Answers to 6 Burning Questions From App Entrepreneurs
Let's talk about how to turn your app idea into profit.
The web ecosystem is far more evolved than the mobile app ecosystem. Mobile apps have been in existence just under a decade. Even with that, the competition is quite intense given the number of people who are starting their own businesses recently.
If you’re an entrepreneur who wants to build a mobile app business, but you don’t have technical knowledge, you join the ranks of a majority of appreneurs who have never written a single line of code, yet run a successful mobile app business. You’re not alone.
The real challenge isn’t learning to code. Appreneurs don’t necessarily need to learn to code because they can simply hire a team (in-house or external) or use one of the app building platforms to create the first version. But, some of the biggest concerns are how to turn your app idea into profit, what to do next once you have an idea, how to raise money, how to ensure that an app developer doesn’t scam you and how to market your mobile app.
I’ve been mentoring first-time app entrepreneurs for six years. These are some of the pertinent questions I’ve come across, that first-time aspiring app entrepreneurs or appreneurs have.
1. Find a profitable app idea.
While there’s no way to know if a startup’s going to work or not -- believe me, if there was a formula, there would be more venture capitalists than entrepreneurs -- there are a few methods to ensure you build something that has market potential or demand.
There are many factors that make for a profitable business, but a good idea is a starting point. The way to evaluate what works and what doesn’t is to validate your app idea before you build the actual app. If your research tells you there’s a demand for your app, you’re at the first step of building a profitable mobile app business. This way, you won't spend thousands of dollars building something people don’t want.
2. The right way to validate your app idea.
There’s a myth that you must build a product to validate your idea. The truth is, it really depends on the type of product you’re building and the competitive landscape around it. If your app is in a competitive landscape -- like if you’re building the next on-demand taxi app -- the competition has already validated the need for the app because of existing successful apps in this space.
But if your app is in a completely new space, with little -- meaning no one’s a big enough player -- to no competition, you must validate the concept before building a product. You can do this by putting up a landing or a sales page, promote it with a few hundred dollars spent on Facebook advertising (because you can target your segment very specifically) and see if there’s any interest in it.
Once you’re confident of the interest or curiosity generated by the landing page, go ahead and build the first version of the product.
Related: 10 Reasons Not to Build a Mobile App
3. The right time to raise money for your mobile app.
Ideas don’t get funded. At least not anymore. The barrier to entry in terms of product development is very low. Anyone can build an app. But not everyone can build a business. Investors are interested in you as a person and your ability to build and grow a business more than your ability to create an app. By the time Buffer App raised its $450,000 seed round, the team already had 55,000 users and were making about $13,000 a month. Buffer's co-founder Joel Gasciogne admits, "We would have really struggled to raise funding without that traction, and so I advise others to just get started and try and build something that people will pay for."
The Appreneurship Academy suggests 13 creative ways to raise money, but here’s one of them. Get funding as a birthday gift. In 2008, as Cynthia Kersey, a divorcee who neared 50, wanted to pursue her dream idea of securing a child’s right to education. She threw a party for her 50th-birthday and invited everyone she knew. She asked each guest to bring, in lieu of gifts, $100 and announced that she would use the gifts as seed money to open her Los Angeles non-profit, The Unstoppable Foundation.
4. The many ways to build an app.
There are many ways to build an app, depending on the objective and the app’s landscape. You can build an in-house team, hire an external or outsourced development team or leverage one of the app building platforms. The Appreneurship Academy recommends using BuildFire app builder and even shows a step-by-step tutorial on how to build an app using the platform.
Be sure not to get scammed when hiring outsourced developers by doing a background check and asking pertinent questions that help you assess their credibility and experience.
5. The many ways of making money from your mobile app.
The most common ways to generate an income from an app are advertising, in-app purchases or a subscription service. What most people don’t know is that there are tons of other ways to make sure appreneurs make a lot of money from within the app and outside of it.
One of the ways is to secure a partnership with another brand. This can significantly ramp up your monetization. What you’ll need to do is find a partner with a similar customer base who can add something to the experience of your users.
A partner or a network of partners can seriously benefit your customers and your businesses alike, especially if you create an integrated experience -- like when Localytics and Optimizely partnered to deliver mobile analytics as a combined service.
6. In marketing, there isn’t a one size fits all strategy.
Depending on which expert you talk to, you’ll get pitched a number of ideas, each expert saying theirs is the most effective. There’s Facebook and Google advertising, there’s App Store Optimization (ASO), social media marketing, PR, etc. You can't possibly do it all, nor should you.
Figure out where can you easily find your potential customers with the least path to resistance when opening a dialogue. You also have to consider that the money you spend on marketing should bring in at least three times the return on investment. The lifetime value of your customer should at least be three times that of the cost of acquisition of the customer.
Once you identify a marketing channel or a combination thereof that brings the maximum return on your investment, double down on it to scale up your business.