Do you want to start a business development company? If YES, here is a complete guide to starting a business development company with NO money and no experience plus a sample business development business plan template.
If you are business inclined and you are thinking of a business to start in line with your passion and skill, then a business development company will be an ideal business to start up. As a business development company (BDC), you would be able to invest in businesses and help small and medium-sized companies to grow, most especially in the initial stages of their development.
This article will give you all the necessary information you need to make your decision to start a business development company in the united states of America.
Steps to Starting a Business Development Company
1. Understand the Industry
Business development companies began in the 1970s at a period when the Private Equity funds began to gain prominence among large and sophisticated institutional investors. During the 1980 amendments, Congress created closed-end investment funds to finance and invest in private companies.
The goal of business development companies is to provide finance for start-up businesses which would stimulate the economy, and generate income, thus increasing the public investor’s wealth.
From the year 2000 till now, the business development company industry has increased in number more than 10 times. This growth is also followed with more opportunities for investors. With this, investors have been able to gain exposure to private equity.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
A business development company is an all-encompassing business as it comprises of start-up businesses or existing businesses that may need your service. Also, individual entrepreneurs might also need the services of a business development company as entrepreneurs.
3. Decide Which Niche to Concentrate On
The business development industry allows you to specialize in other niches relevant to your business. Here are some niche ideas you could specialize in;
- Auditor with specialty in contract compliance between media agencies and big brands
- HR consultant with specialty in workplace mediation and workplace investigations
- Regulatory finance specialist for utility and telecommunications companies
The Level of Competition in the Industry
Whatever business you decide to pitch your tent in, you are bound to face competition with the BDC inclusive. The level of competition experienced in the business development industry does not have anything to do with the location of the business since all BDC’s can operate from any part of the world and still compete effectively in the global market.
When it comes to BDC’s, distance is never a barrier in competing for clients both nationally and internationally.
4. Know Your Major Competitors in the Industry
There are always brands in every industry that perform better than others or are better regarded by the general public than others.
Some of these brands have been in the industry for long and so are known for what they offer. Some are also known for how they treat their clients. Here are some of the leading business development companies in the United States of America;
- Apollo Investment Corp
- Ares Capital Corp
- Fifth Street Finance Corp
- KCAP Financial, Inc.
- Prospect Capital Corp
- FS Investment Corporation
- Gladstone Investment Corp
- Medley Capital Corp
When starting your business development company, you have to get your economic analysis right for you to generate profit from it. You need to plan how you would grow and expand your business to increase your client base and spread your business within your country and other countries of the world.
When carrying out economic analysis for your BDC, you would need to factor in the returns on investment your investors will get and how to maximize profit. At regular intervals, you would need to continuously review your financial position while running your BDC.
You would also be required to map out strategies to help you to get a market share for your BDC by focusing on some specific areas of specialization.
5. Decide Whether to Buy a Franchise or Start from Scratch
The Business model for your business development company is not cast in stone. Basically, your overall business vision and mission statement should be your guide. However, for your business development company, it would be good to start it from the scratch. You would be able to build your reputation gradually.
6. Know the Possible Threats and Challenges You Will Face
If you decide today to start your own Business Development Company, one of the major challenges you are likely to face is the presence of well – established business development companies who are offering same business development services that you intend to offer. The best way to circumvent this challenge is by creating your own market.
Unfavourable government policies or policy somersault in the United States can also pose a likely threat to your business.
Other threats are global economic downturn which can affect spending power and the arrival of a competitor within your location of operation. When you are faced with these threats, you only need to be optimistic that things will continue to work for your good.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Generally, for this type of business, you are not short of options to choose from. You can either choose a Limited Liability Company (LLC), general partnership, or a sole proprietorship. Ordinarily, if you are starting up with a modest capital, the sole proprietorship option should have been the ideal business structure for you. But the limited liability Company is mostly recommended for obvious reasons.
As a matter of fact, if you intend to operate your business throughout the United States, then choosing sole proprietor is not ideal for you as you would be exposed to more financial risks the farther you go. Limited Liability Company, LLC or general partnership will be an ideal choice.
Setting up a limited liability Company (LLC) will effectively help to protect you from personal liability. If by chance anything goes wrong in the business, you will have only the money you have invested into the LLC at risk. This is not so for the general partnerships and sole proprietorships.
Limited liability Company also has simpler and more flexible operating structure in place because you don’t need to appoint a board of directors, organize shareholders meetings or other managerial formalities in order to successfully run your business.
There are some other factors you would need to consider before choosing a legal entity for your business development company, they are namely; limitation of personal liability, ease of transferability, admission of new owners, taxes, and of course investors’ expectations.
If you critically study the pros and cons of all the various legal entities available, you will agree that limited liability company (LLC) is most suitable for your business. You can even start-up as a limited liability company (LLC) and later convert it to a ‘C’ or an ‘S’ corporation in the future especially when you have the plans to take your business public.
8. Choose a Catchy Business Name
Generally, when it has to do with choosing a business name, you are expected to be creative because the name you eventually come up with will go a long way to create a perception of what your business entails.
Usually, most entrepreneurs follow the trend in the industry they want to operate from when naming their business.
If you are thinking of starting your business development company, here are some catchy names that you can choose from;
- Gemstone Investment Corp
- Keystone Investment Corp
- Prudent Investment Corp
- Iclass Financial, Inc.
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and also in most countries, you won’t be given the license to operate a business without having in place some of the basic insurance policy covers required by the industry you intend to operate from. So, it is highly important to create a budget for insurance policy covers and you can also consult an insurance broker who will guide you to choose the best and most appropriate insurance policies for your business development company.
Here are some basic insurance covers that you are expected to purchase if you want to start your business development company in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Workers Compensation
- Business interruption insurance
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Motor vehicle insurance
- Payment protection insurance
- Employment Practices Liability Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
As a business development company, you are handling other people’s businesses for them. You need to know that you are exposed to certain risks. You need to protect your hard-earned intellectual property rights against those that might want to use it to defraud other people.
Therefore, you need to protect your company’s logo and other documents unique to you or even jingles and media production concepts.
You can file for intellectual property protection. If you intend to register your trademark, you are expected to file an application with the USPTO. The final approval of your trademark will be subject to review of attorneys as required by USPTO.
11. Get the Necessary Professional Certification
Aside from the results which would be required of you as a business developer, ensuring that your key members of staff get professionally certified is also important. To make an impact in the business development industry, you should strive hard to acquire all the needed certifications in your field.
It is also recommended that you should go for more professional certifications as it will really show your commitment towards the business. Here are some of the certifications you can get if you want to run your own business development company;
- Certified business development expert
- Certified business relationship manager
- Certified business consultant
- Certified business coaching specialist
- Certified international business strategist
- Customer service manager certificate
- Certified advanced business analyst
Note that the higher your experience and qualifications, the easier it will be for you to secure high profile business development deals from clients.
12. Get the Necessary Legal Documents You Need to Operate
It is very necessary and important to have your legal documents in place before launching a business in the United States of America. This is because you cannot successfully run any business in the United States without the proper legal documentations.
Here are some of the basic legal documents you would need to legally run your business development company in the United States;
- Business Plan
- Business License and Certification
- Certificate of Incorporation
- Non – disclosure Agreement
- Insurance Policy
- Consulting contract documents
- Employment Agreement (offer letters)
- Apostille (for those who would like to operate beyond the United States of America)
- VAT registration
- Federal tax identification number
13. Raise the Needed Startup Capital
Whatever industry you decide to pitch your tent in, whether it is a start-up or a franchise, whether it is started from home or not, you will definitely need finance to start it up. Though the financial outlay may vary but the role of finance in any business cannot be over-emphasized.
To get a good source of finance for your business, one of the first and perhaps major thing that you need to do is to write a good business plan. With this in place, you may have much less stress in convincing your bank, investors, and friends to invest in your business.
Here are some ways you can source for start-up capital for your business development company;
- Raising money from personal savings
- Raising money from sale of personal stocks and properties
- Raising money from investors and business partners
- Selling shares to interested investors
- Sourcing for soft loans from family members and friends
- Applying for loan from banks
- Applying for business grants and seed funding from angel investors and donor organizations
14. Choose a Suitable Location for your Business
Business development requires you to be in constant touch with your clients. You need to be accessible to your clients, so you need to factor in all these when getting a location for your business.
If you take your time to critically study the business development industry, you will realize that most players in this industry are willing to pay expensive rents in order to stay in a busy business district; a place where business activities are at its peak.
The role of location in the success of your business cannot be overemphasized; hence as an entrepreneur, you should be looking forward to renting or leasing a facility in a visible location; a location where the demography consists of people with the requisite purchasing power and lifestyle.
It is also worthy of note that to get a good location for a business facility does not come cheap hence you should allocate enough funds in your budget for leasing/renting. You could also talk to a business consultant or a realtor to guide you when choosing the best location for your business development company.
15. Hire Employees for your Technical and Manpower Needs
Aside from the professional qualification and experience needed to thrive in this business, you would also need to get competent hands to assist you to achieve your goals. For this business, you might need to start with a minimum of 4-7 key competent staffs.
The Service Delivery Process of the Business
The service delivery process of a business development company has to do with providing the needed support for start-ups and medium scale business. It has to do with getting involved in all the activities that would ensure profitability and stability for a business. It also has to do with managing investor’s assets and ensuring good returns on investments.
16. Write a Marketing Plan Packed with ideas & Strategies
As a business development company, you would have a lot to prove in order to show that you have what it takes to develop a business before you can be awarded major business development contracts. It would be best to first get your professional certifications and build a successful career in business development.
People and organizations will like to hire your professional services if they know that they are going to get good value for their money.
So, when you are drafting your marketing plans for your business development company, ensure that you create a compelling personal and company profile. Asides from your qualifications and experience (expertise), it is of equal importance to clearly state your past achievements as it relates to the industry you intend to start your business in.
This will further boost your chances in the market place when sourcing for business development contracts. Here are some of the platforms you can make use of to market your business development services;
Introduce your business to individuals and companies by sending your brochure and introductory letters with detailed explanation of your services
- Promptly bid for business development contracts
- Advertise your business in community-based newspapers, radio stations, and local TV stations
- List your business and services in local directories
- Encourage the use referrals and word of mouth
- Promote your business via the internet
- Join local chambers of commerce and industry around you to talk about your service
- Engage the services of marketing executives to carry out direct marketing for you
17. Develop Iron-clad Competitive Strategies to Help You Win
The business development industry is a competitive one, and as such you will need to come up with unique ideas and strategies that will enable you to outsmart your competitors in the business development industry. Part of what you need to do in order to stay ahead of your competitors in the industry is to offer professional and excellent service to your small and medium sized clients at their initial stage of development.
Start-ups and entrepreneurs will always consult with you if they are convinced that you have a better option especially as it relates to producing results business-wise. Another strategy to adopt is to ensure that your company is well positioned with highly qualified and certified business development experts to attend to client’s needs.
18. Brainstorm Possible Ways to Retain Clients & Customers
In any business you decide to pitch your tent in, you will need to consider how to increase your customer retention. This will go a long way to determine the success of your business.
While looking at retaining your customers you should also look to attract new customers. One of the easiest ways you can increase your customer retention and attract new ones is to consistently satisfy your customers. When you satisfy your customers they will hardly source for an alternative service provider.
According to statistics, one of the main reasons why most clients go in search for alternative service providers is due to a drop in the quality of service offered. The other reason is poor client service.
Part of ways to achieve this is by tracking results and progress with the aim of improving on them as quickly as possible. If you intend to build a loyal client base and manage your clients effectively, you should purchase customized CRM software.
With this software in place, you can easily stay in touch with your clients by carrying out quick surveys, seamlessly introduce new products and prices to them, felicitate with them on their birthdays and other anniversaries. This software can help you to achieve a lot in customer satisfaction as you can even send bulk SMS and customized e – mails to your clients.
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are into any business, your specific goal should be to boost your brand awareness and communicate your corporate identity. This is one of the secrets of larger companies as they are always willing to spend a large chunk of their yearly budget on boosting their brand awareness and communicate their corporate identity the way they want people to perceive them.
If your intention of starting a business development company is to spread your reach beyond your city of operation to become known nationally and internationally, then you must be ready to spend money promoting and advertising your brand.
To effectively promote your brand, you should leverage on the print, electronic and social media (the internet). The social media (internet) is highly recommended for brand promotion and advertising as it is cost effective and wide reaching.
Another strategy you can use is to sponsor relevant community-based programs and advertise your brand on the TV, radio, relevant magazines and newspapers. Here are some of the platforms you use to promote and advertise your business;
- Encourage word of mouth publicity from your loyal customers
- Leverage on social media platforms like;Facebook, Twitter, YouTube, LinkedIn, Instagram, Snapchat, Google+ and other platforms to promote your business development company
- Place your billboards and banners in strategic positions around your city
- Distribute your handbills and fliers in areas around your neighborhood
- Contact small businesses, corporate organizations and the international business community informing them about the services you render
- Advertise on your official website and make use of your blog to help you pull traffic to the site
- Ensure your official cars are branded with your employees wearing the company’s branded shirt or cap at regular intervals.