Depending on the specifications of your app you have to take into account a budget somewhere between €10.000 for a simple app such as a news app and €200.000 for a complex app that enables home automation or VoIP, for example. An average multi-platform app in the Netherlands costs between €50.000 and €100.000. With these hefty amounts, it is important to draw up a business plan, even if you want to set up your idea on a small scale at first.

The minimum properties of a business plan are:

This article gives you a good basis to start with your business plan so that you have a better chance of success with your app. Do you want help in drawing up your business plan? Then view the Accelerator Day where we work from concept idea to a well-founded plan.

It is important for you and your potential investor to know exactly why you need an app. The iOS App Store has more than 2,2 million apps and the Google Play Store already has around 3 million apps. Each app category has hundreds of nearly identical apps, most of which are free to install. So what is 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, pleasure, social influences and critical mass.

A smart way to figure out the "why" of your app is to look at the problems your app is trying to solve. Another 'why' may be a shortcoming of other similar apps.

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

The most important step in the plan is validating your idea. Is there a real demand for your app idea? One of the cheapest ways to find out is through Facebook ads. Provide a budget of €100 and test your idea on various target groups. Leads the audience to a landing page and measures the result. We also did this during the Google Startup weekend Utrecht 2016 with our Roomie concept and found out that 17.000 people were interested in a better way of finding a room.

It is important to measure the interests of the market. You can do this by using Google Trends. Your app should target a growing market. Google Trends gives you a good idea of ​​this.

However, when you are working on a disruptive/innovative idea (such as Uber), Google Trends will not provide you with clarity.

View the highest ranked apps in your app category from both paid and non-paid apps and find out what they do best. Read the reviews of these apps and see why people love this app and more importantly what is missing from this app.

Answer the following questions when analyzing a competitor:

This competition analysis cannot be done in a day. You have to keep an eye on the competition over a period of time in order to draw more conclusions.

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

Of course it is also smart to use apps like App Annie or Sensor Tower use it to gather more information about your market and understand your competitive position. The proper execution of questionnaires can also provide unique opportunities and problems for your target group. Moreover, conducting questionnaires well has good value for your business plan.

The most important question you should ask a user is: "What feature should it include so that you would download this app without thinking?"

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

Your business plan should include at a minimum:

What is the unique selling point (USPs) of your app? This is related to the 'why' of your app, but also tells you why your app is better than the competition. Your USPs tell you how you approach the market, how you convey your message and how you provide support for your app. Your USPs also tell you how your app compares to the competition.

What does your end user look like? In the previous phase, you investigated who your end users are. These end users may be in multiple personas. A persona is a representation of a typical end user of your app. For example, a dating app persona can focus on single Dutch people with an average income between 30 and 40 years old. The more detailed your personas are described, the more value your business plan has.

Set up personas as follows:

In addition to this generic information, it is also important to note the following properties:

The more detailed you go into your end user, the better your marketing strategy can be drawn up.

Depending on your target group, you can roughly choose from the following channels to ensure conversion to your app:

These channels give you a varied return of investment (ROI) and you will have to compare these statistics with, among other things, purchase conversion if you want to draw good conclusions from this.

It is also important one go to market strategy this will also depend on the marketing channels you have chosen. When you have drawn this up, it is time to draw up a financial plan.

Apps with a lot of users often already have a lot of financial resources. Don't let this stop you from making good estimates about a number of important financial metrics.

User acquisition costs are the most critical metric for any business.

In the context of mobile apps, you need to look at the cost per installation (CPI). If you want to go even deeper, look at the costs per conversion to purchase. There are always users who install your app and then immediately delete it.

While well-established companies have exact CPI, you can also find out what the approximate CPI of your app is. You can look at services such as fiksu. For example, to find out how much it costs to reach your target group and get high quality users. You include this number in your business plan.

The lifetime value (LTV) of the customer is the amount of money you earn on average from a customer. This number indicates the financial viability of your app. A low LTV and few customers can lead to the end of your app. Various LTV calculators can be found online and as long as the entered figures can be justified, you are good with regard to LTV.

How much money do you expect to spend per month? Includes everything from salary to freelancer costs to overheads and hosting. That is your burn rate, a cost item that you want to keep as low as possible. This section in your business plan should also include the runway, which can be calculated using the following formula:

Runway = (Total Cash in Business) / (Burn Rate)

The runway then indicates how long you can still undertake before all the money is gone. It is also important to write out your cash flow. This is how you find out when you can get into trouble.

You will also have to do a cost/benefit analysis. In the short term, your costs will be higher than the revenues. You have your runway as a formula for this. But in the long term you naturally want to earn money from your app. Put all costs together and weigh this against the expected turnover. If you end up with a positive number, you know you're in the right place.

How do you want to earn money from your app? Most apps focus on user growth over revenue first and earn money later in the process. read Read more about the different revenue models here and about the advantages and disadvantages.

You want to find out how much you can charge a user. First you will have to look at how much your competition charges for a similar service. You can also research how much your end users are willing to pay to fix the problem.

Finally, it is important that your business plan contains a profit and loss budget that takes into account the necessary dependencies and figures. This must be well substantiated and be issued for a minimum period of one year.

If you are in the phase where you do not yet have an app, then you should not spend too much time drawing up a business plan. As you work towards launching the app and bringing it to market, you find out that a lot of your assumptions need revision. But if you follow this process and draw up a basic business plan, this is a good guideline in building your app and you don't waste time. Are you ready to have a prototype developed or to have your app fully realized? Then take contact contact us, we can help you from idea to maintenance.