startups · 07 Feb 2023

Complete Guide on How to Start a Mobile App Business

Tatsiana Kerimova

Tatsiana Kerimova

Chief Executive Officer

Illustration by Amir Kerr

With small and medium enterprises (SMEs) closure rates reaching 19% in 2022 and a looming recession, starting a small business has never been this risky. Nonetheless, the business idea and its implementation make a difference and get your undertaking off to a good start.

Given the omnipresence of smartphones, investing in mobile app development allows business owners to tap into the profit-making potential of this market. Mobile device usage significantly accelerated in 2022, with daily time spent per user surpassing 5 hours.

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Average hours spent on mobile per day per user. Source: Data.ai

As app usage continues to increase steadily, mobile app revenue grows accordingly. In 2022, global consumer spending across app stores stood at $167 billion.

Now that we’ve looked into the immense potential of the mobile market, let's elaborate on how to start an app business. In this article, we have curated a step-by-step action plan that will help you navigate your way toward a successful app and avoid potential pitfalls during the development process.

Generate an App Idea

Just like any business, mobile app development starts with a well-shaped idea. A unique concept is the backbone of any business success, but you don’t have to break the mold to carve a niche in app stores. Instead, you can find an existing problem your customers have and offer your mobile app as the solution.

Alternatively, you can create an artificial demand for your service to stimulate customers’ interest. If the market is saturated for your business idea (and it likely is), develop a unique selling proposition for your application to differentiate it from the competition.

How do you know if your idea will drive high profits? The answer is simple: your product should bring value. That's why when testing the viability of a business idea, you should evaluate it in terms of long-term benefits for a potential audience; in other words, your mobile app should address a real-world pain point and deliver value to the end user.

Let's use 2022 as an example. Accelerated by the pandemic, tangible investment, and healthcare staffing shortages, the usage of telemedicine applications has increased 38x from the pre-pandemic baseline. As a result, on-demand doctor apps have become one of the core startup ideas in 2022 and attract plenty of investment.

Mobile shopping apps and livestream shopping apps, in particular, are also a byproduct of the pandemic targeted at compensating for the offline shopping experience during the lockdown. By 2024, live commerce is estimated to grow to $35 billion, thus emerging as a profitable business idea for the years to come.

Do Market Research

Once you decide on your idea, it's time to research. Thorough market research is a critical step in mobile app development, as it allows you to collate the audience's insights, look into hot trends, and conduct a competitive analysis. Without input, you won’t be able to create a market-oriented product packed with future-proof functionalities favored by your target audience.

Market analysis

If you want to look at the industry from a broader perspective, assess the market's general trends first. For example, entertainment, social media, and sports TV apps have been among the most crowded app categories in 2022.

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Top app categories, 2022. Source: data.ai

Moreover, each mobile app market has micro-trends, such as IoT integration for healthcare apps and live-streaming features for dating applications. The deeper your understanding of the market is, the higher your odds are of creating a commercially viable solution.

Related: What Types of Apps Make The Most Money

Competitor research

Competitor research is the process of investigating the strengths and weaknesses of your competitors. By doing this, you can spot the gaps in the existing market and avoid potential pitfalls that your competitors have encountered. Researching direct competitors will also help you to define the core features for your future product, evaluate the revenue potential in the niche, and pick up marketing ideas. 

Along with direct rivals, we also recommend looking into indirect competitors. They offer the same products and services as you’re planning to, yet the end goals differ (e.g., Uber and Google Maps). 

By researching indirect competitors, you can considerably increase the breadth of your ideas and inspiration sources. As you both cater to a similar audience, the chances are much higher of landing unique ideas or opportunities that your direct competitors haven't adopted yet.

Target audience research

Investigating the potential app users is key to meeting their demands and spotting their behavioral patterns. For instance, healthcare app users see self-service options such as online appointment scheduling as a decisive factor in their choice of care. 

Also, you shouldn't forget about generation comparison; for example, according to Oracle, millennials and Gen X are more interested in the order online and delivery options compared to other generations. Comparatively, Baby Boomers and Gen Z are more into offline shopping. You can leverage these insights when building an e-commerce application.

Whether you have experience in mobile apps or not, proper research on current trends and historical data analytics will help you have your finger on the industry's pulse.

Choose the App Development Platform

When choosing between an Android app and an iOS app, there are a few factors that you should take into consideration. Ask yourself:

  • What market are you targeting? Are you planning to reach as many users as possible?
  • What monetization model is your product based on?
  • Are you looking for a high level of customization and a unique design?

Your answers will determine the app development platform; for example, Android apps are better if you aim to market globally. According to Statista, Android is one up on iOS by the number of users. As of 2022, the Android operating system holds 71% of the market share, while iOS accounts for around 28% of the mobile market. 

However, the situation differs in North America, Australia, and northern Europe, where iOS penetration steadily increases. So if you’re targeting one of these markets, iOS apps are the safe bet. 

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The revenue potential also differs in iOS apps and Android solutions. According to Sensor Tower, consumers spend more on subscription-based apps from the App Store than on Google Play.

Moreover, iOS app users tend to splurge on in-app purchases. The revenue from the top 100 non-game subscription apps on the App Store increased by 31% year-over-year (YOY) to $13.5 billion in 2021 from $10.3 billion. Therefore, subscription-based or free apps with in-app purchases are better off in the Apple App Store.

Choose Between Native and Cross-Platform App Development

It’s not enough to choose between iOS and Android apps; you also need to consider platform compatibility. Native mobile apps are platform-limited and designed to run on Android or iOS. Conversely, cross-platform apps cover multiple platforms with one codebase.  

If you need to test your business idea in the wild or get funding, we recommend going for a cross-platform application, as it allows developers to build a prototype quickly. However, a cross-platform solution means limited functionality, as it cannot employ device-native functionality like GPS, camera, and microphone. 

Cross-platform applications are also hard to maintain and scale, making the transition from a minimum viable product (MVP) to a full-fledged solution quite challenging. We recommend choosing this approach for small projects with a short lifetime.

Native app development is based on the native technologies of a particular platform that boost its performance and facilitates maintenance compared with a cross-platform solution. Native apps are the right choice for long-term projects as they’re easily scalable.

Targeting a particular platform allows you to offer a better user experience and granular customization. Moreover, you can tap into the full paraphernalia of device-specific features and expand your feature set.

Make a Business Plan 

Starting an app development business is impossible without a business plan, as effective tactics and strategies are must-haves to pave the way to success. Proper planning reduces the chances of falling into common pitfalls that are usually accompanied by unnecessary costs. 

The dynamic nature of the mobile app development business highlights the importance of both short-term and long-term planning. During the planning process, you should mark your general steps towards a final goal that will serve as a guide when developing your business. Also, don't forget that a proper business plan is essential to raise funds.

At this stage, you consolidate all the data you've gathered and identify the strengths that make you stand out from others. An outline of a business plan may look like this:

  • Define a problem that your app will solve
  • Research solutions
  • Select target audience
  • Outline core functionality
  • Determine a monetization strategy
  • Select a marketing and promotion strategy
  • Set a budget

Next, let's discuss two points from the list above that many struggle with: determining a monetization strategy and selecting a marketing and promotion strategy.

Monetization strategies

Choosing a well-researched app monetization model is important to create a positive user experience and grow your user base profitably. You can drive profit in several ways by using the following monetization strategies:

Paid apps

Although most apps in the Google Play Store and App Store are free, you can still launch a paid app. App Store outnumbers Google Play in paid apps, offering more downloadable-for-a-fee applications.

In-app purchases

In-app purchases mean that users can be charged to access extra features. This monetization strategy is implemented in a wide variety of apps. For example, photo and video editors and game apps often use this method to drive profit.

Direct sales

Selling goods and services via an app is another popular solution. However, this strategy is not limited to e-commerce only. For instance, educational platforms that distribute courses also fall into this category.

Advertisements

Using ads is a basic monetization strategy for free websites and apps. Therefore, you will likely find many offers from brands that would be glad to promote their products, services, and apps.

Related: How Much Money Can You Earn With an App?

Marketing and promotion strategies

Plan for promotion early to start developing your public relations (PR) campaign in advance. 

When determining your marketing and promotion strategy, the rule of thumb is to market where your audience is. For example, it would make sense to prioritize social media marketing if you are launching a mobile solution. 

When using social media for marketing and promotion, you need to find out where your prospects exist and market there. If we rely on best practices, 90% of marketers worldwide use Facebook, followed by Instagram, which is popular among 79% of marketers.

Raise Funds

No matter how revolutionary your app idea is, without funding, that idea will probably never see the light of day. Startup fundraising consists of several rounds, where a fledgling company pitches its business idea or an early product version to attract funds. There are four primary finance sources:

Personal funding

You can start a mobile app business with your money if you have enough for a launch. 

Pros:

  • Sole ownership, which means you control the business development

Cons:

  • Personal responsibility for the risks
  • Lack of finances may hinder growth

Angel funding

Angel funding means that an investor purchases a share in the startup for the sake of additional income. The angel investor can be a businessperson, a group of like-minded wealthy people, family members, or friends.

Pros:

  • No liabilities in case of failure
  • Typically includes guidance from the investor

Cons:

  • Funding can be slow and incremental
  • Possible uncertainty with the investor and founder's roles in decision-making
  • Investors expect fast growth and high revenues

Crowdfunding

Crowdfunding is done when you reach a pool of investors via crowdfunding platforms like GoFundMe or Indiegogo

Pros:

  • Allows you to spread the word about and validate your idea

Cons:

  • Unknown time frame before crowdfunding is collectible
  • Your idea can be stolen

Bank loan

This source works great for financing short-term goals. Taking a loan from a bank comes with its advantages and disadvantages.

Pros:

  • Typically, interest rates are low
  • Sole ownership (if you manage to get your entire budget)

Cons:

  • Liability in case of failure
  • You'll be required to prove your creditworthiness to get a loan by providing personal information and/or collateral

Regardless of your chosen funding source, make sure you have accumulated enough finance for product development, marketing, and other additional costs. Otherwise, you risk failing due to a lack of funds, which is the first and most common reason startups fail.

Find App Developers

How do you start a mobile app business without a reliable team to implement your idea? First, you will need to hire iOS and Android developers, a backend developer, QAs, a business analyst, and a project manager. Here is how you can gather your team members:

Freelancers

You can reach the pool of freelancers on platforms like Guru or Upwork. Although you may save on costs, this option will usually require a high level of personal involvement in the operation. Additionally, aligning remote professionals' work is difficult since they may opt for different technical stacks and have individual work styles. 

Sometimes, your collaboration with a freelancer is not secured by a contract with clear terms, conditions, and deliverables. The freelance hiring option also limits your choice of a mobile app idea. For example, compliance-subject applications such as mHealth apps or financial solutions aren’t intended for freelance outsourcing.

In-house employees

Getting yourself an in-house developer is a viable solution that comes with increased costs. You will need to set up a department, provide space, invest in costly equipment, and take care of benefits and perks to retain tech talent.

App development company

Outsourcing your app business to a development agency is the right option for those who want an aligned team of professionals with no burden of in-house management. In this case, you are involved in the decision-making process and regular check-ups, leaving all the heavy lifting for the agency's team. Although this is usually more expensive than hiring freelancers, this option tends to be cheaper than hiring in-house employees.

Build a Minimum Viable Product

An MVP is an initial version of your app where you can assess the viability of your product based on customer experience. At this stage, you ensure the app has just enough functionality to fulfill its initial purpose. New features should be added in later version updates.

To make data-driven solutions, you can set up a test group that tests the MVP and provides feedback. Afterward, analyze the group's responses and make any required updates that help you to release a useful application with an outstanding user experience. 

Promote Your App

There’s so much thought and work that goes into app development that marketing tends to take a back seat. However, this shouldn’t be the case. Keeping a consistent app marketing strategy both pre-launch and after-launch not only helps your solution get a head start in the market but also helps build credibility and promotes loyalty among users.  

Your pre-launch marketing strategy can include the following options:

  • Establishing a web presence and launching a landing page
  • Creating and growing your email list
  • Building visuals, recording a promo and creating a press kit
  • Crowd marketing on platforms popular among your target users
  • Pitching your app to journalists and bloggers
  • Using app store optimization to get discovered
  • Developing a paid user acquisition strategy

When your application is released into the wild, it’s about monitoring, analyzing, and improving your acquisition rates, retention metrics, and other essential numbers. Ensure that your mobile app's description meets the app store's guidelines so that it can be ranked high.

Iterate on Your Minimum Viable Product

Some startups make the common mistake of releasing an MVP, getting figures on downloads, and deciding to leave it as it is. However, the whole point of an MVP is to validate your product to get customer feedback on features they need and transform your MVP into a user-driven, full-blown product.

Therefore, the work is not done after your MVP roll-out. Nevertheless, you should collect valuable feedback, prioritize new features, and plan further improvements.

Get Started on Your App: Our Final Thoughts

So, how do you start a successful mobile app business? First, you need a brilliant idea supported by a market analysis that addresses users' pain points. 

Then, shortly after your research is complete, you need to develop a business plan to guide your project's development. Based on your plan, you can accumulate enough resources and hire a professional development team to implement your idea. 

We at Orangesoft can take over the end-to-end mobile app development process to turn your business idea into a successful app. Don't hesitate to contact us for more information.

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