Business Plan for App Development – Everything You Need to Know

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business plan for app development

A goal without a plan is simply a wish. If you want to achieve your goals, invest your time and efforts in developing a descriptive business plan for the app. Is there a winning formula that guarantees success and reduces the mobile app development business’s risk of failure?

It’s not something you are inherently proficient at, being an entrepreneur and not your expertise niche. If you are confused or doubtful regarding what you must incorporate in your mobile app business plan, refer to the following detailed article. 

But, you must be wondering as to why is mobile app business plan is essential, right? Here, it is.

The Need for Business Plan for App

The following reasons represent why a business plan for app development is so important:

Reduce the Risks 

As per the recent reports, writing a business plan brings you closer to your goals and ambitions. Entrepreneurs with proper business plans are more likely to build their company and increase revenue than those without a plan. Thus, you reduce the risk of failure. 

Planning is one of the easiest ways to secure loans and investments. 

business plan v/s no business plan statistics

Attract Great Minds and Investments

Depending on the type of business model you use, you have to decide between investors and startup co-founders. Sometimes you need to attract both. The application business plan is the only way to quickly fulfill your task and proceed towards the company’s growth.

Better Preparation 

“By failing to prepare, you are preparing to fail” – Benjamin Franklin.

Benjamin Franklin wasn’t a software developer, but the above words highlight the significance of app business planning. Through writing a plan, you enhance the knowledge about the market you are planning to break into. It clarifies your goals, sets priorities, and helps to build more accurate forecasts. Thus, revealing the possible risks and finding your voice in the industry. 

Keep a Definite Strategy

In the world of interruptions, it’s hard not to miss out on essential things. Every day you face new obstacles and issues as a startup owner. But, a set of blueprint points act as a quick reminder of why you started it and where it should take you.

Manage and Delegate Effectively

It’s an art to be a good manager. A business plan for an app works as your tool to create a masterpiece. It gives you a vision of critical tasks to delegate to responsible people. 

Now, as you know the importance of writing a business plan, let’s jump into how to write a business plan for your app startup. 

Read about: Find Investors for Your Mobile App Development Idea

Steps to Write a Business Plan for App

You might be wondering how to write a business plan for a mobile app. A business plan is a set of:

  • Bullet points that describe your vision.
  • Some statistics that provide real numbers about the industry you are planning to enter.
  • Few tables with definite steps and strategies you would like to implement for reaching your goals.

Is your product viable? Does it have the potential of bringing new experiences to the user and measurable benefits to the founders? These are the two primary questions your application business plan should answer. Include the below pointers to make your triumph inevitable. 

Executive Summary – App Development Business Plan

Be very clear and concise in this section, especially for the ones seeking investment. It’s easier to write the introduction to this at the end, once everything is on paper. In this section, you have to deal with the following points:

Unique Value Proposition

Unique Value Propositions change with time. No business plan for app development survives without contact with real customers and the market in action. But, you should have a starting point.

If you plan to create an entirely new market, it would be harder to define it. But for the ones entering the established markets, you can use this opportunity to outline why you are different from the competition. Here, it’s difficult to claim that you are better than the competition. There are chances that they have more resources and customers. You need to explain how you are different and how it will help you gain market share. 

Objectives 

If you seek investment, you need to know if your goals are aligned with the portfolio. Now, you can define success. Is it:

  • An exit – IPO or acquisition?
  • A specific revenue target?
  • How soon do you want to achieve that (e.g., 3 to 5 years)?

You can also use a mobile app business plan template, e.g., the ones provided through HubSpot.

Problem Analysis – Mobile App Business Plan

A problem is something that you know your potential customers have. Either there is no practical solution, or the current solution may be having severe shortcomings. It should demonstrate that the problem impacts enough people to make your app startup a viable commercial proposition. 

Solution 

Now, introduce your app and explain why it’s a suitable solution to this problem. Explain how it solves the issues identified and why people or companies will turn to it as a potential solution.

Read This: A Comprehensive Guide To Mobile App Development Costs

Company 

Your team means everything to you. It is the primary reason why investors put money into startups. Accelerators, like TechStars and Y Combinator, pick startups for the teams behind the idea.

In this section of the business plan for startup app, outline the following:

  • The legal entity, when the company was formed, and where the company is registered.
  • The number of employees and/or the shareholders.
  • Where are you based, and how the team operates together when some members are remote?

Company History

Now, outline the history. How did you uncover the problem you wanted to solve? What steps did you take to understand the customer pain points and the market? How did you assemble the team?

Listing important milestones is also a useful indicator of how you have grown and lessons learned along the way.

Management Team

It’s a vital section. For all those involved, whether full-time or plays a crucial role in the company’s strategic direction, investors want to know more regarding them. Give details about their involvement, role, and responsibilities, along with professional and academic experience in business plan for app development or related fields. 

It’s useful for the advisory team to list who’s onboard and how they support your startup. It serves to give investors further confidence in your plan.

Market Analysis – Business Plan for App

Few of the most successful startups of the last decade entered huge markets. Take Uber and Airbnb, for instance: transport and travel. Enormous global markets. It took billions to disrupt those markets, thousands of staff, and many struggles before making a profit.

Everyone doesn’t need to be ambitious, but it certainly helps investors about three key metrics – if you work them out or find them about your market:

  1. Total Available Market (TAM) = total size of the market you know that exists.
  2. Serviceable Available Market (SAM) = percentage of the market you can reach through your sales/marketing and partner channels over a specific timescale (e.g., 3 to 5 years).
  3. Serviceable Obtainable Market (SOM) = known size of the early adopter market you reach in the initial 6 to 12 months.

TechStars’ article is a useful starting point to figure out those numbers.

If you enter an established/growing market, then the research firms such as Nielsen or Forrester must have an idea of the market size and anticipated growth projections. Gartner can give you an overview of competitors. All this research must be publicly available.

SWOT Analysis

If you face established competitors – whether they’re startups or big players, it is essential to do a SWOT analysis as part of the mobile app business plan development.

SWOT = Strengths, Weaknesses, Opportunities, and Threats.

Make it clear that you are aware of all the potential challenges. Investors can sense false confidence when they see it. This plan also lets you convince others to join the team; then, they need to know that they are working with ones who have a realistic view of the road ahead.

Marketing Strategy

It’s a bridge that allows your product to fall into customers’ hands. You have to convince your investors about you having such a bridge. To succeed, use the following marketing strategies for your mobile app:

Target Market

The first step is to attract the audience by choosing a specific group of consumers for aiming your product. The target audience should be defined based on habits, demography, online behavior, and lifestyle. Analyze how your ideal client would use your app.

Competitor Analysis

Researching competitors is a part of business analysis. It will help you highlight the features that distinguish you from competitors, allow you to improve the processes, and solve problems in your market.

Create a Landing Page

It will help you expand your target audience for your mobile application to inform readers about innovations and updates. Make sure that your page contains the app’s name, functionality description, promotional videos, etc. 

App Rating

To improve your application rating in search results in the app stores, you need to improve the characteristics. For example, by optimizing the mobile app in terms of loading time. A high position in search results draws the attention of potential customers. 

Product Growth

Expanding the user base is different from the type of app startup, and the business strategy to enter other markets also varies. For instance, a massive advertising attack would make sense only in markets where consumers understand your product or service and its usefulness. Take an example from apps that have successfully implemented massive marketing campaigns: Uber and HouseParty.

Financials – Business Plan for Developing an App

It’s time to sit down and crunch some numbers. For any mobile app business plan, the investors need to see the following:

  1. How will you make money/
  2. What will it cost to run your business?
  3. How much funding is required?

Startup Costs

Investors must know what everything is going to cost and what the variables are. 

App design and development costs may vary depending on the app’s features, developer’s rates, and complexity. For accurate estimates, you may request an app development quote from IT experts.

Some costs are fixed, such as salaries, office rents, and subscriptions. In comparison, others will increase as your business scales, e.g., server space. Base the cost projections on your revenue so that the investor can see how the company should scale over time and start registering a profit. 

Revenue Models

For the app founders, the following revenue models are available:

  • Advertising: It works if you intend for your user-base to be the product, where they get it for free, and the advertisers would pay to reach them. 
  • In-App Purchases: It is the most viable route to revenue for consumer apps. Base revenue projections on a percentage to make a purchase. Don’t be over-optimistic and use prompts like referral discounts to encourage upgrades.
  • Paids: Many people are opposed to pay for downloading, but apps can still generate revenue this way. If you go this route, iOS and macOS app stores are where you will most likely find users willing to pay, alongside selling apps through your own and third-party websites. 
  • Subscription: It’s a popular choice for B2B apps and is becoming more commonplace with consumer apps.

Funding 

To secure investment with these numbers in hand, you must outline how long it will take to achieve profitability and the funding required. It’s the amount you are asking for. In exchange, you have to say how much equity you are giving away or work out how long it will take to bootstrap until profitability – once you have an app to launch.

Learn about: 101 Mobile App Ideas for Startups in 2021

Why do Startups Fail

reasons why startups fail

You can avoid fate by analyzing the costs you may require. Plus, it is essential to mention all the details to the investors regarding the costs and expenses you may need and for what. Since the devil lies in the details, here is what you should include – one-time costs, fixed costs (rent, utilities, etc.), recurring costs (rent, inventory, etc.), variable costs (salary of employees), etc.

Funding Required

It is time to ask for funds and reveal all the information related to it. Address the questions in this section:

  • How much money would you need?
  • What equity percentage are you willing to give in return?
  • Will it be a convertible note or a preferred stock?
  • For what duration will this money suffice before you need to propose another funding round?

Tools for Creating Effective Business Plan for App

You may have a million-dollar idea, but it would fail if you do not have an effective mobile app business plan to execute it. Below are some online tools and resources to help you create a business plan and get established, irrespective of the experience. 

  1. Office Online Templates
  2. Free-Plan
  3. The $100 Startup’s One-Page Business Plan
  4. Write my Essay
  5. BPlans.com
  6. Rocket Lawyer
  7. StartPad
  8. Bizplan.com
  9. BizGym
  10. Law Depot Business Plan Samples

For more information: 10 Apps and Tools for Entrepreneurs to Write a Winning Business Plan 

Free Mobile App Business Plan Template 

The mobile app business plan template includes the following sections:

Free Mobile app business plan template

Travel Application Business Plan

When planning a trip, most travelers rely on mobiles more than ever. As per Travelport Digital, 80% of travelers used a mobile app to research trips in the year 2018. So, travel app development is a vital niche to bring in investments. But, if you are planning to build a big-time travel app, then you need to carefully choose the right business model, features and decide the budget. 

How do Travel Apps Make Money

There are mainly three revenue models for tourism app development:

  • Merchant model (Expedia)
  • Advertising (TripAdvisor)
  • Commission Fees (Booking.com)

Core Features of Travel Business Plan for App

Here are the must-haves for most of the travel apps:

  1. Sign-up/ Profile Management
  2. Search and Filters
  3. Listing Information 
  4. Messaging Channels
  5. Booking 
  6. Review System
  7. Notifications 

How to Create a Travel App

Use the following pointers to make your travel app engaging and useful:

  • Work for your target audience
  • Pick the right team
  • Collaborate with the hosts

Read more: Travel App Development Guide 

Conclusion 

Regardless of the category, your mobile app belongs to, the business plan for each one is essentially the same, for the most part. A business plan is static as opposed to a business model, which is dynamic. It’s because the document is created only once and is not rewritten once the purpose is fulfilled.

Are you looking to Hire Mobile App Developers for your business? Then, we have a team of highly skilled and dedicated professionals in the market.

FAQs – Business Plan for App

  • How do I propose an app idea?

You can develop your app idea using the following steps: Research your idea, create a storyboard, get feedback, and develop a business plan.

  • How do free apps make money?

Free apps make money through the following mediums: Advertising, in-app purchases, referral marketing, subscriptions, paid apps, crowdfunding, etc.

  • How long does it take to create an app?

While it varies greatly, the general answer would be 4-6 months. It doesn’t mean that the first version of an app – a v1.0 app – can’t be built faster than four months or would not take longer than six months. But, it’s an average figure.

  •  Do I need to meet with an attorney before writing my business plan for the app?

It’s your call, and different types of businesses have different needs, but meeting with an attorney who is well-versed in legal issues affecting small businesses is invaluable.

  • What are the three primary purposes of a business plan?

The three primary purposes of a business plan are as follows: Establish a business focus, secure funding, and attract executives.

  • What is the most essential part of a business plan?

The Executive summary is the most essential part of your business plan and maybe the only one to read. So, make it perfect. Its sole objective is to get the investor to read the rest of your business plan.

  • What are the types of business plans?

Types of business plans include but are not limited to startup, strategic, internal, feasibility, growth, and operations strategies.

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author
Siften Halwai
AUTHOR

In addition to serving as a Content Writer & Content Marketing Strategist, Siften Halwai is a certified Cambridge English: Business Vantage (BEC Vantage) who empowers to create content that his targeted audience loves to read and engage with. His IT educational background and years of writing experience have given him a broad base for various content formats. Also, he’s a great cook, always ready to explore food, cultures, and adventures.

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