Do you have a winning idea for a mobile app? Excellent! Now is the time to sit down to plan the app in great detail, and write a business plan that will take you on the wings of success until the desired exit. But wait, there are eight critical key points that your business plan must include in order to be effective and serious. The first set of points analyse the user’s browsing or usage data and users’ behaviour:
The most common and most convenient metric for understanding and comparing is the number of unique users per month, and tracking this parameter over time is essential. When combined with the number of visits to the site, you can get an additional indication of the number of repeat users. Even comparing the average time that users consume the service and are actually in the application or in the site is important, especially when it is done over time and you can track behavior changes of surfers and make necessary adjustments in the service / product.
Conversion Rate –
Conversion means an action by which a user interacts with the app, whether it is leaving information on a contact form, subscribing to a service or product, or anything else that makes it a customer (depending on the customer’s individual definition for the enterprise). It is usual to measure the number of conversions divided by the number of visits over a period of time. A comparison of the ratio over time indicates the efficiency of marketing and sales processes, or the value of the service / product in relation to the user’s eyes (even when considering the price).
Churn Rate –
Although it is unpleasant to say, but no customer remains a customer forever. The abandonment rate (in percentages) of free or paid customers is something to consider. Some present the data more subtly by defining the lifespan of the different types of customers, but it is certainly the same.
The second group deals with general and financial parameters relating to the business model and its efficiency:
Customer Value –
It is common to divide the total cost of marketing and sales by the total number of new customers over a period of time (e.g., in a month or a quarter), which means how much it costs to recruit a new customer, if a significant increase in the number of customers is planned (for example, by launching or introducing a new product).
Customer Lifetime Value –
When a customer consumes a service or product over time (for example, a subscription to a digital newspaper), it is customary to calculate his economic contribution in terms of the average monthly subscription price multiplied by the average number of months a customer needs the service. For example, if a customer pays NIS 100 per month and stays a customer for an average of eight months, then his economic contribution, or in other words, his life lifetime value, is NIS 800.
Burn Rate –
An estimate of how much it costs each month to keep the company alive until it becomes profitable. This is the total expenditures that include overhead, salaries, marketing and any additional expenses that can be considered. The burn rate varies according to the life cycle stage in which the venture is and depends on its development.
The number of months in which the company’s cash is sufficient to maintain the activity. For example, if the cash burn rate is about NIS 200K and the company’s coffers have NIS 1 million, then the Runway is five months, and this parameter can also be used when raising funds from the market to indicate how long the money raised will be sufficient and when it will be necessary additional funding.
A parameter whose importance is quite obvious, but precisely because of this it is important to note. Includes the total monthly income, from sales, from subscriptions, from services and from any other source of income from the customer in favour of the enterprise.
It is common to present a monthly level of details for a period of six months to one year ahead, followed by annual intervals. Of course, this is a forecast, but under reasonable assumptions and comparing with competitors or projects of a similar nature, a business plan is drawn upplan is drawn up to outline measurable goals. The business plan allows you to examine at any moment where you are, and plan actions to change reality instead of merely reacting to a given reality.