1)  Marketing, properly executed  is structured activity that introduces companies and products to markets is has identified and segmented. Marketing people make initial contact with the customer base they have defined. They use materials they have designed to leave a lasting impression and the potenatial customer wanting more. They enunciate the customer's pain-points and establish the identity and unique nature of the solution their company has. Marketing has deep roots in its parent company and shallow roots in the customer base.
2) Business development (BD) has deep roots in the customer base and slightly less deep roots in its own company. It is the business of BD to develop long-term, meaningful relationships with cusomers and prepare the for the advance of the sales team.

You can now assess how important business development is for small business without further guidance.

Business development and marketing are related, but different concepts. They operate at different levels.
 
I think of the two areas essentially as ‘business-related’ and ‘customer-related’ respectively. It’s not perfect, but it’s one way of breaking down the concepts. 
 
For example, ‘business-related’ (or business development) activities are about growing your business at its operational level. It might involve salespeople visiting prospects or business-to-business relationships. 
 
Customer-related (or marketing) activities correspond with reaching your brand’s customers. These include things like ads, content development, branding activities, PR, promotions and customer service (among many other activities).  
 
Another way of viewing it is ‘marketing’ involves reaching the intended audience, and ‘business development’ happens after the customer is aware of the offering.
 
As you can see comparing these two terms can be confusing and there’s no real universal rule about how to differentiate between them. Use of the terms can also be contextual, such that they differ depending on the business or industry to which they’re being applied

Marketing is getting your message out to the right people where they are when they are there. I believe that was well answered by Keith Rowley

Business Development, well I have a different spin on that. Traditionally again Keith's answer would be a staunch one. However, I challenge (ever so slightly) "Business Development" people on this concept. Who's business should you be developing, yours or the customers? Most BD people are there to develop their employers business. While that is true, I believe your BD function should serve the customer. I believe our role is to help our clients/customers business develop through the use of our products or services. We are interested in their business success. 

Business Development is critical for any size of business.