Business Development: How Many Warning Signs Do You See?

There’s a lot of confusion and concern in small and mid-tier businesses about business development. I think most business owners and CEO’s would like to see improvement in this area. If you aren’t one of them you are indeed lucky.

Maybe a good place to start is asking the question, what does business development mean to you and your organization? Is it:

  • Sales?
  • Marketing?
  • Advertising?
  • Public relations?

For me, it’s all of the above but much more. I think the best definition I’ve seen was in a article from March 2012:

“Business development is the creation of long-term value for an organization from customers, markets, and relationships.”

The key statement is creation of long-term value. It’s an ongoing effort of development and maintenance. Any of the activities above alone will not create long-term value.

One of the things I remind my clients of, on a regular basis is, you should always have your business ready to sell. You may not want to sell it but it’s great to have options. If your business is ready to sell it should be at it’s best.

One CEO I worked with summed it up really well. He said. “when I want to sell my business nobody wants to buy it, when I don’t want to sell, everyone wants it.” Many business owners find themselves in a similar position, when they get in trouble they start thinking about selling. Which is exactly the wrong time. When things are going well, they get more attractive to buyers, but they get comfortable.

The key is business development is to understand it’s a process that includes all segments of your business, all the time!

So, what 7 signs would tell you it’s time to make investments in a business development strategy?

Here are my thoughts. The earlier you recognize these signs and the better your position to deal with them.

Flat or declining sales

If your sales haven’t grown year-over-year the first reaction is usually to hire more sales resources or increase pressure on the ones you have. Often the problem is deeper than that. Sometimes we are quick to blame the economy, government regulations etc, but the truth is some businesses grow in tough economic times, usually at the expense of weaker competitors.

It starts with customer focus. What are their real needs? What do you offer your customers that your competitors don’t? What solution do you provide? Often I hear things like great customer service, high quality or fast delivery. In today’s market these are assumed, if you aren’t providing them, you’re not competing.

Declining profit margins

Another indicator that can have several root causes. One of which is pressure on sales frequently leads to lowering price to close business. If you can’t communicate value to your customers that they understand and agree with you are forced to sell on price. This works well if you are the lowest cost provider of your product or service. If not, you’re going out of business.

Which leads to the other reason for declining margins, increased internal costs due to operating inefficiencies. Rework, additional labor, waste, excessive overhead are all items that impact profit, and passing them on to your customer is not an option. If these items exist and aren’t dealt with quickly, they will put you in a position of worrying about survival, not growth.

High customer turnover

Do you know the real reason customers leave? What is your turnover relative to your industry? Is your sales and marketing team spending enough time on your existing customer base? Your internal resources have to be able to delight your customer 100% of the time, or sales become a revolving door.

Inability to hire or retain key employees

Sadly this is a lagging indicator because typically the employees you lose are the ones with the best options, and the same ones you’ll need to grow your business. Often in larger organizations, key employees are the first to recognize issues that aren’t being dealt with and begin to look for options.

Difficulty meeting financial projections

Do you have trouble meeting sales forecasts? Profit margins? Accounts receivable turns? Inventory turns? All of these affect cash flow and impact your ability to invest in real growth.

Inability to access adequate credit or capital

If you aren’t attractive to quality lenders, you can’t grow your business. Going to a lender without a solid plan that you’ve got a track record of performing against is a tough sell.

Lack of a sales pipeline

Are you having issues generating leads and closing orders? Are you pulling orders into the current month to make a projection, without leaving an adequate backlog for the following month? Do you know the root cause of the problem?

A solid business development strategy has to include the entire organization internally, as well as external markets and competitors.

It’s much more than sales and marketing, it’s about developing your business to compete profitably in any market environment.


Martin Harshberger
Martin Harshberger
I’m a business development coach in the with 20 years’ experience as a mid-sized company CEO. I specialize in helping businesses grow and increase value for stakeholders. We focus on the development of a sustainable growth strategy that includes all key business functions. Repeatable business growth requires a clear organizational strategy with performance metrics, a defined marketing & sales strategy, and accountability for execution. We are a member of the Strategy Execution Alliance and a Certified HubSpot partner. We employ a holistic approach using analysis and planning tools coupled with a methodology to identify opportunities and threats, develop solutions and facilitate execution. Recognizing that most strategic and change initiatives fail, we offer tools and process to help you succeed. Having founded and grown two mid-tier companies over 20 and I’m the author of “Bottom Line Focus” how to take your business from surviving to thriving in 18 simple steps. Specialties: Business development, Business growth, Strategic Planning, strategy execution process, and tools. Marketing strategy development and execution, digital content marketing programs and tools.

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