Business Development or Sales? The Distinction and the Difference for Small Businesses

If you’re running a small business, chances are you’re wearing a lot of those proverbial hats. You might even be the chief cook and bottle washer, literally. And while you may have delegated specialty function areas like accounting, you really are the heart, soul and sales of your business.

So what’s all this about business development? Isn’t that just sales?

Yes, and very definitely, no. In very large organizations business development is a separate function from sales. In medium sized organizations, business development is often a C-suite executive responsibility. But in smaller organizations, both functions are usually carried out by you. And they are different activities, regardless of what the job ads will tell you.

CJ Cornell, Visting Professor of Entrepreneurship and Angel Investor, defines the two functions this way:

Sales = transactions

Sales is responsible for selling a specific product or service, with a clear price and value, to an identifiable individual customer. Sales is the activity that happens once the specific customer is identified.

Business development identifies and executes NEW areas of business:

New markets, new distribution channels, new products - typically through the use of partnerships between another company and an internal department at your company.

He further states: “For Business development, the goal is not a sales transaction.”

You’re already doing both of these things if you are running your own business. But which is more important and how do you allocate your time between the two?

That depends on the age of your business and your sales success. If you are just getting started, you kind of need to be hearing the cash register ring before you allocate any serious time to business development. Once you have stable and consistent sales coming in, then you can turn your attention to business development. Because without sales, there won’t be any business to develop, right? See also these previous posts about lead generation.

As a savvy business owner, you’ll naturally fall into the role of business developer. Making connections for partnerships, seeking out new sales channels, spearheading collaborations; these are all business development conversations you’ll naturally find yourself in at networking events. But if you haven’t been operating for long and you really need $$$, you’ll need to put those conversations on hold for the time being and focus on revenue generation.

As sales continue to increase, and perhaps you delegate the sales function to an employee, business development will take on a larger role for you and your business. And that will be critical to your longer term success. Because all businesses need to develop to succeed and survive. Even if you don't have plans for world domination or a record setting IPO exit.