Originally published: 16/06/2017 14:52
Publication number: ELQ-48228-1
View all versions & Certificate
Publication number: ELQ-48228-1
View all versions & Certificate
How to write a Business Plan for Your App Startup
For people in the second camp- people writing a business plan for investors.
Introduction
New startups usually write business plans for one of two reasons. Either: 1) They think it would be beneficial for aligning the founding team around a shared strategy (plus it’s what they were taught to do in school), or 2) They want to raise funding from a venture capital firm or angel investor.
If you’re in the first camp, the good news is that we actually recommend not spending a lot of time writing out a formal business plan. Instead, consider creating a business model canvas. A business model canvas is a more focused and agile form of the traditional business plan. One of its advantages is that it can more easily adapt to the pivots and iterations that have become very common in modern tech startups.
This article is for people in the second camp, people writing a business plan for investors. All startups are different, especially if they are competing in the mobile domain, so it’s advised that you tailor each of these sections to work best for you.
- Step n°1 |
Executive Summary
This is the first and most important part of your business plan. Your executive summary will be the first thing any investor reads, so it’s crucial that you’re clear and concise; less is more.
1.1 – Problem
A problem is a difficulty a consumer has that either has no current solution or the available solution has shortcomings. Successful businesses identify these gaps in the market and fill them with their products.
-What is your target customer dissatisfied with regarding the status quo?
-How big of a problem is this for your target customers?
-What are they currently doing to solve this problem?
1.2 – Solution
The solution is where you introduce your app. Don’t go into feature details on how your app works, instead, stay true to the problem that you just identified. List exactly how your product solves the problems you identified.
-What does my app allow people to do that they couldn’t before?
-How will my app change the status quo people are dissatisfied with? (identified above)
1.3 – Unique Value Proposition
Your unique value proposition is the factor that differentiates your company from other companies. Ideally, your company should be the only company in the world that can claim it.
You should not claim that you are simply “better” than the existing competition. To be better than everyone else you will need lots of money and time, resources you may not have a lot of.
Example on Image: Dollar Shave Club ships amazing razors and world-class grooming products for just a few bucks.
1.4 – Objectives
This section is where the investor will check to see if their portfolio goals align with your goals. There are two things you should include here:
-Success Definition (Keep this to a shorter time frame [1-3 years]) – What metric or accomplishment would let you know that you succeeded? For example, this could be a revenue target or a number of customers.
-Exit Plan – What is the end goal of building up your company? This could be an IPO, acquisition, or a personal cash flow.
- Step n°2 |
Company
For some investors, the company section of your business plan is the most important. It’s often the case that what you are writing about now will not be what your business eventually becomes. This is why accelerators like Y-Combinator base most of their decisions on the founding team and company potential.
2.1 – Company Overview
This first section is where you should answer the key facts about the current structure of your company (legal and otherwise).
-What kind of entity is your company?
-Are you an LLC, C-Corp, or another corporate entity?
-What state was your company formed in?
-When did you form your company?
-Where is your team working from?
-Are you in a startup hub like Silicon Valley or New York City?
-Do you have a remote team?
-Are you working from an apartment, office, or coworking space?
-How many employees are on your team so far?
2.2 – Company History
This is your opportunity to explain the history of your company. Talk briefly about the idea that motivated you to start the business. Then go on to explain what you have been doing since you came up with the idea. List key milestones in your progress such as major pivots, early hires, changes in location, product launches, or anything else relevant to your experience.
2.3 – Management Team
This is often the most important part of the whole company section. For every person on your management team list their name, degrees, relevant work experience, and their responsibilities in the company. Here’s an example:
"John Smith – Head of Design & Development
Oversee internal development teams
Create and manage app architecture
Maintain and update database schema
Optimize internal agile processes
Oversee and approve all product designs
John previously worked at a top New York app development Agency – App Partner. He was a senior developer, responsible for system architecture, database management, and API development. He also managed a team of junior and intermediate developers.
John has a BS in Computer Science from New York University"
2.4 Advisory Team
Most successful startups have an advisory team that helps them with key decisions. People on your advisory team should have experience in the industry you’re competing in. When describing each member include their current positions, level of involvement with your startup, and key parts of your business they help with.
