Tag Archives: building a business

Putting the final touches on the Business Plan

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In prior posts, I discussed many of the things to consider when developing a business plan for starting an #appreneur business.  It is now time to put the finishing touches on the business plan.

A man who does not plan long ahead will find trouble at his door. – Confucius

If you missed any of my prior posts, quickly access them from here:

Do Not Wear Rose Colored Glasses

Before committing money to any business, it is important to create a business plan. When doing this, don’t wear rose colored glasses. Too many people come up with an idea and convince themselves that it is a good idea without any objective analysis. If they do commit to doing a business plan, they skew their analysis to support their idea that the business is viable instead of objectively analyzing competitors, attainable market share, and overhead costs.  This is a great way to lose money.

How Can We Reduce Risks of Losing Money?

The best way to reduce the risks of losing money on a business venture is to go into the business planning with skepticism as to whether your business idea is worthy of investing in. Only after careful analysis of the market space, competitors and costs do you decide if the idea is worth investing in. If your analysis tells you that it is not financially viable — don’t waste your time and money! Go back to the drawing board and look for another idea that has reduced risks.

If your idea does look like it has legs (is viable), commit a certain amount of funds towards it, based on your startup analysis. Then when you commit those funds, keep an eye on your expenses. If your revenue is not what you expected or if your costs greatly exceed your projections, define a monetary threshold you will not exceed and if you do — shut it down! Pouring tons of money on a bad idea is a great way to go broke!

Anatomy of a Business Plan

OK, now that I’ve scared the hell out of you, you probably figured out that I am really just describing how important the business planning process is. Skip it and you will most likely fail. Go into with a biased optimism can also cause you to fail.

Go into it with open eyes and analyze everything you can so that you can make the best decision possible regarding the viability of your idea. In the past months, I’ve been feeding you blogs that described different parts of business planning.

Now it’s time to put all of this information into a document.  Here are the sections I normally include in a business plan:

  • General Company Description – This contains your mission statement, goals and objective, business philosophy, user demographic, industry information, company strength/weaknesses, and legal form of ownership.
  • Products and Services – Describes your product /services offered.
  • Marketing Plan – Describes your product features / benefits, customer profile, competitor revenue analysis, branding elements, the niche you are pursuing, marketing strategy, a description of the sales process and follow up, marketing budget, how you will price the product, a sales forecast for the first 2 years, and timelines.
  • Operational Plan – Describes your production and maintenance plan, business location, legal environment, personnel plans, inventory process, accounting procedures, general marketing approach, competitive matrix, startup and expenses and capitalization.

Rather than go into each of the above items in ad nauseum, I find it easier to simply give you an example of the business plan I built for aMemoryJog.  Of course, I hide our competitor list, as this proprietary, but you will understand the thinking that went into the analysis.  Below are 2 versions you can use, an MS Word and a PDF edition:

MS Word Version

MS Word Version

PDF Version

PDF Version

Related article: How to Build a Product Website for your App

Conclusion

Now we have a very good understanding of how to analyze our business idea and to create a business plan to determine if it is viable. My next blog will be out in a couple of weeks — I will discuss how develop a specifications document that you can hand off to a consultant to get the best price for developing your app.

Shameless Plug

The app I am creating is slated for production in the App Store around July or August 2014. However, the web edition is already available at http://www.aMemoryJog.com. Once the app is done, it will seamlessly sync with the web version.

Download a free trial and check it out!

aMemoryJog – Web and iPhone editions

Also, if you like this blog, please share it with others to increase our following. Our twitter account is @2HourAppreneur and be sure to like my Facebook page at http://www.Facebook.com/2HourAppreneur.

Thanks for following the blog!

15 Marketing Activities to Consider for Your App

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In our last post, we discussed how to determine you app’s user demographic using Alexa and how to refine your marketing strategy based on user demographic. Now it is time to flesh out the specific marketing activities we might plan for when preparing our app for the App Store.

Business has only two functions – marketing and innovation. – Milan Kundera

Marketing Strategies for Software

When I was building my last software business, our product sold for about $700 per user per year for our Software-as-a-Service model and about $1100 per user per year for our On-Premise edition. It was not unusual for a single client sale to yield $30,000 to $50,000 because a normal sale was for 30 to 50 users of the On-Premise edition.

I had the sales and marketing side of things pretty well figured out. We would advertise with Google Adwords, sponsor trade shows, speak at events, appear in trade magazines, and perform weekly web-based demonstrations of the product to users that signed up for a trial. All of this was supported by an automated email drip system that emailed clients once they downloaded our product and a sales team that followed those emails up with a phone call to nudge the client to attend a demo and eventually purchase.

Marketing Strategies for Apps

App marketing is very different. Why? Because the price of apps normally range from 99 cents to 20 bucks. With such a low sales price, it would not be cost effective to have a sales team contact people that download the app to nudge them to buy. It would also not be feasible to try to demo the app to users weekly — it just does not fit for this type of product.

When someone starts searching for an app, they will decide in matter of seconds whether they will download the app, normally based on the look of the icon, app screen shots, short description of the app and the user reviews. So it is important to get those things right.

Additionally, the App Store is crowded with lots of apps so it is important to get your keywords right so that when someone searches for an app similar to yours, they find it. In addition to the App Store, you can also drive downloads for your app from other sources. Bloggers and journalists are normally held in high regard, so if they review and recommend your app, it is an easy gateway to gaining users.

Marketing Activities

Based on my research, here are a list of marketing activities that make sense to consider for apps.

  1. Place your product in all app stores (Apple, Google, Windows) – start with Apple first and migrate to other platforms once a platform shows success.
  2. Use Google Adwords to drive downloads. For about $100 a month you can drive more downloads. Always tweak this process and measure the conversions to ensure that the money is well spent.
  3. For those of you reading this blog, it is part of my marketing strategy.  The idea is to build a community of like-minded individuals and provide them with really useful content. When others take a journey with you, they are more likely to share your blog and product information with others — resulting in more visibility for your app.  By the way — please tell all your friends about this blog and have them subscribe to it and my Twitter feed and Facebook page (thanks!).
  4. Spend time every day gaining new Twitter users for your blog — use Just Unfollow to follow and unfollow Twitter users. I try to link to at least 50 new Twitter users per day.
  5. Create a Facebook product for your blog or product and try to gain visibility to it.
  6. Work with journalists, app review sites and bloggers to get reviews posted for the app. In only about a month, I have found about 125 blog / review / journalist sites that may review my app once it is ready for the App Store. Once my app is ready, I will email each of them asking them to review it.  If they post a review (especially if it is positive), it will generate more visibility.
  7. Implement an automatic drip email campaigns for trial users of the software to nudge them to purchase. I wrote my own automatic drip email system but you can purchase Mail Chimp or a similar program to do this.
  8. Solicit sites to link to your web site by looking at your competitor’s linkages and sending emails to the owners of the linking sites asking to link to you. You can see who links to your competitor’s site by using Alexa.
  9. Participate in discussion forums with other appreneurs to offer advice. This is good for newbie appreneurs and can also be very good for you — you will always learn something new. Never overtly pitch your products using this technique but include a link to your product’s website page and a tagline on each post. That gives visibility to your product, you will be surprised at how many people will see it and click to learn more.
  10. Work with other #appreneurs to offer a MORE section of your app where your can cross promote each other’s product. Be sure that the products you show in this section are good products and complementary to yours. As discussed in a prior blog, it is good to also include these as affiliate links, allowing you to earn money for those cross sells.
  11. Implement reminder screens that encourage your free users to upgrade to the paid version.
  12. Continuously tweak the App Store listing by changing the product title, description and keywords with each release. Test the effectiveness of the changes.
  13. Localize the app title, description, keywords and screenshots for each language you support.
  14. Create a good press package for each release that includes a good press release, videos of the product, screenshots, product overviews, and features.
  15. If all above is working and you have extra marketing funds, advertise on Facebook.

Related article: How to Build a Product Website for your App

Conclusion

Now that you have a better grounding for the types of marketing activities you might want to implement, prioritize the list and get started!  My next blog will be out in a couple of weeks — I will discuss how to finalize your business plan and give you the opportunity to see mine.

Shameless Plug

The app I am creating is slated for production in the App Store around July or August 2014. However, the web edition is already available at http://www.aMemoryJog.com. Once the app is done, it will seamlessly sync with the web version.

Download a free trial and check it out!

aMemoryJog – Web and iPhone editions

Also, if you like this blog, please share it with others to increase our following. Our twitter account is @2HourAppreneur and be sure to like my Facebook page at http://www.Facebook.com/2HourAppreneur.  Thanks for following the blog!

Using Alexa to Determine your User Demographic

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In our last post, we discussed how to monetize your app for free and paid apps. We even discussed how to generate recurring revenue from your app. Once you have figured out your monetization strategy, you will need to formulate a marketing strategy. A more refined marketing strategy can be created if you understand your user demographics.

I remember auditioning for record labels and having them tell me, ‘Well, the country-radio demographic is the thirty-five-year-old female housewife. Give us a song that relates to the thirty-five-year-old female, and we’ll talk.’ – Taylor Swift

How to Determine Your App’s User Demographic

If you have really deep pockets, you can conduct user demographic studies that can better pin-point what type of “typical user” might enjoy your app.  You can look at things like male / female, age, geographical location, and education level. But who has thousands of dollars to spend on these types of studies?  Not me!

There is an another approach. Using Alexa, you can put in your competitor’s website and it will spit out the demographic. After analyzing several of your competitors, you can hone in on your demographic.

Let’s take an example. Let’s imagine you are creating an app to compete with Angry Birds (good luck with that).  You can go to http://www.Alexa.com and enter their website address (http://www.AngryBirds.com) and here is what it will show:

AngryBirds Demographic

User Demographics – AngryBirds.com

Based on the above, the demographic is mostly male with very little or no college education. They seem to use Angry Birds at school and home more than at work. As we can see below, it is very popular in India and the USA:

AngryBirds Demographic2

User Geographics – AngryBirds.com

You will want to do that with 4 to 5 of your competitors to hone in on the commonalities.

Related article: How to Build a Product Website for your App

Are Demographics Important?

In some cases demographics can be very important. For example, women tend to use meditation apps more than men so if I were designing a meditation app, I would want very soothing colors and would want to give my beta version to several women I trust to try it out and give me feedback on the design, look and feel and functionality.

The demographic can also play into how you market the app. In our fictional meditation app, I would scour the web for some female bloggers that are early adopters of technology, and are into meditation.  I would contact them to get them excited about writing a review for the meditation app.  Their popular blog could turn other women onto the app if they really enjoy your app, especially if they write enthusiastically about it.

Conclusion

Now that you know how to use Alexa, try determining your app’s demographic! My next blog will be out in a couple of weeks — I will discuss what marketing activities you might consider when planning the release of your app.

Shameless Plug

The app I am creating is slated for production in the App Store around July or August 2014. However, the web edition is already available at http://www.aMemoryJog.com. Once the app is done, it will seamlessly sync with the web version.

Download a free trial and check it out!

aMemoryJog – Web and iPhone editions

Also, if you like this blog, please share it with others to increase our following. Our twitter account is @2HourAppreneur and be sure to like my Facebook page at http://www.Facebook.com/2HourAppreneur.  Thanks for following the blog!

Sneak Peek at aMemoryJog Lite iPhone edition

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After several months of development, the FREE edition of aMemoryJog (Lite) app is almost ready for production.  We are now making final bug fixes, preparing marketing materials, and getting ready for the Apple App Store submission.

To jog your memory (pun!), aMemoryJog is an app that tracks passwords, frequent flyer details, loyalty program information, and pretty much anything else that is easily forgotten. By having this information on your phone, it is a tap away.

The edition shown in this blog will be TOTALLY FREE for download in the Apple App Store very soon.

aMemoryJog Lite Movie

My @2HourAppreneur readers get the first sneak peek of the application.  I created a movie that shows the app in progress, click below to watch the movie:

Movie

Additionally, I thought I would include some screen shots so that you can see each screen in detail. If you have any feedback (good or bad), please provide it by commenting to this post. We still have a few more weeks to make tweaks, so your feedback is valuable.

Login Process

From here, you will be able to create a new account (if you don’t have one) or login if you do have one. If you have an account but cannot remember the password, you can have it emailed from here.

Login

Please provide some feedback by entering comments into this blog:

  • What do you think of the logo?
  • What do you think of the colors of the application?

All Your Easily Forgotten Info in Your Pocket

Once you are logged in, it shows a list of items you have stored in aMemoryJog. To add a new item, tap the + sign in the top right of the page.

ItemListing

To view the details of an existing item, simply tap it and the details appear.

ItemReadOnly

One of the cool features is the ability to tap the website address of a stored item and it will bring up that website and allow you to quickly log in without remembering your userid and password (you can tap those to automatically fill them in).  Here is an example of that for the Wells Fargo website:

WebBrowser

Questions for you:

  • What do you think about how it organizes all your passwords?
  • Do you like the colors?
  • Are the navigation buttons at the bottom of the page easy to understand?
  • Do you like the website browser integration for tapping a website address to automatically fill in the userid and password?

Adjusting your Settings

The app is also configurable, you will have a number of different settings that allow it to work better for your specific needs.

Settings

Questions for you:

  • Are the settings labeled in way you can quickly understand  what they do?
  • Is the look visually appealing?

Getting Help

The Help screen allows you to watch a movie that shows how the product works, access frequently asked questions and request support.

Help

Questions for you:

  • Is it clear how to use this screen?
  • Do you like the colors used on this screen?
  • Is it clear what the Tell A Friend section is for?

Conclusion

Thanks so much for supporting this effort. Your feedback is important, especially now just before getting it ready for production — so any feedback is welcome.

Also, if you like this blog, please share it with others to increase our following:

Thanks again for following the blog!

How Will You Monetize your App?

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In our last post, we discussed how to determine if the app you have been considering building would be financially viable. Once you have enough confidence that it is, it is now time to think out the options for monetizing your app.

Being good in business is the most fascinating kind of art. Making money is art and working is art and good business is the best art. – Andy Warhol

Different App Monetization Options

There are many ways to make money from your app:

  • You could offer a free app that contains banner ads and each time someone clicks on a banner ad, you will accumulate money from those clicks.
  • You could offer a paid app where each time someone pays for your app, you get 70% of the revenue generated (Apple or Google Play keeps 30%).
  • You could provide in-app purchases that provide value added services (like data backups to the cloud, web access to your application, etc.).
  • You could setup an affiliate program and present other apps as possible purchases within your app and receive a referral fee.

Monetization

What’s the Right Approach to App Monetization?

So should create a free app with banner ads and in-app purchases, create a paid app, or just rely on affiliate program revenue? In my opinion, you should do all of the above to maximize your revenue. And you should figure out a way to capture recurring revenue.

Free Edition with Banner Ads and In-App Purchases

When creating my app, aMemoryJog, I am taking that approach. For those that don’t have the money to buy an app, I offer the free edition with banner ads.  I feel that once they use the free edition for a while, it will be so useful that they will be willing to pay a small fee to migrate to the paid edition.

Heck, at less than $10, it is probably less than the user spends at Starbucks in a couple of days of sipping lattes. But for those non-latte sipping types that never plan to buy, they will still have a cool app to use. And hopefully there will be occasions when they see a banner ad shown within my app that prompts them to tap on the ad to learn more.  When they do, I earn ad commissions.

Also within the free app, there will be reminders that  are shown that explain what they get by purchasing the paid edition. In my example, they will receive free backups of their data to the cloud to prevent accidental loss of data if their phone has to be restored. It will also provide them with a web edition of the software so that they can use the tool on their PC or Mac and the data entered will automatically sync with the mobile edition. Now that’s adding value with the paid edition!  And, the reminder of this is unobtrusive (also notice the advertising banner at the bottom of the screen that generates ad revenue):

Monetizing Apps

In-App purchase for cloud backups

Paid App Revenue

For someone to fork over their money for a paid edition, you really need some compelling reasons for them to part with their dinero. When developing  aMemoryJog, I decided to offer these compelling reasons to upgrade:

  • No Ads – No ads are shown in the paid edition, giving the user more room on the screen to see their data.
  • Data backups to the Cloud – Each time the user makes changes on their phone, those changes are automatically sent to the cloud for safe keeping.  If their phone ever crashes or they have to restore it, they can easily restore their aMemoryJog data from the cloud.
  • Free 1 Year Subscription to the Web Edition – When they purchase the app, it comes with a 1 year free subscription to the web edition of aMemoryJog. That means they can use it from their PC, Mac, tablet or any other device that has a web browser.
  • Synchronizations with other Devices – Once they love the convenience of using the web edition of aMemoryJog from their PC, tablet or Mac computer, they will want any changes made there or on their phone to sync with each other. The paid edition does that — it seamlessly syncs all their devices.
  • Remote Self Destruct – So what happens if someone steals your phone? Personally, I would like a way to remotely wipe out the aMemoryJog  data from the phone without the thief knowing it.  With the paid edition, you can do that. Just go into the web edition and tell it to self destruct the mobile device. It will wipe out the data when the thief tries to log into aMemoryJog on the mobile device but will keep it securely in the cloud in case you buy another phone and want to restore it so that you don’t lose all the data you kept in aMemoryJog.
  • Recycle Bin – Another feature of the paid edition is the ability to restore a deleted record. Just like your Mac or PC, you can empty your recycle bin or restore selected items.
  • Localized Languages – Finally, the paid edition allows a user in another country to use it in their native language. Whether that be Spanish, French, Italian, German, Russian, Chinese or Japanese — they are covered. I even added something special for English speakers — an option called English (Funny). When the language is set to that, it adds personality and attitude to each message that is displayed in the app.

As you can see, I took a lot of care to provide very compelling reasons to upgrade to the paid edition.

In-App Purchases and Recurring Revenue

Most apps pay you once — when they download the paid software. Another way to generate revenue and ensure the longevity of your app is to add a recurring revenue component. In aMemoryJog, I provide a free 1 year subscription to the web edition of aMemoryJog when they purchase the paid edition. But after a year, they will lose access to the web edition and the automatic backups unless they renew their yearly subscription for $9.99. This is just good business because it is a very low yearly cost (less than a buck a month) but gives the user access to aMemoryJog from the web and keeps their data backups safe and secure in the cloud. I implemented it in a way where it keeps track of when their subscription expires then allows them to renew it from directly within the app via an in-app purchase.

Affiliate Programs

The idea behind an affiliate program is that you can present other people’s apps for download somewhere within your application and if someone downloads the app, you get a small commission from them downloading.  Normally this is done by adding a MORE… section in your tab bar at the bottom of your app where people can click that and see other people’s app for download. It is important to partner with complimentary apps for this type of feature so that users of your app will want to download apps with a kindred spirit.

Even if you don’t decide to add a MORE… section to your app, you can still take advantage of an affiliate program. You can set your own paid product up as an affiliate and anytime someone clicks on the Upgrade button to download your paid edition, you get a small commission through the affiliate program — pretty cool, eh?

Related article: How to Build a Product Website for your App

Conclusion

We now have discussed different ways to make money with your app. My next blog will be out in a couple of weeks — I will discuss  how to determine the demographic for your app (whether your users will be mostly male or female, college educated or not, etc).

Shameless Plug

The app I am creating is slated for production in the App Store around July or August 2014. However, the web edition is already available at http://www.aMemoryJog.com. Once the app is done, it will seamlessly sync with the web version.

Download a free trial and check it out!

aMemoryJog – Web and iPhone editions

Also, if you like this blog, please share it with others to increase our following. Our twitter account is @2HourAppreneur and be sure to like my Facebook page at http://www.Facebook.com/2HourAppreneur.

Thanks for following the blog!

Is your App Idea Financially Viable?

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In our last post, we discussed how to define your competitive advantages as you begin your #appreneur journey. Once you have sized up your competition, it is now time to determine if your app idea is financially viable.

If you want to rear financial blessings, you have to sow financially. – Joel Osteen

How Much will it Cost to Develop My App?

The cost to develop an app will depend on the number of screens and complexity of the app, who you choose to develop the app, and how detailed your specification is before getting an estimate.  If you develop the app yourself, the costs will be smaller because there will be no subcontractor costs. However, I recommend you outsource the development so that you can spend your valuable time on pre-launch marketing and planning.

The first step in this process is to create a prototype of what your app might look like. There are some great prototyping tools available, I use Balsamiq Mockups. The cost of this software is minimal (one time fee of $79) and you can use it for all your upcoming apps if you are successful. Using Balsamiq, you can create each screen of your application, here is an example of the ones I put together:

Balsamiq Mockup

Balsamiq Mockup

By crafting your app ideas into a design, it forces you to flesh out the look and feel of each screen needed for a subcontractor to perform work.  Once you have the prototype done, create a specifications document that a subcontractor can create an estimate from.  In my specifications document, I like to include descriptive text that identifies what to do when any button is touched on the screen, what messages to display, etc.  By defining this level of detail, the subcontractor can provide a much better estimate because there are less unknowns.

In future blogs, I will discuss the specifications document in more detail (what to include and exclude), where to find subcontractors, what legal documents you should have in place when working with subcontractors, and how to pick a good subcontractor.

Assuming you have created a good prototype and specifications document, the cost of the development of your app will depend on the number of screens and complexity of your app. Based on my own experience, here are some very general guidelines, the prices are for a single platform (Apple iPhone, Apple iPad, Android device, etc.):

  • Small app (Less than 5 screens and little complexity) – $1,500 to $3,000
  • Medium app (Less than 10 screens and medium complexity) – $3,000 to $6,000.
  • Larger app (10+ screens and medium to harder complexity) – $6,000 to $15,000.

I also suggest that you ask the subcontractor to write the software in a way that allows them to re-use the code when targeting a different platform (Apple iPhone, Apple iPad, Android device, etc.). Also, ask the subcontractor for a ballpark estimate for creating a version in the other platforms once the first platform is done. By investing in a single platform first, it allows you to test the waters to determine if you want to sink additional money into the next platform. Once you recoup your costs on a specific platform, move on to another platform.

Other Costs to Consider

In addition to app development, here are some other costs to consider:

  • Registering your Business – You will need a business name and want to register it your state or province. The cost of setting up a LLC (Limited Liability Company) is about $125.
  • D-U-N-S number – It is also smart to get a Dunn and Bradstreet number for your business. This prevents you from having to use your social security number when working with vendors, you can use your D-U-N-S number instead. If you do this, allow 30 days to get it for free. If you want it expedited, it can cost as much as $299.
  • Website – You will want to create a website for your app that allows you to talk about the features of the app and allow them to purchase. By having a website, you will also get indexed by Google, driving more sales of your product. If you know HTML, I suggest writing your own website. Start off by purchasing a website template from somewhere like Template Monster, they are generally less than $50. You can then simply change the template with your site details. If you are not comfortable creating your own website, you can outsource this just as you do the app development. The cost of this will probably run you about $1,000 or less, especially if you ask them to use the template you purchased.
  • Website  Hosting – You will also want to purchase a domain for your app (for example, I purchased www.aMemoryJog.com) and you will need a company to host the site.  I purchased mine from Go Daddy, you should be able to purchase the domain and hosting for about $65 per year.
  • Google Ads – Once your website is up and running, you can purchase Google Ads to drive business to your site. This is totally optional but can increase your sales. You have to analyze the sales it brings to determine if it is worth it. In my past experience, it is, but every scenario is different. I normally budget $100 per month for Google Ads. Of course, do not do this until your app is in available for sale.
  • Apple App Developer (iTunes Connect) – To sell your app in the Apple App Store, you must sign up for iTunes Connect. This allows you to submit your app to Apple for review and once approved, they will post it in the app store. The cost for this is $99 per year. Apple will keep 30% of the sales from your app, and you will get 70%.
  • Google Play Developer – Similar to iTunes Connect, if you plan to create your app for Android devices, you will need a developer account for Google Play. The cost is $25 per year and like Apple, they keep 30% of your sales.
  • Email Marketing – If you plan to do any email marketing, you will need a product to send emails out automatically on your behalf. For example, when someone signs up for a trial of our web edition of aMemoryJog, it sends an email to the new subscriber welcoming them to the trial. Then every few days, it sends other emails explaining how the product works and how to purchase once their trial expires. This automated engine eliminates a lot of busy work of having to send these emails manually. Since I am a programmer by trade, I wrote the software to do this for my product. But you can purchase a tool to do this for your product. Tools like MailChimp are free to start with, allowing you to send up to 12,000 emails to 2,000 subscribers at no cost. After you exceed that, it could cost you from $40 to $100 a month, depending on the number of contacts you have and the number of emails you send.
  • Contact Management Tools – Once you begin marketing to app reviewers, you will want software to keep track of who you have communicated with and who needs to be sent an email about your app. You can get a contact manager for free until you collect a certain number of contacts. I use Zoho CRM, it is free for 5,000 contacts or less and only $20 per month once you exceed that.

Related article: How to Build a Product Website for your App

Estimating Your Revenue

This is the tricky part. About the best you can do is to try to determine the revenue of your competitors and then estimate yours based on a percentage of that. I discussed this in a prior blog. But I have to tell you from experience, it is a crap shoot.  You really won’t know your revenue until the product is in production. I always try to estimate very conservatively and hope to outpace my estimates. For example, you might look at the competitor with the least number of downloads and estimate that you can capture half that number of downloads.

The best way to estimate your revenue is to estimate your monthly downloads multiplied by the cost of your app, minus the App Store commission of 30%.

Putting it all Together

Once you estimate your revenue for the year, subtract the costs, then you have your expected net profit. If you can live on that net profit, great!  If you can’t but it is at least half what you can live on, you can always create multiple apps to create a profit multiplier and still make the #appreneur life work.

Is your App Financially Viable?

Conclusion

We now have analyzed whether our app seems financially viable. If it looks promising, we should proceed. If not, we should go back to the drawing board – either think of another app idea or bail on app development in general. My next blog will be out in a couple of weeks — I will discuss how to monetize your app.

Shameless Plug

The app I am creating is slated for production in the App Store around July or August 2014. However, the web edition is already available at http://www.aMemoryJog.com. Once the app is done, it will seamlessly sync with the web version.

Download a free trial and check it out!

aMemoryJog – Web and iPhone editions

Also, if you like this blog, please share it with others to increase our following. Our twitter account is @2HourAppreneur and be sure to like my Facebook page at http://www.Facebook.com/2HourAppreneur.

Thanks for following the blog!

Defining your Apps Competitive Advantages

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In our last post, we discussed how to choose what type of app to develop as you begin your #appreneur journey. Once you have picked an app to develop, how do you research your competitors and separate your app by providing competitive features?

I have been up against tough competition all my life. I wouldn’t know how to get along without it. – Walt Disney

Do a Little Competitive Snooping

To build a better app, you need to objectively analyze the competition and understand their strengths and weaknesses. You can do that by visiting their website, downloading a free trial of the product, and in some cases, purchasing their product to see how well their paid products work.

By downloading a trial, you get to see several things. You get an inside view as to how they manage their prospects. They will send you emails during your trial, they may even call you to nudge you to buy. You can also determine how much help they provide as you are learning their product, determine how easy their product is to use, and you can see things you like and dislike about  their product.

Create a Competitive Matrix

Once you fully understand your competition’s features, create a matrix so that you can more easily see who has competitive features.  It might look similar to this for each competitor:

steve

Define your Features

Once you understand your competitors, you can define your features. Here is how we defined this for our product:

aMemoryJog allows tech savvy consumers that own a computer, phone or tablet to keep their easily forgotten information accessible at their fingertips. This includes passwords, account information, frequent flyer details, and an endless list of other critical info. The benefit is that this hard-to-remember information no longer has to be remembered – they can find it in seconds.

Features of aMemoryJog will include:

  • The ability to enter personal information separated by easy-to-set up categories and personal data attributes, and a large notes section to enter more detailed information
  • Automatic cloud backups and encryption of all stored information
  • The ability to access websites with a single click and single click copy userid / passwords
  • The ability to restore a deleted entry from the recycle bin
  • The ability to quickly find information by searching by keyword and by automatically showing recent items.
  • Localized language support for English, Spanish, French, German, Italian, Russian, Chinese and Japanese.
  • Friendly password generator that uses real words instead of hard to remember letters.

Our competitive advantages are:

  • More stylish and user friendly interface than competitors
  • Lean, value added features without feature bloat
  • Recycle bin that allows restoring of deleted items
  • Simpler import feature than our competitors (web edition)
  • Simple to use, easier data entry than our competitors, less options to configure
  • Multiple language support (English, Spanish, French, German, Italian)
  • Friendly password generator that uses real words instead of hard to remember letters.

Related article: How to Build a Product Website for your App

Conclusion

We now understand our competitor’s strengths and weaknesses and have defined our feature set to provide our own set of competitive advantages.  We are now progressing in the development of our business plan. In our next blog, we will begin to discuss the  financial viability of your app and how to forecast costs and revenue.

Shameless Plug

The app I am creating is slated for production in the App Store around July or August 2014. However, the web edition is already available at http://www.aMemoryJog.com. Once the app is done, it will seamlessly sync with the web version. Download a free trial and check it out!

Also, if you like this blog, please share it with others to increase our following. Our twitter account is @2HourAppreneur.  Thanks for following the blog!

 

What App Should I Build?

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Probably the biggest up-front decision for starting an appreneur business is deciding on what type of app to build first. When I built my last software company, I found that I needed software to track requirements, bugs, test cases, and project deliverables. At the time, very few software products did this in one tool. Sure, you could buy several tools to accomplish this but they were not tightly integrated and were pretty disparate. That triggered the idea for the product — I would create a web-based product that did all of those things and could be rented (SaaS) instead of purchased. Since I was a major client of my own software, it made all the difference as to how we continued to improve it.

Trust your instincts, and make judgements on what your heart tells you. The heart will not betray you. ― David Gemmell, Fall of Kings

Be the Customer of Your App

Keeping with my past successes, I decided I should create an app that I desperately needed and would use on a daily basis. In other words, I should build an app that I would actually be a customer of. I came up with the idea of becoming an appreneur in January 2013 and at the time, my wife and I were traveling a lot and needed a way of tracking hotel loyalty cards on my phone. That way when we went to a Holiday Inn or some other hotel, I could quickly give them my loyalty card account number and they would give us credit for the stay.

At the time, I was using a Windows program for keeping track of passwords for the different websites I use, my loyalty card account numbers, and just about anything else I needed quick access to. The Windows version worked great when I was sitting at my PC but it was not accessible when I only had my phone in my pocket.

This spurred the idea for my app. I will create an app that allows me to track passwords, loyalty card accounts, credit card accounts, and the other hundreds of things that are hard to remember yet important to track.

Does this App Exist Today?

The next thing to do was to determine if there is already an app that does what I need. After doing a few Google searches, I found that this app does exist and in fact, there are a number of competitors already doing it. Many people would stop there — it has already been done, someone beat me to the punch. But this tells me that there is already an established market, so there must be lots of people like me that need an app like this. I will not be deterred by the fact that competition already exists, I just need to find some competitive advantages that will allow me to compete well.

I personally believe that trying to create a totally unique app is much harder because you don’t have an established category or market to pull data from. It is a crapshoot as to whether the idea will be marketable. So creating a competitive app is not a bad thing.

Sizing Up the Competition

After doing multiple Google searches, it was clear that about 6 companies were capturing most of the market. Looking at iTunes, I found that there were another 15 or so companies with competitive apps but very few seemed to be selling much. How did I know that? I used http://xyo.net to determine how many mobile downloads each of the big 6 competitors were getting per month.

Note: http://xyo.net provided free analysis of app downloads when I first did this research. They have recently sold that business to https://prioridata.com and it appears that they charge for researching this data now.

It was easy to estimate the amount of revenue each of the 6 companies were making because I knew how much each app was selling for and XYO told me how many monthly downloads they were getting.  Here were the results (I won’t use the competitor names since that is confidential to my analysis):

  • Competitor 1 – They had a really good website, they had apps sold for Apple, Android, Windows, and Web. According to XYO, they were generating 236,000 downloads a month. However, since they have both a paid ($9.99) and free app, it was hard to determine how much revenue they were generating. But if we assume 20% of the downloads were paid downloads, that put their yearly revenue at $5.6 million per year.  Wow!
  • Competitor 2 – They were getting about 31,100 downloads a month and the cost of their app was $9.99, equating to a yearly revenue of $3.7 million.
  • Competitor 3 and 4 – One of these were getting about 14,050 and the other about 13,300 downloads a month at $9.99 each, equating to about $1.6 million in yearly revenue.
  • Competitor 5 – They were getting about 11,450 downloads a month at $9.99 each, equating to $1.3 million per year.
  • Competitor 6 – They priced their app less than the others ($4.99) and were driving about 2,050 downloads a month, equating to $122,754 per year.

Related article: How to Build a Product Website for your App

Conclusion

Based on this initial research, this app idea seems promising. Even if I could generate half of the revenue that the 6th competitor generates, it still meets my goal of creating an app that can produce revenue of $50,000+ per year. And if it is able to do even better, I may have a lucrative app on my hands. But to be competitive, I know I will need some competitive features that allow my app to shine over some of the others. That will be the next analysis — understanding the things each of the competitors do well and not so well so that I can capitalize on it.

This is the early stage of business plan development, I will continue upon this theme in upcoming blogs so you can see how I developed the business plan.

Shameless Plug

The app I am creating is slated for production in the App Store around July or August 2014. However, the web edition is already available at http://www.aMemoryJog.com. Once the app is done, it will seamlessly sync with the web version. Download a free trial and check it out!

ScreenShot_aMemoryJog

Also, if you like this blog, please share it with others to increase our following. Our twitter account is @2HourAppreneur.  Thanks for following the blog!

 

Build a mobile app business working 2 hours a day?

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If you have an entrepreneurial spirit and want to take a journey with me, we will discover if it is possible to build a mobile app business by working as little as 2 hours a day.  I have read several books that suggest that it is possible, if done right.  So I am on a quest to see if that’s doable and I will share what I learn with the readers of this blog. I will discuss everything I do along the way so that if it is possible, you will have a guide to follow as you attempt the same.

The reason why worry kills more people than work is that more people worry than work. – Robert Frost

About the Author

My name is Steve Miller and I am an entrepreneur. After graduating from the University of Alabama in 1984, I wanted to learn as much as I could in hopes of eventually starting my own business and retiring early — hopefully on or before I turned 50. Initially I worked at large software companies, soaking up as much knowledge as I could about software architecture, software engineering, corporate finances, management, and leadership. In 1999, I started my own software business and sold it in 2009 to a larger acquiring company. That allowed me to achieve my goal of retiring early, at 50 years old.

I have been retired now for 1.5 years and have been enjoying this time traveling the globe with my wife, spending time close to our kid’s college towns, golfing, biking, fishing, boating, and exploring new hobbies. You can learn more about me at http://www.WeBeTripping.com and follow our travel blog at http://webetripping.wordpress.com.

Why Start Another Business?

So if I am financially independent, travel a lot, and have lots of hobbies, why start another business? There are several reasons:

  1. I enjoy the challenge of building a business.
  2. Even though I have lots of hobbies, there are rainy or snowy days where boredom can creep in, so why not use that time efficiently?
  3. Being retired at 50 could leave 40 years to live off our retirement income, so any additional cushion can’t hurt.
  4. I am curious about the mobile app market and would like to discover how lucrative it might be.

What are the Parameters of the Business?

I chose to create mobile apps (iPhone, Android, etc.) because there is a low-cost entry, the market is fairly new and from what I read, it can be lucrative if done right. Sure, there are millions of apps on the market but the majority of apps only get a couple thousand downloads during their lifetime. A smaller portion of apps can generate between $50,000 to $500,000 per year, and an even smaller number of apps can generate millions per year (think Angry Birds, Words with Friends, etc).

When I started to build my business plan, I wrote down these goals of the business:

  • Should have low entry costs (less than $10,000).
  • Should not require hiring direct employees, work should be done by outsourcing the effort.
  • Should have low overhead– no office, low marketing costs and very few recurring costs.
  • Should be a virtual business that allows me to continue traveling and having fun.
  • Should allow me to work no more than 2 hours per day (10 hours per week) on average.
  • Should have an exit strategy that allows me to sell the business once specific targets are hit.
  • Should create apps that have the potential of generating $50,000+ per year per app.

What is an Appreneur and What is the Blog About?

An appreneur is simply an entrepreneur that specializes in building mobile apps. I will use this blog to document all the things I do as I build the business. That will include how I choose the type of mobile app to develop, how to research competitors, how to build a business plan, how to develop app specifications, how to choose a sub-contractor to build the app, how to market the app (pre-release and post-release), and how to analyze and tweak business results.

Will it work? Can I really build an app business working less 2 hours or less a day (on average)? Honestly, I am not sure. But I will document the process and we can determine if it will work. I will be transparent, talk about successes and failures so that you can learn from any mistakes (that I am sure to) make.

I plan to post a blog several times a month, probably less once the app is in production. If you want to get an email each time I post a blog, go to http://2hourappreneur.wordpress.com and scroll to the bottom right of the screen and enter your email address.  You can unsubscribe at any time.

Related article: How to Build a Product Website for your App