By Drew Hendricks
As your app development firm grows, you may encounter the occasional request for a business plan. Whether it’s from a client, as part of a response to a Request for Proposals for a big contract, or handed over to potential investors, if you don’t have one, you’ll have to create one quickly.
If you think you may eventually receive a request for a business plan, it’s probably a good idea to have one on hand, just in case. But, as you create and refine that document, there are a few things specific to your industry that you should include. Every plan will inevitably include basics such as your sales forecast and cash flow; however, these things aren’t covered in the SBA business plan template.
The best app in the world means nothing if customers don’t actually use it. An important part of your business plan is your traffic projections, which illustrate your plans for growth. You should be able to calculate just how many downloads you’ll need to reach your goals. If your revenue stream includes in-app downloads, you should include your projections for monetization in this area as well.
In addition to the numbers, you should provide a detailed explanation of how you arrived at them. Will you have a marketing push that drives attention to the app store during your first week of release? How will you sustain that momentum once the initial excitement has diminished? Investors and potential clients will want to not only see where you hope to be but how you plan to get there.
Team Business Experience
Your business plan should list each of your team members, along with detailed information about each person’s background. As the business leader, you should make sure your description demonstrates your ability to build a successful business and lead it on a day-to-day basis. If you’ve helped build a startup in the past, be sure to emphasize this information, along with any successes you had as part of that business.
If you’re working with short-term contractors or freelancers and you feel their experience could benefit your business plan, ask if you could include them. The workers who will be helping build your app, create your app store icons, and market your product once it’s out may have impressive experience. Because they’ll be part of the team working with you, it’s only natural to include them once you have permission.
Information on Target Market
Potential investors and clients want to see that you know your target market well before they attach themselves to your project. Prior to putting your business plan together, conduct extensive research into your target market and include this information in your document. What is the financial situation of the customers who will be downloading your app? If your app’s audience is primarily young, will your audience’s parents be willing to let their children download your app?
When you can show that you understand your target demographic, you’ll also demonstrate that you’ll be able to market to them. This revelation is important to anyone thinking of investing in you, whether through funding your app or partnering with you. If you’re free to develop apps for a variety of projects, you should still show that you have the ability to understand the general demographics of those who download and use apps in your particular niche.
Apps can be a difficult business to pinpoint, because customer behavior can often be unpredictable. Your business plan should show that you plan to handle this unpredictability through monetization strategies that pay. If you’re developing apps for a variety of customers, is there something you do for each client that ensures money rolls in long after the initial rollout?
When you demonstrate that you have a plan to make money through your apps—whether through pay-to-download, monthly memberships, or in-app purchases—you’ll show that you’re a businessperson at heart. Investors and potential clients want to know they are working with someone who knows that for a business to truly succeed, it needs regular income.
A business plan can be challenging, but when you start with basic templates and customize your plan to include items unique to app development, it isn’t as painful as you think. Plus, by creating one proactively, you’ll have it on hand if ever a situation arises where you need to present it.
About the Author
Drew Hendricks is a tech, social media, and environmental addict. He’s written for many major publications, such as Developer.com, Forbes, and Entrepreneur.