In recent years, we have seen a significant shift in technological advancements. We have gone from desktops to laptops and smartphones, and every year the number of smartphone users rises by tens of thousands. With that, mobile apps of various types are an automatic demand. And so, mobile app development is not an option anymore; it's a necessity!
In particular, startups need to design mobile apps to target more users and reach the millennial population. A well-thought mobile app business plan is the first step to developing your app. The business plan must cover the entire cost of app development, including planning, designing, marketing, and after-sales support.
It's not enough to launch the app on the app stores. Whether you are a B2C or B2B industry, there is a lot of competition in the mobile app market. So, a sufficient portion of your budget will go toward marketing tactics to get users to search for and download your app.
Additionally, an adequate app business plan also mentions the total cost of app development, including the feature cost. Here's a rundown on making a useful app development business plan to ensure the successful launch of your startup:
Business plan template
A well-crafted, detailed, and insightful business plan is the first step towards a potentially successful mobile app startup. Ensure that you cover all areas for a descriptive analysis for your company as well as investors.
The summary section of the mobile app business plan is where you introduce the project to the investors. It should be clear and precise, mentions the relevant details, including how the idea came to you and how it solves the problem:
The problem defines a difficulty within the society with no apparent solution or insufficient solutions. For your project's success, identify and understand the gap in the supply and demand chain in the market. The app startup business plan should highlight the following points:
What troubles your target audience?
Does it have a significant impact on their daily lives?
Is there a solution to their problem? How effective is it?
List down potential solutions
The next step is to shed some light on your app idea. The purpose of the mobile app startup business plan is to introduce the app idea to investors. In this section, explain precisely how the app eliminates the problems highlighted above.
Mention only the points that answer the questions above instead of listing the distinct features of the app. You should include:
What the app allows users to do that they couldn't before
How will it tip the status quo in favor of the target audience?
Explain the unique selling point
The App Store has 2 million+ apps, while the Play Store offers around 2.5 million apps. Your app must be unique enough to stand out.
The application business plan needs to state how your app is different from the various other similar apps, to get investors interested in your app idea. In a perfect world, your unique selling point would be solely yours, differentiating your mobile app from the competition.
No value propositions or USPs are set in stone; it may change with updates and new features when introduced into the market. But it is best to have a definite starting point to show the investors.
Define clearly the USPs of the app when writing your mobile app business plan. It will be challenging if your target market is unexplored. In the case of entering an established market, mention what makes the app different and how it will help gain a market share.
Strategic objectives of the business plan
Any investor funding your project would like to know if their long-term targets match with yours. When defining your mission, values state:
Your target revenue
End goal: IPO or Acquisition Strategy
The timeline to achieve these goals (3 to 5 years)?
Build a well-crafted company profile
Investors need to know who their partners are. Under the company section of your app startup business plan, write details of your startup, including where it is registered and when it was established. Additionally, highlight the team's key players, the shareholders, and the different operations the company undergoes.
Firstly, identify the structure of the company:
Where and when it was set up
Are you an LLC, C-Corp, or some other corporate office?
The number of employees in the company
Are any employees working remotely?
Are you working from an apartment or office space?
Under the history section of your application business plan, share the idea behind starting the company. Mention briefly what inspired you, what you and your team have done since establishing the company, and more. Highlight your milestones and achievements, location changes, products launched, and everything relevant to the experience that inspires investors' trust.
Introduce your critical players, whether they are part-time, full-time employees, working remotely, or as part of the in-house team. Mention details of their educational background, work history, and experience in mobile development or related industries.
Not just the management team but also mention the advisory members. Instill investors' confidence in your app idea by letting them know who supports the startup and how.
Conduct thorough market research
Before you can go on with the development phase, it's best to validate your app idea and research the market. Investors need to know the target market, the size of the market, the competition, and more. Your mobile app startup business plan should include:
There are three key parameters to base the market size:
Total Available Market (TAM) – the maximum demand for a product or service in the commercial market.
Serviceable Available Market (SAM) – this is the portion of TAM that you can target through sales and marketing channels.
Serviceable Obtainable Market (SOM) – it defines the segment of SAM that includes the first individuals to use your product or service.
Explore research firms like Nielsen or Forrester to understand your target market's size and the potential growth projections for your industry. You should mention the growth rate for companies with a similar business niche and the amount invested in the industry.
A point to note is that you only include statistics of companies in your target market. If you are entering the local market, do not mention the global economy.
Another layer of market research is learning from your competitors. Gartner helps you study your competition in various parameters, including the level of functionality, niche, audience size, and pricing.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It defines where you stand in the market and against the competition. In your app business plan, share with the investors your strengths and weaknesses.
Highlighting your weaknesses and threats will also help encourage investors' confidence. They will know you acknowledge your limits and are working to fix them.
Finally, build the app
You identified the benefit of your app, its USP, and its market worth. Now, share the details of your app idea, including the type of app it is, the features you will add, and its MVP.
The type of app to develop
The type of app you develop depends on your company's requirements. In your app startup business plan, mention what kind of app you are creating, an Uber-like app for movers, a gaming app, or a file manager. Every app offers distinct features, each of which has a different monetary value. Additionally, state whether the app will be a hybrid or native app or a web app.
The platform choice and features will determine the final cost of the price. For example, native platform development can cost $5000 each, whereas cross-platforms are estimated at $8,750. Mvp app development
Part of smart business planning is launching a prototype in the market than a full-functional, expensive product right off the bat. Share with the investors your plan for developing an MVP for your product, include the cost of developing an MVP, the factors that will influence its price, and other details.
Your marketing strategy is the one aspect of the business plan that will need periodic revisions. According to the market conditions, you need to change how you get the product to the target users. Share your marketing tactics with the investors, including the following:
Marketing is possibly the costly phase of developing a new product. You need to target multiple platforms to spread the word and bring the app to your users. Plus, the continuous reevaluation of the strategy raises the total cost of marketing.
Customer Acquisition is the marketing phase where you convey the details of how you plan on gaining new users. Share with the investors the channels you will target, their benefits, and the cost per acquisition of one customer from each channel.
It's imperative to be quantitative and detailed with the cost, so your investors know the plan's risks.
Offering referral rewards is one way to grow your audience base. After gaining some traction with the app, you can leverage network effects with a referral program built into the app. Key metrics
Instead of targeting multiple benchmark parameters, a startup focuses on one or two metrics to better analyze your growth. It will help you understand your progress and understand where you need to improve.
Finances before and after launch
Investors are funding your app idea, so they need to know the exact numbers involved. After reading through the entire business plan, share:
The total funding you need.
The cost to develop the app and run the business.
How will you monetize your product?
Cost of running the company
Mention a reasonable estimate of the total cost it will take to get your startup up and running. Include the emergency costs, the utility, recurring charges, one-time payments, and others. Be clear and concise with the payment frequency and price stability.
To get a return on investment, you need to devise a revenue model for your app. Here are some ways you can monetize your product:
In-app Advertisements – If you intend to increase your target audience, then in-app adverts are the best option. The app remains free, while advertisers pay to reach their consumers.
Paid App – Get users to pay to download the app. Although many Android users are reluctant to download paid apps, iOS and MacOS users willingly pay for downloads.
In-App Purchases – It is the most viable option for a consumer-oriented app. You would have to use prompts and referral discounts to encourage users to make the purchase.
Subscription – Like Netflix, you can charge a monthly or yearly amount. Subscription models bill users until they unsubscribe from their account.
The cost for app design and development varies depending on the app, its complexity, and the integrated features. Additionally, the charges also depend on whether you hire a freelance developer to build the app or a development company.
Each feature in the app has a different price, and advanced features cost even more. For example, simple email sign-up costs $2000, and social media sign-up can cost $3000. Integrating straightforward profiles cost $4000, while complex profile pages cost $7000. If the app has in-app navigation, then a simple map integration costs $3500, while geofencing can cost $8000. Find costs as per features, platforms, and more to get an idea of app development costs.
The business plan mentions the cost projections on your revenue to let the investors know how the company will progress over time.
Lastly, answer the following questions for your investors:
The amount of money you would need?
When will you start earning profits?
The equity you will give away?
How long till you need another investment?
Write your business plan for a mobile app startup
No business is without its bumps and hurdles, but the start of every successful startup is with a well-thought-out business plan. Get investors interested in your idea, bring your team on board, and consult with our experts to design your app.
You might want to trust an expert app development agency to take care of your business plan and other technicalities. Let's hear your app idea!