Managing Technical and Commercial risk in your mobile app agency

Here at Kumulos we want to not only help app agencies develop and launch their mobile apps, but how to also run their business effectively. Being successful in mobile app development is all about managing commercial and technical risk. In this article, we explore how to make this possible.

Recently, the Huffington post revealed that more than 88% of the top apps come from small agencies, usually with less than 10 employees. If you’re already in the app business, you probably already had an inkling of this number, maybe you already knew it, but the important fact is that in the app development world, small is king.

The explosion in the demand for app development services has encouraged many new start-ups to be created in the hopes of riding a lucrative and rapidly growing wave. Many of these small businesses are failing, or are not making enough money to survive purely as an app developer, and it’s hard to know how to avoid the pitfalls that many fall into, especially if you and your team are much more skilled in the tech side of things rather than business.

So here are a few tips from us at Kumulos to help you to reduce risks in your mobile app development business that will (hopefully) make sure you don’t step on any beartraps.

Identify your mobile app development risks, then plan for them

When going into a new project, or even when you’re starting up for the first time, there’s a habit to assume that you and your team can do anything, and that if a problem crops up you’ll go right through it. Whilst this optimism is a good thing, it should be tempered by realism. Outline very clearly what the risks are for your business and make sure you have plans of action to deal with them if problems occur.

For example, in app development, a major risk is the project going over time and or over budget. This is usually due to scope creep and it can kill a project dead, and can cripple or even shut down a business if the project was big enough. Look no further than the games industry for continual real world examples of this. We recently published a study that showed the 3 Pillars of Success for a profitable mobile app project. It showed that planning, and in particular structuring the project well made a huge difference to mobile app success.

It’s also clear from experience that the better structured the project, the more likely it is to succeed. A simple mobile app project planning tool could help you out here. It’s designed to make sure that you have all the bases covered and you’re spending the right amount of time on each critical project phase.

Have insurance, lots of insurance

Even if you’ve identified risks, there are only so many ways you can completely prevent things from going wrong, so it pays to make sure that everything you have is backed by solid insurance. When working with technology, the biggest physical risk to your work is likely fire or theft. All it takes is one faulty wire or connection and then you’ve got a spark that could destroy your entire office, given the chance. Working with tech also means a lot of expensive equipment just sitting in your office, and in the still harsh economic climate, thieves are targeting tech businesses. If either of these things happen, suddenly your entire work space is gone, without insurance you’re not going to be able to replace it easily, and all the while you’ll be losing money on a project that isn’t going anywhere.

The other side of this is to also ensure that you have up-to-date and readily accessible back ups for all your work off-sight. The off-sight can’t be stressed enough, as there’s no point in having backups that are just as easy to steal or destroy as their regular counter parts.

Also, never discount the fact that gaffs and mistakes happen, and while they’re part of everyday life, they can be disastrous; as evidenced by the story of how Pixar almost lost the entirety of Toy Story 2 when one of their technicians accidentally formatted their entire storage drive.

Be smart with your money

The primary thing to pay attention to here is cash flow. As a business, you want to be making money, which means establishing a good flow of money into the bank. There are a few ways to do this, with one of the most stable being the monthly subscription. It allows you to have a predictable and steady income that means you can plan any purchases or expenses without fear of being in a financial rut when the expense hits.

However you decide to monetize your business, the important part is to analyze your market. Find out who’s making money, how they’re doing it and what’s attracting business to them. Not only does this give you an idea of the competition, it also gives you case studies to base your own business practices on as you can see real world examples of who’s making it and who’s not. There’s also the case of cash flowing out again, inevitable in any business. But there are ways, again, to minimize the risk posed by your expenses.

When you’re looking for an office space to use for your business, for example, think about renting rather than buying. With renting, you avoid tying your business into a long term contract, which means if you want to, or have to change venues, it’s a lot easier.

Don’t bite off more than you can chew

App development is an exciting and ever changing world, and it can be tempting in that kind of environment to try to keep up with the “next big thing”. If you find yourself considering taking on another app development project when your team is already busy with your current; stop yourself. All you’ll be doing is shooting yourself in the foot as you pile on the workload and eventually all you’ll have to show for it will either be two failed projects or two apps that don’t work too well.

If you have become successful and want to expand, do so, it’s the prerogative of a small business to want to grow, but make sure that you have the staff and the funds to manage more than one project before you go ahead and take on something new. In the short term it will make the start of the project less hectic as you run around trying to prop it up with current staff as you find more, and in the long term it will make for a better end result and likely more money for your business.

Learn to recognize a duff idea – fail early

Not every idea is a good one, it’s sad, but it’s true. Most are okay and will be good or even great with a little work, but some are doomed from the start. It’s obvious to everyone but the people working on it, and it’s something that as a small developer, can easily sink you. Try to recognize ideas where there’s unlikely to be a market, or where the market is already saturated with similar ideas and copy cats of more successful apps.

Look for useful niches that haven’t been filled yet; there are still many out there, it’s just that now all the obvious ones have been taken. Again looking at the games industry for an example of what not to do, we need not look further than Real Time worlds, who, after initial success, poured all their resources into making the MMO All Points Bulletin which almost instantly flopped and sent the company into administration.

This list will hopefully help you recognize a few of the pitfalls associated with running a small business, and allow you to neatly side-step, or at least plan for them. Small business is the future of app development, and we’re always here to give developers a helping hand, so why not sign up today and see what our mobile app management platform can do for you?