Mobile App Business Plan: To Write or Not to Write, and How?

Brief startup document guidelines

You may have heard that there are a few documents that founders may prepare when planning their startup:

A traditional business plan, a bulky document that runs dozens of pages to detail your entire business strategy. That includes your product overview, marketing plan, competitor analysis, and basic financials. Importantly, you can initially do it on what is called a Lean Canvas, a one-page plan, which in fact can be your ultimate blueprint (many investors will approve)
A pitch deck, a PowerPoint-type presentation, 10-15 slides, to convey your mobile app business plan in a concise and visual way. Its aim is to grab investors’ attention and get you a follow-on meeting.
An executive summary, a 1-to-3 page document that outlines your startup business idea in a similar way to the pitch deck, but with words instead of visuals. Again, this is a tool that you present to a room of investors.

If you are raising funding, having an impressive pitch deck and executive summary is a must.

Yet, do you need a formal, full-blown written business manifesto?... There’s been a lot of controversy about this. Things can change, the minute you start your business, for sure. Actually, a startup business plan prepared in the early days may never come true and is unlikely to be read by anyone for that matter. But… You DO need to do all the brainstorming and research conducted for a business plan for an app — on things like customers, the market, channels, the problem you’re solving, and finance. Because this research goes into crafting your pitch deck and executive summary. Creating an application business plan is your homework and a great exercise to get your head around how you will EXECUTE your startup idea. You can at least write down answers to key questions using the Lean Canvas — it will help you formulate a business strategy and help investors understand how your mobile app will get traction. To sum it up, a startup business plan is not necessary, but absolutely useful.

Let’s go to the matter at hand — your business plan for app development

Suppose you’re building a food delivery app for college students living on campus. How to assault on this idea?

Executive Summary

It’s the first part of a business plan and investors will always read it. You can either write your entire plan and then distill it down into your executive summary or try to summarize key points, using a startup business plan template as your guide.

Here you should convey a few things quickly: the problem you solve, the solution you provide, and the audience you do it for (er… if you aren’t solving any problem in the world, you may face a difficult uphill climb with your company).

The problem: Canteen food can be terrible, while students usually don’t have much time for cooking. As a result, many students engage in poor dietary habits or erratic eating behaviors, leading to high obesity rates. The market is chock-full of apps, but your competitors target wider or different audiences, or make little focus on promoting healthy diets.

Highlight: Outline the scope and the scale of the problem and describe how it is bad for many people. It is also critical to clearly define your audience.

The solution: You come to the rescue with your new food delivery app. You want to cook home-style food and sell it via a sleek iOS/Android app at very reasonable prices. And you don’t want to use a third-party delivery service like GrubHub whose commissions can be crazy. Instead you want to have your own delivery and know where to find professional app developers.

Highlight: Present your solution, which is your app, which is your unique value proposition. Explain what makes it different from competition and how it will fix the trouble or fill the want. For a food delivery app, your value proposition might sound like this: “We deliver cheap healthy home-made meals in under 60 minutes!”

The business model: Your startup business model should tell investors how exactly you are going to make money and what your other business objectives are. Identify an app roadmap with key milestones and make sure your goals align with investors’ expectations.

Highlight: Sprinkle in a few numbers. How many users do you intend to acquire in 12, 24, 36 months? How many developers you need, and where will you find them? (Actually, Jooble is a great place to find skilled developers). What about your projected revenue? Do you hope to operate nationwide in a couple of years or want to merge with a larger company? There will be a bunch of questions from investors about your mobile app startup journey, so keep answers at hand.

Market analysis

You may be asked to go into more detail on your target market to show the viability of your mobile app. Prepare once again numbers as your homework:

how to prepare a mobile app business plan for your startup - chart

TAM: the number of US students who live on campus and order food online
SAM: the number of students you can reach through your sales channels at launch; it might be limited to a particular college or university
SOM: the number of early adopters

Doing market research certainly won’t be easy: according to this HuffPost’s infographic, students’ food ordering habits differ from college to college! Also, you should be ready to make a market forecast:

Number of companies expected to target your audience in the short term
Estimates of their short-term growth rate
Estimates of their short-term revenue

Cite reputable resources (Gartner, Cisco, Forrester, etc.) to avoid unsupported allegations. What’s next? Make sure to study where you fit in the competitive landscape. In case you’re using the Gartner’s Magic Quadrant, do NOT place your company in the upper right corner: after all, it’s your no-name startup against well-known brands like UberEats! Do not forget to analyze your strengths, weaknesses, opportunities and threats (SWOT), too: acknowledgment is the first step to improvement.

Marketing and sales strategy

In a world where you need to have at least a $ 30 thousand marketing budget to fuel organic app downloads, you can’t possibly skip the marketing part. A strategic point that you should cover is:

Customer acquisition: define your KPIs, identify channels you’re going to use, and evaluate customer acquisition costs

Do not rely on ads only; explore alternative promo strategies, including influencer marketing, blogging, flyer distribution, and App Store Optimization (ASO). Anyway, the choice of a customer acquisition channel largely depends on your launch strategy: if you’re planning a soft launch (one college, Saturdays only), you don’t really need to spend a cent on paid ads. Instead, you should consider poster advertising on campus or reach out to the most popular girl in college and ask her to promote your app on her Instagram. A word of advice: What do successful mobile apps have in common? That’s right, they all go viral at some point! The easiest way to enable app virality is to enhance it with referral and loyalty program elements like bonus points, promo codes, and easy social sharing.

Financials

Last but not least, here comes the financial part. It should be really good. Investors will expect to see your sales forecast, income statement or cash flow forecast for at least the next three years and get an understanding of the underlying assumptions. You should also be able to tell them about:

Monetization strategy: apart from getting revenue from food delivery, you can also monetize your free mobile app by partnering with healthy food restaurants, sporting goods manufactures, bars or nightclubs to make a few dollars on banner placement
Startup costs: they include one-time payments like the price of building a mobile app and operating expenses such as office rent and employee salaries
Funding: here you should write how much money you’re hoping to secure, and how it will be spent and at what pace.
ROI: it is one of the most important factors investors consider when making a decision. Your Return on Investment (ROI) predictions should be based on your business model

how to write a business plan for an app - ROI chart

Whenever possible, represent your data, especially numbers, with graphics. It’s proven to be more effective.

Ending note

Due to the COVID-19 pandemic, mobile adoption has accelerated by two to three years. More consumers are using apps for work, education, entertainment, and shopping, resulting in increased downloads, time spent on mobile, and consumer spending. In other words, it seems there’s no better time to start a food delivery — or any other app business! — than now. And yes, as a result, we are likely to see more companies entering the mobile app market than ever before. To edge out competitors, just remember doing really thorough business planning before going into app development. It will help you figure out your “secret sauce” and execution journey for your team and your investors.

How to prepare a business plan for a mobile app startup and... do you actually need one?