Leadership Guide

Things required by all software and app business plans

If you are chalking out a business plan for web-based software or for a mobile application, then there are certain crucial aspects that you must focus on.  Over and above the profit and loss, sales forecast balance sheet and cash flow, here are eight critical aspects that you must include in your business proposal:

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Estimate of Visitor Traffic

One of the most important projections is about the future estimate of unique visitors on a monthly basis.  It is crucial to track the figures as these visits indicate the prospect of repeat visits, which would prove to be beneficial.  This is also known as ‘number of hits’, but that is no longer a good measurement tool.  This has been overtaken by tracking the average time spent by the visitor on the site.

Conversions

A conversion means when the visitor plans on subscribing and it is important to find out whether the conversions are for the premium version or the fee basic version.

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Churn

The churn indicates what percentile of fremiums and what percentile of the paid subscribers choose to exit per month.  Some prefer to calculate the monthly average.

Customer acquisition cost

This refers to the marketing efforts and pay-per-click on an average per paying customer.  For this, you need to divide your sales and marketing costs by the number of customers.

Lifetime value of a customer

This is quite similar to churn.  For this, you need to multiply your average revenue per subscriber per month by the average number of months that a subscriber stays.

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Burn rate

The ‘Burn Rate’ provides an estimation of how much money is required on a monthly basis to stay in basis and includes overheads, salaries, marketing and so on.

Runway

The Runway is mentioned in months – as to “how many months of burn rate are in the cash balance.”

Revenues

The revenue is shown by the sales forecast and is a very crucial indicator of depicting the flow and size of business.

Summary:

It is important for a business plan to explain their assumptions and estimates and how the figures would change in the near future.  The projections are usually for 12 months.  At times, the change that happens over time is more important than the projected number.

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Dr Prem Jagyasi

Dr Prem is an award winning strategic leader, renowned author, publisher and highly acclaimed global speaker. Aside from publishing a bevy of life improvement guides, Dr Prem runs a network of 50 niche websites that attracts millions of readers across the globe. Thus far, Dr Prem has traveled to more than 40 countries, addressed numerous international conferences and offered his expert training and consultancy services to more than 150 international organizations. He also owns and leads a web services and technology business, supervised and managed by his eminent team. Dr Prem further takes great delight in travel photography.

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