As a part of your business plan, you develop a business model through which you identify a plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing. In this program you document all of this in your business plan.
Businesses are generally successful when they have enough money to support themselves and generate a profit, so revenue essentially is money coming into the business, and profit is what we have coming into the business which is additional to our operational or running costs.
There are different kinds of businesses, such as not for profits, like the Tech Girls Movement Foundation; for profits, which are companies like Google; Social enterprises and many others.
Money is an important part of business and needs to be planned for. We need to consider how much starting capital we need to set the business up and to get the App operational. If you were to calculate your time as ‘X’ amount of dollars per hour and how many hours you spend on developing the App, the pitch, the business plan and everything else related to submission, then you can do your calculations on your fee, or your operational cost to the project.
We then need to consider how we are going to receive money for the App and what goods or service we provide. Again, look at other Apps on your device from the App store or the Google play store and see how much they charge to buy the App, is it free? Do they have in-app purchases or advertising? Or is it a subscription model where you pay yearly or is a once off fee of say $2.99?
Rather than having customers pay an up front set fee for the App, you might decide to have in-app purchases. Another way of generating revenue is through advertising, and this is how Google operates. Google does not charge anything for you using their Gmail services and their Google docs as an individual and they certainly don’t charge you to use their search engine. You should consider how are Google one of the most profitable companies in the world if they don't charge for their services or products? They use an advertising model. When you do a Google search, look at the Ads that come up on the right hand side. These ads provide the advertising companies with exposure which they’re willing to pay a lot of money for. That’s how Google makes most of their income.
You can also start considering profit in the future for your app, so you might decide to do a 12 month projection or even a 3 year projection, in terms of X amount of income based on your calculations multiplied over that period of time, or if you were to get X amount of advertising partners on board, then you project you will make X amount of money in the future. This is all very useful for our judges and for us to understand that you have considered different ways of funding your App, your development and your time.
One way of getting the starting capital that you need to set up the business is investment. To convince others to invest in your company, we need to sell the idea to them and that’s where your pitch (which we will develop later in the program) comes in. What your investors will want to see is a return on their investment or as we call it ROI. If investors are convinced you can give them a return on their investment, they may decide to give you the money you need to get the business up and running.
Crowd funding has also become a popular way of creating that starting capital, or just raising funds in general. At the Tech Girls Movement Foundation, we created a crowd funding campaign on kick starter to present a proof of concept before we had even produced our books in late 2013.
We found it was a really successful way to not only raise awareness of our program and concept but also to invite anyone to invest as little as $1 to get our project up and running.