What Is a Mobile App Business Plan and Why Is It Important?

A mobile app business plan is a strategic way of playing a role in emerging markets.

Smartphones have become so pervasive that it’s likely even you are doing the tasks that you once did with a console or a computer with a pocket-sized flatscreen.

While 96% of all Americans own a cellphone, as much as 81% use a smartphone specifically. 

For those with businesses centered around technology, this means creating a business plan that can cater to a new horizon of innovation. Where smartphones are concerned, the most efficient way to cater to this need is through mobile apps. 

Developing a mobile app starts with a good idea that you think will interest your target demographic. But to truly see your app thrive, you need a mobile app business plan.

Today, you’ll learn why this is such an important piece of the puzzle and what steps you should take to start your mobile app business plan. 

Why Is A Mobile App Business Plan Important?

The market for mobile applications is continuing to grow. More and more businesses and entrepreneurs are trying to get into the game before the market gets too saturated. 

Venturebeat expects the market to grow 270% to $189 billion by 2020. More than 50% of the market is held by gaming apps, the most popular kind of mobile apps. 

As appealing as it sounds, creating a valuable and profitable app is not as easy as you may think. Creating a business plan for your application should be the first step to a successful launch. 

A comprehensive mobile app business plan serves as a guide for everyone involved in the project. It also gives insight on how the app should be introduced to the market in the most lucrative way. 

Coming up with a good mobile app business plan is fairly straightforward. A business plan will provide you with a clear vision of your app along with marketing and financial logistics. 

Whether you decide to bootstrap development or not, a good business plan usually contains the following:

 

  • App overview
  • Unique selling proposition
  • Market analysis
  • Estimated marketing costs
  • Revenue projections
  • Marketing plan & launch strategy
  • Projected profit/loss statements
  • Break-even analysis
  • Cash flow projection

How To Write a Business Plan for a Mobile App

Documentation is the best way to organize any idea, no matter the industry. Mobile app business plans do not differ in this regard.

A business plan includes several sections: 

Executive Summary 

This is an opportunity for you to summarize your business plan in a concise manner. Readers should be drawn to your business and want to learn more about your goals at this point.

Leaving this part for last - after you’re done writing the rest of your business plan - might help you better formulate your words for this section. 

Company Description

A company description is exactly what it sounds right. That said, don’t be afraid to be detailed about various elements of your business.

For example, your company’s legal structure, financial highlights, and suppliers should be part of this description as well as a brief history and overview of your company’s objectives and consumers. 

Products & Services

In short, what are you selling? Write a detailed description of the product or service you’re providing with a focus on how customers benefit.

Again, be descriptive here. Include, copyrights, patents, research and development proposals, and how the product fares in the market. 

Marketing 

At this step, you should start drawing conclusions based on market analysis, which should be composed of details such as a sketch of your target customer segments, an overview of your industry, historical and current market projections, and an inquiry of your competitors.

All this should be backed up by quantitative and qualitative data. 

Strategy

Combining all the information you have gathered, illustrate a strategic means of reaching your goals from promotion to costs to labor to operational management and lifecycles. 

Management & Organization

Explain the roles and responsibilities of the people in your company. Even advisors like accountants and attorneys should be listed. Stakeholders should be included too with a description of their percentage of ownership. 

Use an organizational chart that categorizes different departments with the names of each employee and company associate. 

Finances

Now it’s time to get down to business. You’ll need to come up with some projections of how much your app will make.

Also, make some statements about your financial history for the past few years. 

3 Steps To Building a Marketing Plan for Your Mobile App

The creation process of a memorable mobile application is not limited only to software development.

No matter how awesome your app is you need to know how to introduce it to the market. This means making sure that it reaches the right audience and starts generating revenue within the first days. 

Building a user-friendly optimized application is crucial for the project's success. But without knowing how to market it, it will take you much longer to reach your business goals. 

A marketing plan shows that you know your product well and understand the needs of your audience and the market.

A good marketing plan addresses at least the following points:

1. Identify a Unique Selling Proposition

What makes your app different and/or better than the competition?

Knowing what differentiates your product will help create the proper positioning and brand messaging you need to market effectively.

2. Target a User Persona

Who are you targeting? What are their interests? This answer can contain one or more types of people, but you must outline them as detailed as you can.

Creating a user persona often puts together the following demographic information:

  • Age
  • Gender
  • Location
  • Occupation
  • Marital status
  • Income

Psychographic data is also important. This allows you to understand the mindset of your target. Here are some examples:

  • Challenges (personally or professionally)
  • Personal/professional goals
  • Favorite sites/apps
  • Hobbies
  • Values
  • Use cases
  • Influences

Think of developing a user persona as if you are creating a character for a story. Only you want your character to be as objective and realistic as possible. 

In the beginning, you will define your user personas based on your own perception. It’s important to know that your perspective is subjective. Research is required to be true to the user persona you create for your product.

3. Use the Right Marketing Channels

Depending on your target, you should tailor the channels you use to reach out to them.

If your potential user base is on Instagram, then you should market on Instagram. Don’t waste your time on LinkedIn.

A common pitfall people make when marketing is to do everything. In theory, that sounds great. Except it’s a no stone unturned approach that will spread you thin.

Get to know your target audience and find where they congregate. Think like a fisherman.

The hot technique these days is growth hacking. Growth hacking is a means of rapidly trying out new methods to increase brand awareness. It’s great for businesses with very little funding that are looking for creative ways to market.

Here is a list of marketing channels for you to consider:

A good way to get ideas is to study apps that have become successful. Find out what they did in their early stages to move the needle.

Monetization Strategies for Mobile Apps

The classic growth model apps use is to develop a user base and then monetize them later. But that is not the only path to success.

Other options for advertising include:

  • In-app advertising
  • Freemium
  • Incentivized advertising
  • In-app purchases
  • Subscription

To validate your strategy, check out what competitors are doing. What strategies are they using and what are they charging?

4 Financial Key Metrics for Your Mobile App Business Plan

Once you’ve decided how to monetize your app, you need metrics to know you’re doing it right. You should keep these metrics in mind as you plan to monetize or validate your mobile app. 

Before you build your app, these metrics will be speculative. However, they can still help you understand how your app and business will perform in the long-term. 

1. Customer Acquisition Cost (CAC)

In the context of mobile, this metric would be called cost per app install (CPI). If possible, you can go further to find out the cost per activation (CPA).

Since this type of information doesn’t exist yet for you, you will have to rely on industry benchmarks. Companies like Fiksu can give you information on cost per thousand (CPM) from month to month.

2. Lifetime Value (LTV)

Ideally, you will want to know how much money you can make on average from a single user.

A low LTV will be considered a yellow flag, and if your acquisition costs are high then you’re going to have a hard time breaking even.

3. Burn Rate, Runway, and Cash Flow

Your burn rate is essentially the rate at which a startup ‘burns’ its liquid cash. This can be measured in monthly increments. Another way to think of this is as negative cash flow. 

Cash is spent through fees, hosting charges, and other variable and fixed overheads. Like any good business, you will want to keep cash flow down.

Runway refers to how much time you have before your business runs out of costs. To calculate runway, use this formula:

Runway = (Total funds) / (Burn Rate)

Naturally, your cash flow will be determined by your monetization strategy and how well it is executed.

4. Profit & Loss Statement 

Finally, you should project your profits and losses over a period of a year. This section identifies the liabilities and assets you might gather.

When estimating your possible earnings it makes sense to look at the situation from different angles: a best-case scenario; a worst-case scenario; and, well, realistic conditions. 

Analyzing these three different outcomes will give you an idea of where you might want to cut costs. Ideally, you don’t want to go bankrupt during the first few months in business. 

If you are able to recapture the expenses during your first year in a worst-case scenario stimulation, that gives a lot of promise for your app in the market. 

5 Channels to Validate an App

Before investing in the development of your mobile app you want to make sure that your idea will have demand in the market.

Creating a mobile application requires both time and money. Early idea validation will ensure that you are investing in the right project. 

Start with researching the market and getting feedback from industry experts and potential final users to get an idea of how viable your idea is.

You should also think about what you might want to change to make your app more viable

There are multiple ways to validate your app. Here are a few ways:

1. Google Ads & Facebook Ads

If you already have a landing page set up, you can get straight to work. With a small budget, you can test a targeted audience and evaluate the response.

2. Google Trends

Google Trends allows you to compare keywords for relevancy. If you are entering a growing market then you can validate the market potential based on search volume.

This tool won’t work for apps that are novelty ideas though.

3. App Store

In the app store, be sure to check out the category that aligns with your app. You will see other apps that are competing.

Download a few of them and learn their strengths and weaknesses. This will help you come up with your unique selling proposition.

More importantly, read the reviews to see what users like and dislike about the app.

It would help if you asked yourself the following questions:

  • Why do people like the app?
  • What makes the app stand out?
  • Does the app work the way it should?
  • How are they marketing their app? (Check out the screenshots, icon design, and descriptions.)
  • What is their competitive advantage?
  • Does the app have any traction outside of the app store?

4. Third-Party Analytics

Companies like App Annie and Sensor Tower provide market data to help drive growth for applications.

5. Primary Research

Surveys and questionnaires can be very insightful if done correctly. This method will give you the best insights about customer behavior which can make or break your plan.

All for the better, of course.

How you choose to go about it is up to you. Some people are comfortable asking strangers on the street. Others tap into their social networks and ask their friends and acquaintances.

Finally, there are polls, which you can leverage to package your questionnaire in a presentable format.

Conclusion

Some people get obsessed with ideas but have no idea how to flesh it out.

They learn that mobile apps are lucrative, learn Java or Swift, and try to dive headfirst into something they know nothing about. In effect, they fail before they even get started. 

Fortunately, the steps outlined here should help you build a more effective strategy around the development of your app.

Monetization, financial metrics, and figuring out what makes your product unique are a few principal points to take away from this. 

>>> Keep learning: A more in-depth look at how to develop a mobile app on the Trio blog.

 

 

Alex K

Co-Founder & COO

About

Co-Founder & COO of Trio. Alex loves all things tech and enjoys helping

Frequently Asked Questions

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A comprehensive mobile app business plan serves as a guide for everyone involved in the project. It also gives insight on how the app should be introduced to the market in the most lucrative way.

A mobile app business plan is comprised of several sections: an executive summary; a company description; products & services, strategy planning, management & optimization, and a financial statement.

The three steps consist of identifying a unique selling proposition, targeting a user persona, and using the right marketing channels.