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What do you really need to start a business?
There’s a big blind spot when it comes to building apps. A lot of people have the idea that all you need to start a business, especially one based on an app, is the app itself. The reality is a little different.
Here’s our CEO and Founder, Abe, talking about what it takes to start an app-based business.
I have a great idea for an app! What’s the first step to getting started?
If you’re going into app-building as a business, the first step you need to take is to minimise your risk and validate your business idea. There are ways to do this without building an app first, which is my personal suggestion, but if you want to jump right in and start building an app, we can do that for you! What we’ll need to do from our end is go through what we call a discovery process and try and figure out what you want to build, why you want to build it.
We don’t do this on our own: it’s a partnership between you and us. Together, we’ll figure out the scope of the work and a product roadmap.
How do you validate the idea?
One of my favourite ways is building a very lightweight landing page, or a marketing webpage. Ideally, you work with a marketing company, and have your messaging really well-thought out – especially what problem you’re solving. All apps solve a problem, whether unconsciously or not, and you need to telegraph this problem solving to your audience.
At this point, you can have a sign-up page where you can collect email addresses. Collect a thousand emails, and you have proof that you have a winning idea!
Remember, you want to build a business: this is how you minimise your risk.
Earlier, you mentioned a roadmap. What would that look like?
When we talk about roadmaps, we’re talking about a product roadmap. Basically, we want to isolate what the stages of app growth are. Similarly to businesses, an app will have different stages of growth.
This is tied to why you’re building your app. Are you pitching to investors? Are you looking to make sales through the app? These are two distinct product goals, and the roadmap for development will vary depending on these.
For example, if you want to pitch to investors, prior to building the app, you could create a pitch deck and a prototype to take to meetings which can help you find more investors. After that, the goal is to get users. In this case, we recommend that the app is free to use for a while, so you can show the investors that you actually have enough users to turn a profit on this app.
However, if your goals are sales, your primary aim is to get the app out there as fast as possible. In this case, we’d work on an MVP, a minimum viable product, so that we can see if people are willing to pay for it. Once you have a set amount of people, you can then invest your money into improving the app.
The product roadmap is still one of those baby steps we talked about earlier. After that, on the business side, you can start thinking of the next best features and work on feedback from your users. This can develop into a two or three year vision for how the product can grow.
An app is never really done; it’s the same as building any business.
Do you need anything else to start?
After sorting out the overall business plan and validation of the idea, you need to talk to an attorney. Work on contracts with your vendors, work on your privacy policy and service promises. You need to work on licensing: if you run a website that has an element of content creation, for example, who owns the product? There’s a lot of things you need to iron out with an attorney.
You need to submit a patent for your app and work on copyright.
You might also need to outreach for IT security – how are passwords being sent back and forth, how is the email list protected. Privacy laws are very strict nowadays, and you need to have your security airtight to avoid setbacks.
What about finance? Does that come into it?
In most cases, you have to continue selling and raising funds throughout the app’s lifetime.
On the other hand, if your app has in-app transactions or deals with money at all, you may also need to have someone in charge of those payments specifically – an accountant.
There’s a common misconception that you can just build an app, but in reality, you need to know a lot about how the app industry works before you actually start building an app. It’s similar to the business of restaurants: you might visit a restaurant often, but opening up your own is a different reality to what you see when you visit one.
Do you have to do anything specific to establish yourself as a business?
Something that gets missed a lot is when you establish yourself as a company. You can start an app under your own name, tied to your social security and so on, but when you establish it as a business, you have to register your business as an LLC – which also means paying taxes to the government.
The moment you’re starting to take money in, you want to disconnect your personal liabilities from your app, so that would mean starting separate bank accounts, and so on.
Is it hard to get a bank account approved for an app?
Banks treat app-building companies as any other business, so you shouldn’t really run into problems there.
You mentioned marketing. Is there something in particular to keep in mind?
Marketing is so important; there’s so much to think about. Marketing is a big industry. There’s content creation, branding, email automation, and any one vendor is not going to be able to do everything for you. They might not be able to see everything going on. There are fractional CMOs that you can invest in to help your vendors all connect on the same line, but otherwise, you really need to invest in a good marketing vendor or two.
What about NDAs? How important are those?
They’re important, but it’s just something else for your attorney to work on. It’s really just covering your bases. Investors will want to see that you have contracts with your vendors, and so on, so it can really help legitimise your app.
Once you’ve set everything up and you’re about to go speak to your investor, how do you value what you build? How do you ask for a certain amount?
That’s a tough question! Realistically, it’s not a science – that happens more in private equity. When you’re starting from scratch, you’re selling hype and an idea. You’re selling your credentials. You mostly just set a goal, and try to meet that goal. Start with friends and families, then you want to define the success of your company on KPIs, users, and revenue. A lot of people get freaked out at this stage, but that’s actually the least concerning part.
You need your investors when there’s a bit of a risk in it, but otherwise, once you start seeing progress, you have little to worry about. Personality plays a role in that. You have to pitch, you have to make phone calls, you have to sell your idea to people. There are good resources out there to help you, but otherwise: it’s all personality and hype.
It takes a lot to start a business from scratch, and that’s without taking in the effort it takes to actually build an app. That’s why you outsource: outsource your marketing, outsource your law requirements, outsource everything including building the app. With so much on your plate to actually build the business, the last thing you need is to build an app on top of that.
Leave that part to us. We’re always happy to build cool ideas for you while you focus on the rest.