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I am in the process of writing my business plan now I have a few questions. I do apologise if some of the Questions I ask have been answered already.

Firstly I want to start Mobile App development company for iPad/iphone Android etc. After my business plan i will start looking for investors.

So my questions are:

  1. Is it advisable for me to outsource the programming and development of the apps? For me to do this I will have to hire overseas-- meaning we will only communicate online. Can this work, since I'm planning to contract for a certain number of hours? So it will be like they're full employees but I never meet them.

  2. When determining your budget on your business plan, by how much should one over-estimate? (Just in case something goes wrong you will at least have money to cover that, instead of finding yourself broke with a problem on your hands.)

  3. Additionally, where can I get a book or something on starting my own App development and vendor company?

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3 Answers

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Try this book - it will provide you with some basics. Piece of advice - (without diving into the details of what would be your business model) run in parallel: develop the prototype as soon as you can and at the same time do the business planning - do not try to get the perfect business plan first and only then start the development...and maybe one more - do as much as you can alone.

regarding Q#2, if you are talking about what should you use for the business plan, my calculation was as follows: it is important is it a contractor or inhouse developer because you have pay taxes for the inhouse developer salary and can expense the cotractor price in some ellegant ways in order to reduce your taxes. In my case it was inhouse developer that was getting salary X per month. So the calculation per month was (X*F)*2 . F is your local taxes factor and 2 is a risk factor, but it all deppends on your particularcase and can vary.

Good luck!

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ok that makes sense as i figured there must be some sort of cover for the risk involved. should i mention that the amount also covers the risk factor? – iScotts May 24 '11 at 8:35
mentioning the formula components might be helpful for you in the first place. You would be able to do better analysis and improve different budget estimations. Also you might be asked by VCs (or angels) how exactly did you get this specific number.Sometimes you will find it problematic to recall how exactly the calculation was made (several moths later). – aviad May 24 '11 at 8:58
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In case you are in a very early stage with your App and the business plan, be careful with overseas (outsourced) development. This may be very efficient when you have a clear, professional and deeply detail description of the software. Otherwise, and this is the common case with tech start-ups, lot of brainstorming and prototyping must be taken care on place. That is just not working overseas. Seek for developers to join your team.

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Wont inHouse developers make things more expensive? – iScotts May 24 '11 at 8:35
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I always advise founders the same way: become a practitioner in your product. Learn how your product will be built, the mechanics behind the technology, and the methodology behind it's management. If possible, build a prototype yourself, if only for the learning experience. In other words, get your hands dirty.

I'm not suggesting that you should do it all yourself, but outsourcing the entire process will always cost more than if you understand and guide the process yourself. I've talked to so many entrepreneurs who have the sentiment that they know nothing of programming (or design, or whatever), and refuse to learn. More often than not, they end up with expensive, poorly built products that eventually fail or have to be rebuilt. Or, in your case, with unhappy clients. Understanding your technology and your process will ultimately inform your budget and help you develop a better idea of what to expect from developers and how much you should pay.

Out of curiosity, why do you need investors for this venture? If you are developing apps for clients, then your customers should be your investors - their ROI is the product you deliver, and you don't give up ownership in your company.

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