Tag: #startuptips

Benjamin Franklin was an exceptional man with even exceptional wit and wisdom. Though the statement is subjective, it is apt in every situation involving planning.

A rather important part of the whole process of starting a company is devising an astute and accurate mobile app business plan.

A goal without a plan is just a wish. If you do not want your goals to become far-fetched wishes then you have to invest your time and efforts in creating a descriptive business plan for your app.

Now, I understand this is not something that you might be inherently proficient in since you are an entrepreneur and this is not necessarily your niche of expertise. So, if you are unsure of what you are supposed to incorporate in your mobile app business plan or even how to start one, refer to this detailed article to help yourself.

Nevertheless, before we start our discussion, I feel we first need to sit down and ponder on the “why” of creating a business plan for your mobile application.

Why make a mobile app business plan?

Magnetizing investments

The most obvious reason why mobile app startups make a business plan for developing an app, as you might have surmised as well, is to bring in more and more investments. This is to attract investors and even start-up co-founders – the choice is yours to make, and sometimes you need to have the support of both.

An efficacious business plan will help your vision be represented in a crystal-clear way while displaying the scope of your mobile app concept and idea as well.

Reducing the risks

Un-planned actions pertain to risks, and risks in business are synonymous to cost-inefficiency and loss.

When you devise a business plan, you actually map out the whole journey of your business, something that can provide you great insights into the many unanticipated and probable risks.

Helps you keep everything in perspective

When making big decisions, it is common to forget and leave out certain important aspects that can make or break the foundation of your business at a much later stage. However, when you have a blueprint including a set of points acting as a reminder of those crucial aspects, it becomes easy for you to remember them. Business Plan is that blueprint.

Now, it’s time to move on to our main discussion answering questions such as “How to build Business Plan for a Mobile App Startup” or “How to Write Business Plan for Mobile App Idea?”

Steps to create a business plan for your mobile app

1.  Executive Summary

Essentially a short overview of your detailed mobile app business plan, this stage is something you must pay special attention to, since, this is going to be the first thing the potential investors will encounter.

Things that make this section ideal are – convey more while writing less, refrain from mentioning the working of the product, etc. Instead, focus more on market scenario, targeted users, and this-

• Focus on problems addressed

‘Problems’ are something that always prevails. Meaning, there is always room for improvement and innovation. What you are supposed to do here is analyze the problems users are facing with the existing solutions and find out –

1. the needs and demands of the users at the moment
2. problems users are facing with the products similar to yours
3. why these solutions fail to satisfy – what are they lacking that you can provide in a better and different way, and so on.

• State your proposed solution

Try not to divert from the path of the problem while explaining its solution, i.e., do not go into the functioning and features of your app, rather stay focused on the problem and the ways in which your app addresses them.

• Unique Value Proposition

This is where you can boast of the things that differentiate you from other organizations and businesses, something about your app that is unique in itself. Not just better but definitely different. For example, the USP for Domino’s Pizza is “You get fresh, hot pizza delivered to your door in 30 minutes or less or it’s free.”

• End objective of your app

After everything’s said and done, it all comes down to this – The goals you  plan to achieve with your app.

You MUST state the vision of your app’s future, i.e., how many downloads you are initially expecting on your application, how much profit you are expecting, and much more. It is best to visualize your short-term plans and then improve your answer through metrics.

2.  Introduce your company

The next step while making a detailed and convincing business plan is to prepare your company’s information. Since the future is unpredictable, the things you have mentioned in the above section may not be as appealing to the investors as you may conjecture.

Firms like Y Combinator, TechStars, to name a few, are known to select startups for funding based on the team and the founders. So, you see how crucial this section just became for you. Moreover, it would add as a plus point if you could provide information about the MVP or a prototype you have developed.

The things you should cover here are –

• Provide an overview

There are some questions that you need to address in this section to help investors understand your organization and develop trust in it.

1. Type of entity – Are you an LLC or privately owned organization?
2. Location – Where is it housed?
3. Duration – When was the organization established?
4. What is the team size of your company?
5. Do you operate off-shore as well or not?
6. What are the problems your company is currently going through?
7. What is the ultimate goal of the company?
8. What is your vision?

• Take it from the top

Like a novel, you must tell the story of your organization while briefly touching on all the preliminary motivations, ideas, problems, etc. that you encountered at the time of its inception.

List everything about the history of your company that is worth knowing, since it could be a lot damaging if any crucial information is withheld from the investors and is revealed later. It can include the locations you have operated in, early hires, major pivots, product launches, and such.

• Management team

Remember each and every person in your company is an important cog in your organization’s machinery. This is why you are required to mention the names of all the members of management with all the relevant information related to them, i.e., qualification, professional experience, expertise, KRAs while mentioning the organizational hierarchy.

• Advisory panel

Almost every mobile app development company is backed by an advisory team. The panel consists of industry experts with years of experience under the belt. More often than not, they are the makers of some successful apps. Creating a list of such advisors can immensely improve your brand image and credibility, boosting the chances of getting funds.

3.  All about the Industry

Essentially, your end product is going to target a particular industry. Hence, it is obvious for you as an entrepreneur to know every grain of major information, from market history to current trends, related to your targeted industry.

• Market size

The most basic thing that you must know and also showcase in this section of your business plan is the size of the market. This includes – total available market (market demand for the app), serviceable available market (number of users you can target say in 3 to 5 years), and serviceable obtainable market (the segment of your initial users in 6 to 12 months).

If you are wondering how to do so then, you can always refer to the credible data provided by some trusted third-party platforms, namely, Sensor Tower, App Annie, and Statista.

• Keep updated with market projections

You need to understand the market’s past and present to gain insight into future predictions. The best thing to do here is to compare and analyze the market size of the past 5 years, mention the number of new entrants in the industry, the number of total fundings, and so on.

• Competitors analysis

Competitive analysis is an indispensable element of any business on this planet. Regardless of the organization type, industry, size, etc. – all religiously perform this step.

Various models around this have been devised to gain the attention of angel investors. Out of the many, the one we recommend is the 2 x 2 matrix model, in which variables portray these four aspects: challengers, leaders, niche players, and visionaries. In order to highlight the execution and vision of the app as it progresses, these four elements are displayed via an x-y axis scale.

• Self-assessment through SWOT

SWOT analysis, representing four components – Strengths, Weakness, Opportunities, and Threats is used for self-assessment by all organizations. It enables you to give a structured description of your company’s situation in an efficient way in your business plan for app development.

4.  Marketing strategy

Acting as a bridge between your app and the end-users, a solid mobile app marketing strategy wields the most power. Your role is to devise such a marketing strategy that acts as a ‘deal-sealer’ between your firm and the investors. This will show the investors that you have the medium to make your app reach the users’ smartphones from an app store.

These are some points that you can include in your marketing strategy-

• Describe the user persona first

Creating user personas is very beneficial. This is something you would be able to identify while you are doing your research on the market. In case there is more than one user personas, you must mention them in your app development business plan. The more in-depth it is, the more promising your business plan seems to the angel investors.

The said information is to be included in the user personas – Age, Gender, Occupation, Location, Income group, and Marital status. Other information that is classified as psychographic data includes attitudes towards money (price-sensitivity or value shoppers), the context of app usage, personal/professional aims, hobbies, preferred sites and apps, tech-savviness, and so on.

• Customer acquisition strategy

Once you have identified the user personas of your app, you can determine your customer acquisition strategy. One thing you have to be absolutely sure about is your CAC (customer acquisition cost). You will be able to estimate the right cost once you have established which channels and campaigns you will employ in your marketing strategy highlighting your app’s USP (unique selling proposition).

Here are some channels that you can try to achieve great results –

• Incentivized user downloads
• Search engine marketing
• Organic installs
• Social media (Facebook/Twitter/Instagram) ads
• Partnerships
• PR
• App store optimization
• Content marketing
• Push and in-app notifications
• Retargeting campaigns
• Mobile site redirection
• Mobile app wall ads
• Email marketing
• Event marketing

• Product driven growth

Change in product driven growth is one of the most common elements of pivoting a startup. If your business model needs a large mainstream user base, then it is of utmost prominence for you to build a referral program in your mobile app to leverage network effects. A well-known and effective example is Uber. For instance, Uber offers a coupon on the users’ next ride as a reward for referring to others and the referred person also enjoys coupons on the first ride.

• Make a landing page

A landing page can really help you in numerous ways. One of which is that it can help you expand your horizons in terms of target users. It keeps the readers informed and updated about innovations and further updates of your app. One thing to keep in mind whilst doing this is to make sure it contains the name of your app, its description, promotional videos, etc.

{Also read: How to Create Success Story with your Mobile App Landing Page}

• Define your key metrics

There are several metrics on the basis of which you can measure your business growth and popularity of your mobile app. This is something that you must include in the web or mobile app business plan. You have to be careful while picking the right metrics suitable for your business model. An example – if your app is a social media application, then your ideal key metrics should be the daily active users instead of the number of downloads.

5.  Operational strategy

Stating the strategy regarding your daily operation imparts an impression of awareness and readiness on your part to the investors, something which always works in the favor. This also includes your strategy for customer relations.

You must describe and map out how you are going to handle customer services and maintain quality assurance. It also includes how you are going to perform the app development process and manage it. Other things to cover in this section are-

• Users Process

You can mention information such as how your users are going to behave from the start to the end, i.e., when they first hear of your app and start using it.

• Personnel plan

This outlines all the data related to the employees. It concerns how and when you will hire the employees, how salaries will be expensed, how will you set the hierarchy in the organization and so much more.

6.  Financial plan

It is the stage where you could literally say “Let’s talk numbers”. What the investors would want to see in this section are the answers to the questions – how will you make money? What will be the cost to run the business? And how much funds do you need?

• Devise an app monetization strategy

Just like for marketing, you need to have an efficacious mobile app monetization strategy, something that we have also covered in detail in our article named “How to choose the right pricing strategy for your mobile app project”.

• Startup costs

According to CB insights, 19% of the startups fail because they get out-competed.  In the graph below, you would find that 29% of the startups get shut down as they run out of cash.

You can avoid this fate by analyzing the costs you may need. Similarly, it is crucial for you to mention to the investors all the details related to the costs and expenses you would be needing and for what.

Since the devil is in the details, here is what you should include – one time costs, recurring costs (rent, inventory, etc.), fixed costs (rent, utilities, etc.) variable costs (i.e, the salary of employees) and a lot more.

• Funding needed

It is here at this stage that you are going to ask for the fundings and reveal all the information related to it. Address these questions in this section –

• How much money do you require?
• What percentage of equity are you proposing to give in return?
• Is this going to be a convertible note or a preferred stock?
• For what duration this money will suffice before you need to propose for another funding round?

Regardless of what category your mobile application belongs to, the business plan for each one is essentially similar, for the most part. A business plan is static in contrast to a business model, which is dynamic. This is because it is a document created only once and is not rewritten after the purpose is fulfilled.