's not then
you pretty much are just wasting your time at that point.
So again you know they're going to be strengths and weaknesses when it comes to business development.
It really depends on where your startup is and you know it may be for you it may not be for you so you
really just gotta wait these out.
And so the really the big difference between business development and direct sales is how the money
is passed from the customer the end user all the way to you.
So in indirect sales you have you on the left corner right and you're going to go out and find customers
who may want to buy your product or service if they like it they're going to give you money and they're
going to give it directly to you and you take all the money because there's nobody in between.
Now when it comes to business Velma it's a little bit different.
You're going to be on the left side and then there's going to be this third party in the middle.
And so what you're doing you're going out to all these third parties and you're trying to sell them
on your product or service and say hey you should sell this to your customer base.
And so they're going to go out and go to their customer base and say hey we got this new product by
this one person you want to buy it or not.
So the customer will say sure I want to buy.
So they pass the money over to the third party and because there's somebody in the middle they're going
to give you a smaller card and that's going to go to you.
But even though you got a smaller of what the customer paid for it's OK because the third party went
out and did the selling for you.
So essentially they earned their piece.
And so you know the main key differences between direct sales and business development is when you're
doing direct sales you have control you have power of who you go after how you go after them and you
have complete 100 percent control of whether or not you're making the revenue business developments
a little bit different where you're relying on third parties to do a good job.
If they do a great job you may make a lot more money but if they don't do a great job at all and there's
not really pulling through for you that you're not going to make anything and there's nothing is really
not much you can do about it except try to find new partners and that might take you a long time.
And so that's the main differences I see when it comes to direct sales or business development.
So if you've got a product that you believe you can sell yourself and you can sell it quickly and you
know you won't you're somebody I want to hire a sales team.
Direct Sales might be a better fit but if you're somebody that don't necessarily want to manage a huge
sales team and you want to be a little more strategic and just work with the key people who are going
to sell your product or service you their customer base then business development might be for you.
So just look at your startup and see what's the best way to grow whatever it is that you have and not
only that but you also have to think about what's the best thing for you personally from a management
standpoint or a personal standpoint do you like to go out and directly sell to people or do you like
other people to do the selling for you.
And so just think about those two things.
And with that you'll be able to await their decision on which one you should do.
There are similarities between business development and sales and that is the sales cycle between business
development and direct sales is very similar especially when it comes to this course.
What you're saying you're going to do no matter whether you choose business development or sales is
that you're going to code email somebody you think will be a great fit for your product or service then
get a meeting with them and then you know over a series of meetings a lot of things are going to happen
like negotiation and presentations things like that.
And then at the end you're going to close the deal.
So whether you're doing business development or sales the sales process is the same cold email meeting
close the deal.
And then if you're in sales if you close the deal you get the money right away if you're in business
development and you lock in a deal where that person is going to sell for you and you should expect
to get money over time.
And so your company actually can execute business development strategies and sales strategies like I
mentioned before is similar to how Oracle does it.
And I'll give you an example of how the company used to work at lobbed at it.
And so for Lobb there's two divisions just direct sales where if you go on Lob's Web site you can buy
our products.
You know right off the bat right.
And so what we do is we essentially provide a way for companies to send postcards electronically so
rather than having to write it out or print it out you could send it as easily as you would an email
so person goes on.
Or they choose the custom enterprised have someone like me would get on the phone with them and they
might say hey I want to buy 50000 postcards per month.
How much is that going to cost.
I'm going to quote them.
They're just going to buy it then they're going to pay me every single month for the postcards that
they bought.
And so that's that's how the recked sales is going to work.
But when it comes to a business relationship partnership this is one Lobb did of autopilot.
And so what autopilot is it's a marketing software where people go on and they get set up these automated
marketing triggers where if a customer does something on their web site then they might automatically
get an e-mail or automatically get a text message or postcard.
And so if you notice how they built out that section up for the postcards.
So it says here engaged at just the right time of personal e-mail in app message as a mess and postcards.
So when you think about that postcard section what they're actually doing is they're using Lob's technology
and they're integrating it into autopilot.
And so from if you're a customer who goes on autopilot they're just going to use it as is.
They have no idea Lobb is working in the background to make it happen.
And so when they want to send postcards on autopilot autopilot is going to send a message to lob at
an Lob's going to actually deliver on that postcard.
But the end user does not really know this so what did it provided value for autopilot in that it gave
them the functionality to add the ability to send postcards from their marketing software and makes
it really easy for their customers to send these postcards.
So every time an auto pilot customer sends a postcard using autopilot Lobb is going to get paid.
And so this is an example of a business development deal because basically to make that happen it's
a lot of conversation between engineers to actually build this out and get it integrated.
But once it's integrated if people are actually using it law can expect people to use the postcards
on autopilot and they're just going to keep getting a check every single month for all the post-cart
that they send.
So it's very different from direct sales because of direct sales.
I would go when I would get someone to buy the postcards that I would get out for auto pilot.
You know it's built into their software so for the rest of time as long as autopilot continues to use
it labas cannot continue to get paid over and over when people use the post-cart functionality on the
autopilot website.
And so even at the bottom right you could see the companies that use autopilot like fresh dash crunch
base lift Microsoft patriarch's.
So basically Lobb can go out to all these other companies you know in the case of a business development
deal and say hey Microsoft uses us lift uses us and actually maybe they don't directly use Lobb but
because autopilot uses Lobb and their customer autopay they are technically a customer of law as well.
And so what these business development deals you can really leverage these brands when when you tap
into another person's customer base and then you can go out and it makes it a lot more easier to sell.
And so doing both at the same time lobbed does direct sales.
And at the same time it does a lot of business development with these other startups.
So when you think about growing your startup you have to think about.
Do people want to buy my product direct or does it make sense to be focusing on business development
and trying to work out deals like LA did with auto pilot.
And so once you get one business development you can get another and another and another and that's
how you really scale your business because once you get like multiple huge businesses to continue to
use your product every single month that's when you reach true scale.
And when it comes to direct sales you know you're going to have to build a huge sales team and just
sell over and over and over.
So just look at what type of company you want to build.
And the really think I want to stress is that you want to be mindful in how you do it you know be mindful
in what type of company you're trying to build.
What's the most reasonable for you personally and what kind of team you want to manage.
And if you want to do direct sales and you're good at selling do direct sales but if you want to do
business development due to business development if you want other people to sell for you.
And so that's everything we've got to cover between the strings and differences between direct sales
and business development.
Choose the one that works best for you and essentially I mean if you wanted to you could try direct
sales is how we see how it goes and if it doesn't work that well go to the business development see
how it goes and if both work really well do both.
You know if you have the bandwidth and you're you know you have the funds and you can hire more people
you can do both.
And you know see which one works the best.
So that's everything.
Be smart be conscious.
Pick the one that works for you.
Focus on it and then move on from there.