How to write a business plan for a mobile app

Depending on your app's specifications, you should expect a budget ranging from €10,000 for a simple app like a news app to €200,000 for a complex app that enables, for example, home automation or VoIP. An average multi-platform app in the Netherlands costs between €50,000 and €100,000. With these significant amounts, it's crucial to draw up a business plan, even if you initially want to start small with your idea.

The minimum components of a business plan are:

• The type of app
• Unique Selling Points (USPs)
• Market analysis
• Estimated marketing costs
• Estimated profit
• Marketing plan
• Projected profit and loss justification
• Break-even analysis
• Cash flow forecast
• 5-year plan

This article provides a solid foundation for starting your business plan, increasing your app's chances of success. Do you need help creating your business plan? Then check out the Accelerator Day where we work from a concept idea to a well-founded plan.

Why a Business Plan for an App

It's important for you and your potential investor to understand why you specifically need an app. The iOS App Store has over 2.2 million apps and the Google Play Store already has around 3 million apps. Every app category has hundreds of nearly identical apps, most of which are free to install. So, what's the reason users will install your app? According to David van der Loo, owner of App Specialisten, there are four reasons why apps are downloaded:

An app is downloaded for these four reasons: Utility, enjoyment, social influence, and critical mass.

A smart way to discover your app's 'why' is by looking at the problems your app aims to solve. Another 'why' could be a shortcoming of other similar apps.

Successfully establishing your 'why' is the first step. After that, it's important to validate your market and estimate its size.

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Validating Your Business Plan

The most important step in the plan is validating your idea. Is there actually demand for your app idea? One of the cheapest ways to find out is through Facebook ads. Set a budget of €100 and test your idea on various target groups. Direct the audience to a landing page and measure the results. We also did this at the Google Startup Weekend Utrecht 2016 with our Roomie concept and discovered that 17,000 people were interested in a better way to find a room.

It's important to gauge market interest. You can do this by using Google Trends. Your app should focus on a growing market. Google Trends provides a good overview of this.

However, if you're working on a disruptive/innovative idea (like Uber), Google Trends won't provide clarity.

Look at the highest-ranked apps in your app category, both paid and free, and find out what they do best. Read the reviews for these apps and see why people love them, and more importantly, what's missing from them.

Answer the following questions when analyzing a competitor:

• Why is this app successful?
• What is its ranking, and is it consistent?
• Why do people love this app?
• Is this app's user a die-hard fan?
• Does this app entice users into a quick purchase?
• Does this app solve a similar problem?
• Am I, or could I be, a fan of this app?
• Is this app used more than once?
• How is this app marketed?
• What unfair advantage does this app have?
• How much does the app cost, and what in-app purchases are available?

This competitive analysis cannot be done in a day. You need to monitor the competition over a period of time to draw more conclusions.

It is also possible to use the top app charts for iOS apps to use.

Of course, it's also smart to use apps like App Annie or Sensor Tower to gather more information about your market and understand your competitive position. Thoroughly conducting surveys can also reveal unique opportunities and challenges for your target audience. Furthermore, well-executed surveys add significant value to your business plan.

The most important question to ask a user is: ‘What feature must it have for you to download this app without hesitation?’

With these steps, it's possible to get a good sense of the market and the competition. Let's now look at the content of your business plan.