Basic Business Development: The Importance of Simplicity and Rigor

I am sometimes astonished at how enterprise-level business development professionals, even at mature companies, complexify and derail client development. Early stage businesses looking for sales momentum aren’t the only ones; even seasoned business development professionals lose their way.

While having a clear ICP and established value proposition are key, at the risk of stating the obvious: simplicity and rigor are the bedrock for business development. Here’s a 5-step approach I use with both established and emerging enterprise-solution businesses to track the progress of their leads —

1. MNDA: start of the conversation. Enough indication of a potential match that the client and you need to disclose proprietary information to further explore the opportunity.?
2. Letter of Intent: the client interest is established to the point of committing to a structured process. The LOI outlines client goals, who will be involved, and the timeline. Essentially it lays out the meetings needed to determine if there is a fit. It should only take 3 meetings (max) after the NDA to reach this point. A successful LOI process results in agreement to fully scope a pilot project.
3. Pilot Agreement: the client is committed to testing your solution with a subset of their customers/users (or a proxy). The client and you are devoting staff time and resources to the pilot, with clear outcome measures and a defined scope and timeframe. The pilot agreement is explicit about IP ownership and what happens to the IP after the agreement is complete. If there is no fee attached, all IP rights should be retained by you regardless of the success or failure of the pilot.
4. Term Sheet: this is a pre-contract outline of business terms. Outlines financial agreement, term of agreement, what is to be delivered - all the substance of a contract but not yet in legal form. The deal could still fall apart on terms, but odds are it will not.
5. Contract: the term sheet provisions are transferred into the client’s or your own contract format and signed.

Anything before #1 is an undifferentiated pool of leads, regardless of how many conversations or whatever expression of client interest. From a sales and pipeline valuation standpoint, anything before #1 has no value. Anything before #5 isn’t a client.