Since mobile apps continue to grow in popularity, it may be time for your businesses to consider building one to engage and retain customers.
Before your mobile app idea can come to life, you should create a detailed business plan that describes its vision, breaks down development costs, and lays out a marketing strategy.
Building an app is a long and complex process that involves careful planning and execution. Trying to create one based only on an idea, without any additional planning, can easily lead to disaster.
A lack of pre-defined project structure, coupled with delays due to slower development times, is enough to get any app idea scrapped or put off.
Even if it does get built, you’ll have no idea how to market your app or attract any potential investors without a business plan in place. That’s why it’s essential to plan before committing resources to bring your idea to fruition.
In this article, we’ll explain in detail how to write a complete business plan for your app.
Why should you write a business plan for your app?
One of the main reasons you should write a business plan is to minimize the risk involved while allowing you to attract potential investors at the same time.
App development can be costly and carries inherent risks. A business plan is a way to minimize those risks.
Apps whose creation was mapped out well grow at a more exponential rate and secure more investment capital. The reason for that is simple.
Having a complete overview of what you aim to achieve lets you track progress and act towards future goals more effectively. This is also a great way to attract investors, as a business plan will help make a good impression and convey your app’s mission.
Let’s say you’re looking to build an app like WhatsApp.
You’re going to have to perform an in-depth analysis of the cost, team size, and man-days spent to see what the development requirements are. That’s what writing a business plan is all about – planning for what’s ahead.
Writing a business plan for your mobile app
Now that we’ve covered the reasoning behind why creating a business plan is a good idea, it’s time to focus on how to write a business plan for your app.
As an introduction to your business plan, you should write a summary of what your company does and what your app should do. This will act as a quick overview of what’s being presented further down the line.
Therefore, make sure it’s on-point and easy to understand.
A good summary should focus on explaining how your project works without going into too much detail. You’ll have plenty of time to talk about the specifics later, as the main goal here is to introduce and communicate your app’s unique value proposition to the reader.
You’ll be able to do exactly that by answering the following questions:
- What am I trying to accomplish with my app?
- What is the general purpose of my app?
- What does my app do better than the competition?
- Who is my app’s target audience?
Once you’ve answered all of these questions, a reader will have a pretty good idea of what makes your app unique, and what your goals are. These are pretty important, especially if you’re looking to attract potential investors.
Well-defined goals don’t just serve as a personal roadmap—they show transparency and help investors easily determine if the product meets their needs.
“…what makes our service unique is our sticky vendor network and user base.”Unique value proposition, PubHub business plan
Companies like YCombinator have built an entire business focused on funding startups at an early stage of development. For a chance to get funded, you’ll need a great summary that explains what the app is all about and your vision for its future development.
After the executive summary, it’s time to talk about your business, company, and team.
In this section of your business plan, you’ll introduce your business values, its goals, and pitch your app idea.
Anybody reading your business plan (e.g., investors) will first want to find out more about the values that drive your business and how you make a profit.
Try and keep this part relevant and stick to the key characteristics of your business, such as:
- Core values
- Business objective & goal
- Key success factors
After that, it’s time to pitch your app idea to the reader.
The best way to do that is to present a problem you’ve identified and then explain how your app aims to solve it. This should reflect your app’s unique value proposition. Here’s an example:
|Customers are looking for an affordable and easy alternative to expensive taxi rides. ||Our app will offer cheap, affordable everyday rides to anyone.|
Be sure to make your value proposition as concise as possible. Implicitly show how your app solves the problem(s) and how it’s different from others.
To help you do that, you can try using the what-how-why method when you write.
After an introduction to your business, it’s time to provide the reader with some more general information about your company.
Here’s a list of things you’ll want to include in the overview:
- Company structure
- Type of entity
- Number of employees
- Current targeted market
- Mission and vision statement
This will give anyone interested in your company the gist of what you’re about.
Last but not least, you should introduce your team and their skills. This helps humanize your business plan, showing the real people behind your company, their skills, and experience.
To introduce your team properly, start by adding a picture of each team member.
After that, share a bit of information about each person, like their name, position and work experience. If you want to make these descriptions more interesting, you can add a personal touch by mentioning their hobbies or interests, as well.
Let’s look at two different approaches to writing team member descriptions:
|Johnny Knox |
5 years of experience
Born in 1992. Graduated from Harvard. Responsible for product development and planning. Oversees the team and measures their performance.
5 years of experience
Father of two. Harvard graduate with a passion for all things tech. Leads product development and manages long term-goals. In charge of measuring team potential.
The second description is more personal and helps create a sense of human connection with the reader, which can be quite useful when pitching your business plan. Choosing which one to use will depend on the type of investor you’re looking for.
If you want to successfully market your app, you’ll need an understanding of how the industry you’re about to enter works and what the competitive landscape is like.
That’s why the next step in writing your business plan is to conduct a market forecast and a SWOT analysis. The goal here is to show your app idea’s short and long-term viability and analyze its strengths and weaknesses.
To prove your app idea is viable, you’re going to need a market forecast.
Market forecasts are used to assess if there is a real market for your app and can be used to predict its success rate over time. They’re based on market research.
Considering they’re usually done by outsourced companies, they carry additional credibility and are the foundation of any marketing strategy. Adding a market forecast to your business plan is used to reinforce your unique value proposition and prove its market viability.
Market forecasts can be done using any of the three different methods: qualitative techniques, time series analysis and projection, and causal models. Make sure you choose the method that provides you with the data set you need to reinforce your claims.
Your market analysis should also include a strategic analysis of your app’s strengths, weaknesses, opportunities, and threats.
Much like any other type, SWOT analysis is based on data. You’ve added a market forecast to your plan in the previous section, and you can use its data to help write your analysis.
Your goal here is to present insights you’ve gained so far according to the SWOT framework. Here are a few questions to help guide you:
1. Which business process do you find to be the most successful?
2. What assets does your team have that make them stand out?
3. What kind of technology do you utilize that is distinct from others?
4. What competitive advantage do you have?
1. How can your business become even more competitive?
2. Which business process can use improvement in the future?
3. Is there a technology gap present?
4. Are there any open job positions on your team?
5. Is your current company location suited to accommodate your target market?
1. Is your target market growing?
2. Which upcoming trends will encourage people to use your app?
3. How will the perception of your business change after the app’s release?
4. Are there any events that may impact your business positively?
1. Who are your biggest competitors?
2. Do you have the required manpower to develop the app?
3. Are there any technical challenges standing in your way?
4. Is there a chance the market trends may change drastically in the future?
The biggest benefit of a SWOT analysis is that it highlights the challenges your app will have to face and outlines the weaknesses in your app that require more work.
Take Botanical Bounty as an example.
Their weakness is a lack of established reputation in the market, which means they’ll be focusing on building one in the future. Identifying it enables them to dedicate resources towards solving the problem as part of their marketing strategy.
Once you’ve laid out your analysis of the market, it’s time to reveal more about your marketing strategy. Using the information you’ve gathered so far, you’ll need to decide how you’re going to reach users, introduce them to your app, and eventually turn them into customers.
To create a marketing strategy you should start small and base your decisions on data you’ve collected.
From there, you’ll be able to scale up and cover a bigger time frame. The initial goal of a marketing strategy is to test out ideas against the market and see which one works best.
Look at your competitors to see how they acquire customers and draw inspiration from them. The more insight you gain, the easier it will be to create a bulletproof strategy.
As part of your app market strategy, you’ll want to try out different marketing channels:
- Content marketing
- Organic marketing
- Social media
- App store marketing
Each one serves a unique purpose, and offers short-term or long-term benefits. For example, advertising is a short-term strategy that offers immediate results but has no long-term effect. Once your budget runs out, your exposure is gone with it.
On the other hand, organic and content marketing might not show any immediate results, but they will help your app get discovered more easily in the future.
The channels you choose will become part of your marketing mix, which incorporates all of the insights and data you’ve gathered so far into an actionable strategy.
Creating a marketing strategy isn’t a one-off task. As the market evolves, so will the trends.
Even the best market research can’t prepare you for certain changes, which is why you should consider adopting an agile approach to marketing.
After completing your marketing strategy it’s time to define finances, both present, and future.
They’re crucial if you want to make your app idea work, as one of the biggest reasons that startups fail is the lack of money.
The goal here is to present a projection of your finances moving forward, by laying out your funding projection, requirements, and defining an exit strategy.
This will serve as a reference point for any investor that might come along.
The funding projection estimates the total cost of developing and marketing your app in the upcoming year(s).
The ideal format for writing a funding projection is a table. You’ll want to divide all your financial tasks into categories, allocating part of your budget for each one.
After that’s done, you’re ready to spread the allocated funds throughout the desired time period.
Here’s what a funding projection table looks like:
While writing your projection, watch out for varying costs and try to leave a little room for other expenses. As mentioned earlier, the market can be unpredictable and it’s always good to have a bit of extra money stored away just in case.
When you complete your funding projection, let potential investors know how much funding it will take to make your app a reality.
Writing funding requirements is a straightforward process. Specify the amount you’re seeking, and what you’re willing to offer in return, e.g., a percentage stake in the company.
Then, add an overview of how the proposed investment will be spent, and at what pace. The best way to show potential investors what you intend to do with their money is to use milestones.
Here’s an example of PubHub milestones:
Each milestone in your funding requirements projection is binding, which means that any serious investor will hold you accountable.
Make sure they’re based on measurable data, as setting unrealistic milestones may easily get you in trouble.
By specifying your funding requirements, you give investors an easy overview of what you offer and what they can expect if they decide to fund your app idea.
As the name suggests, an exit strategy for your app tells potential investors under which circumstances you’d be prepared to sell your business or a part of it.
Even though you might not be planning to sell your business anytime soon, it’s still a good idea to define your terms for doing so. You never know when an offer you can’t refuse might come along.
There are several different types of exit strategies, depending on what your goal might be:
- Lifestyle company exit
- Mergers and acquisitions
- Management and employee buyouts
- Selling your stake to a partner or investor
- Initial public offering (IPO)
An exit strategy will allow investors to gain insight into the ways in which your personal and business goals overlap, adding additional value to your business plan.
A monetization strategy is an essential part of your business plan, which predicts your app’s return on investment (ROI) based on the business model you’ve chosen. It also includes details on how your app is going to generate revenue and which methods will be used.
To create a great app monetization strategy, you’ll need insight into current and future mobile app industry trends. Such insights will help you avoid mobile market pitfalls and outdated practices.
Here’s a list of the most popular app monetization strategies:
- Subscription model
- Freemium model
- In-app purchases
- In-app advertising
The strategy you choose will depend on the app you’re planning to build and for whom. The subscription model is great if your potential customers have a high willingness to pay, and your app centers on providing content rather than features.
According to statistics, the majority of apps today are based on a free model, combined with either in-app purchases or advertising. The reason is that they offer a lot more flexibility and scalability than paid or freemium ones.
Your monetization strategy shouldn’t be fixed. As mobile app trends change, it needs to be flexible enough to evolve alongside your app and its goals.
Writing a business plan is the best way to minimize the common risks (e.g., running out of money) involved in app development and attract potential investors.
It doesn’t only serve as a way to plan for the future; it’s also a proof of concept of what you’re trying to achieve and how you aim to do it. Without it, you’ll have a hard time building your app.
Keep in mind that every business plan is unique to what you’re trying to achieve. There are no shortcuts and there is no point in copying someone else’s plan. It should be exclusively based on your goals and the data you’ve gathered while researching.