Francesco Gizzi
Strategy
Business development: how to choose and test new opportunities
A moment almost always comes when the channel that made the company grow starts to slow down. Long-standing customers still buy, word of mouth still works, but the numbers no longer move as they used to. That is when many business owners start talking about new markets, new products, deals with partners. And they often open five fronts at once.
Business development, or BD for short, is the work of finding, choosing and validating new paths to growth. The key word is choosing. In my work with SMEs, startups and scale-ups I find that the problem is rarely a lack of opportunities. The problem is chasing too many, without a criterion for working out which ones are worth it and without a quick way to check.
In this guide I explain what business development is, how it differs from sales and marketing, how to decide where to grow among segments, markets, channels and partnerships, how to test a hypothesis in a few weeks, which metrics to look at and which mistakes to avoid.
What business development is
Business development is the set of activities needed to create new, sustainable sources of revenue for the company. It is not about this month's customers, but next year's. It deals with questions like: what new type of customer can we sell to? In which geographical area? Through which channel? With which partner?
In a large company it is often a dedicated function. In an SME it is almost always part of the work of the owner or a partner, done in whatever time is left over. This is one of the reasons it tends to become disorganized: an interesting contact opens up, then another, and nobody keeps track of what is being tested and with what outcome.
Good business development work has three phases, which repeat:
- Explore: gather and describe the possible directions for growth.
- Choose: filter them with explicit criteria and keep only a few.
- Validate: test them quickly and with little investment, then decide whether to scale or stop.
The right time to start is not when revenue falls, but a few quarters earlier. When the numbers go down, room to maneuver shrinks and you tend to accept any opportunity. Working on business development while the core business is still doing well lets you choose calmly and fund tests with resources you already have. That is why I consider it a permanent part of strategic consulting, and not a project to start only in an emergency.
The difference between business development, sales and marketing
The three functions work closely together and are easily confused, but they have different horizons.
- Sales works on the present: it turns existing opportunities into contracts, within an already defined market and offer. It is measured on pipeline, close rate and revenue for the period.
- Marketing generates demand and builds recognition with a defined audience. It is measured on leads, acquisition cost and the quality of inquiries.
- Business development decides where it is worth taking sales and marketing tomorrow. It identifies new segments, markets, channels and alliances, and validates them before the company invests in them on a lasting basis.
A simple way to remember it: sales farms the field you have, business development looks for and prepares the next field to farm. When a new direction has been validated, it passes to marketing and sales, who turn it into routine. If this handover does not happen, business development remains a collection of experiments that never become revenue. That is why it pays for the three to work on the same numbers and talk often, as I also explain in my sales consulting when it comes to integrating a new segment into the sales process.
How to choose where to grow
There are almost always four possible directions. It pays to examine them one by one, starting from those closest to what you already do well. A rule I often repeat: before going far, make sure you have made the most of what is close at hand.
New customer segments
This is often the least risky path. Same product or service, a different type of customer: a new industry, companies of a different size, a different role within the company. To find it, look at your current customers: the most profitable and most satisfied ones often share characteristics that point to similar segments still little explored.
New geographical markets
A new region or a foreign country. The potential can be high, but there are many hidden costs: language, regulations, buying habits, the need for a physical presence, payment terms. Before opening a market it is worth asking whether you can serve it with your current structure or whether it requires new people and processes.
New channels
Selling through different routes: online if today you sell only through agents, resellers if today you sell only directly, marketplaces, public tenders. A new channel changes margins, payment times and the relationship with the end customer. Before opening it you need to model the unit economics: how much is left on each sale after fees and cost to serve.
Partnerships
Partnerships are the most underestimated lever and, at the same time, the one where the most time is wasted. They can give you access to customers, credibility, expertise or distribution without building everything from scratch. The most common forms are:
- referral agreements, in which two companies with similar customers pass opportunities to each other;
- distribution or reselling, in which a partner sells your offer to its customers;
- integrations, in which two products or services combine into a single offer;
- co-marketing, with shared events, content or campaigns.
Before chasing a partnership, answer five questions in writing: what concrete advantage it brings, what dependence or rigidity it introduces, how consistent it is with your positioning, what margin it generates in the medium term, how much of your team's time it will absorb. A partnership that brings volume but erodes margin or delivers off-target customers weakens the model instead of strengthening it.
Management matters as much as the choice. Many agreements signed with enthusiasm fizzle out within three months because nobody follows them up. You need one contact person on each side, measurable 90-day goals, a fixed review meeting and a clear way out if the numbers do not come.
A filter for deciding
To compare different directions I use a score from 1 to 5 on five criteria: size of the opportunity, closeness to current skills, expected margin, investment required (where a high score means low investment) and time to see a result. You keep the two or three directions with the highest score and put the others on hold. Putting them on hold is an explicit choice, not an oversight.
How to test quickly before investing
The most expensive mistake in business development is investing as if the hypothesis were already true. Hiring a salesperson for a new market, translating the website, printing materials, before knowing whether anyone will buy. The method I use with clients reverses the order: first you validate, then you invest.
- Write the hypothesis as one measurable sentence: "Architecture firms with more than ten employees in Rome and Milan buy our service at an average price of €8,000".
- Define the success signal before you start: for example, five qualified meetings and two proposal requests in six weeks.
- Use the cheapest tool possible: a list of thirty contacts and direct messages, a dedicated landing page with a small campaign, two or three conversations with potential partners.
- Listen to the objections: the test also serves to understand what the offer is missing for that segment.
- Decide on a fixed date: scale, correct and repeat, or stop.
A practical example
Imagine a warehouse management software company that sells to food distributors and wants to enter the pharmaceutical sector. Instead of immediately building a dedicated version, it prepares a page describing the offer for that sector, contacts forty targeted pharmaceutical companies and talks with an industry consultant about a possible referral agreement. Budget: a few thousand euros and one person's time for six weeks.
If at the end it has eight qualified conversations and three proposal requests, the hypothesis holds and it makes sense to invest in adapting the product. If it has two conversations and many objections about regulations, it has learned in six weeks what it would otherwise have discovered after a year of development. Either way, the test has been worth it.
With a proptech startup, for example, we went from 0 to 40 B2B customers in six months.
Business development metrics
Each growth direction should be tracked with a few numbers, the same for all of them, so that they can be compared. The ones I find most useful are:
- Response and meeting rate: how many of the people contacted agree to talk.
- Qualified opportunities generated for each new direction.
- Average time to close, to be compared with that of the current market.
- Average contract value and margin, because revenue alone can be misleading.
- Acquisition cost, including the time of the people involved.
- Share of revenue from new directions out of the total, quarter by quarter.
For partnerships, add the opportunities received from the partner, the conversion rate of those leads and the net margin after any commissions. If these numbers are not visible in a single view, decisions end up being based on the enthusiasm of the moment. A well-designed marketing and sales KPI dashboard makes comparing directions immediate.
Mistakes to avoid
- Opening too many fronts at once, with the result that none of them is properly validated.
- Investing in structure before getting a signal from the market.
- Choosing an opportunity because it is fashionable or because a competitor did it.
- Signing partnerships without goals, contact people and a review date.
- Looking at revenue and not margin: a channel that sells a lot can lose you money.
- Neglecting the current market while looking for the next one.
- Not handing validated directions over to marketing and sales, leaving them in a permanent experimental phase.
One last note: growth is sustainable when demand, structure and execution capacity stay aligned. A good opportunity handled by a team already at its limit can do more damage than passing on it.
When you need outside support
Business development requires time, method and a certain distance from day-to-day work, three things that are in short supply in an SME. Outside support is useful when you have more opportunities than time to assess them, when you are about to make a major investment in a new market or channel, or when you have already tried to open new directions without clear results.
In my business development consulting I work on exactly this: mapping the possible directions, choosing a few with clear criteria, building quick tests and turning the ones that work into a market entry plan, linked where needed to your go-to-market strategy. If you are assessing new opportunities and want to understand which ones really deserve your energy, write to me: we will start with a conversation about your context and the hypotheses you already have on the table.
FAQ
What is the difference between business development and sales?
Sales closes contracts within an already defined market and offer. Business development identifies and validates new segments, markets, channels and partnerships, which then pass to marketing and sales.
When is a partnership really worth it?
When it brings on-target customers, sustainable margins and a concrete advantage without creating excessive dependence. You still need a contact person, 90-day goals and a review date.
How long should a test of a new opportunity last?
Four to eight weeks are usually enough to get a first signal. What matters is setting the success criterion in advance and deciding on a fixed date whether to scale, correct or stop.
Does an SME need a dedicated business development role?
Not always. Often a clear method and someone who sets aside fixed time every week are enough, with the support of an external consultant during the selection and validation phases.