The Hidden Art of Scaling Your App Business

“If you go to work on your goals, your goals will go to work on you. If you go to work on your plan, your plan will go to work on you. Whatever good things we build end up building us.” – Jim Rohn

Growing Your App Business

When you first start your app business, your entire focus is set on going from zero to 1. You buy source codes, you read blog posts, you do everything you can.

Eventually you get there. It's not always pretty, but you get there.

What happens next is that you start looking around and saying, “OK, so now how do I go from 1 to 10? Or 10 to 100?” You've got the processes, the knowledge, and most importantly, the education that got something going. But how do you really grow your business?

This is something I've learned a lot about in the last few years. It's also the #1 topic I consult developers about – they simply don't know how to grow.

It's perfectly normal to “hit the ceiling” or feel like you're “spinning your wheels.” But it doesn't have to be like that.

In a nutshell, I want to show you a step by step process that you can follow that will help you scale your app business. If you follow this plan, you will be in the best possible position to grow.

This has worked very well for me, and while I can't promise everything will be exactly the same, I give it to you in full confidence.

Step 1: Identify + Deconstruct

Identify and Deconstruct

The absolute most important part of scaling is to know what you're working with. If you don't do this, you might as well throw money and time out the window.

The reason deconstructing your business is so important is because it allows you to measure and “silo” everything. It also forces you to identify procedures that were currently only in your head and not on paper.

What this means is that you'll be able to effectively assign tasks to the right people.

In the app business, here is a basic list of the tasks you'll need to be doing:

And that's just the big stuff! Sometimes we as entrepreneurs forget how much we're processing in our heads and don't realize how much information we're actually trying to control.

Giving Up Control

That's the key word here: CONTROL.

As you'll see, the premise of this process is to slowly break apart your processes, hand over that control, and manage efficiently. Keep that in mind.

Here's how you achieve Step 1 of scaling:

  1. Take two hours this week and write down everything you can imagine about the app process. The best way to do this is to think about one app as an example and walk through everything that would need to be done in order for that app to go live.
  2. DO NOT leave out details. Write down exactly what the designer would do, who they would deliver it to, who would provide feedback, how feedback is determined, etc (just one example). Don't worry if this is paragraphs long, just write it down.
  3. Once you have the whole process written out, go back and assign names to each part of your process. Who does what? It's OK if you're doing virtually everything…that just means you have a lot of room to grow 🙂
  4. At the end of this, identify places where you have no one working on it (ASO and keyword research is a good example). Mark those as “Need training or hiring”
  5. Assign a price to each part of the task based on hourly rate. For example: uploading an app would be 2 hours of work for a developer charging $15/hr. Uploading the app costs you $30.

By now, you'll have a big chart that has EVERY SINGLE PART of your “app process” written out, assigned, and priced. Pretty cool, right?

What this will do is allow you to become objective about what's going on and see the holes in your work flow and your business model. It will also get you ready for Step 2 of scaling.

Step 2: Train, Hire, or Suck It Up

Training EmployeesThis is probably the most important lesson I can give you about scaling: scale is not possible in every situation. You can't learn to run before you learn to walk. I'll explain and prove why that's true in a minute, but realize that all businesses need to mature before they can really scale.

Once you have your business mapped out and priced accordingly, you need to make some decisions. You're going to start making one of three decisions:

  1. Hire an inexpensive worker who you will train to do something specific. Example would be hiring a virtual assistant and training them to do your market research (assuming they have no previous knowledge).
  2. Hire a trained worker that requires little to no training but will cost you more money.
  3. Do it yourself.

You can imagine the pros and cons of each – mostly a cost/benefit situation. That means that you need to determine if the COST is worth the BENEFIT to your company.

PRO TIP: If you're making less money but want to start the scaling process, do more yourself and hire inexpensive labor. Your time is worth less so it's hard to justify hiring expensive people. If you're making more money, it's better to hire better people because your time is worth more. 

Now, here's the piece that most people do not realize and that stops them from really growing:

They outsource everything, but don't replace their new time with more profitable work.

You might be successful in outsourcing ALL the parts of your business which frees up 30 hours a week for you. While you might think that's totally awesome, you're actually NOT growing – you're just getting more time.

If the value of your time does not go up, you are not creating any new money. You're simply working less (which is also awesome!). But this isn't about how to work less, it's about how to grow like crazy. THEN you can work less 🙂

Here's a step by step example on how to do this:

  1. You realize that you're spending all your time researching keywords, giving feedback to developers/designers, uploading apps, and trying to find new themes. This takes you 40 hours a week to do and you're making $200/week.
  2. You decide to hire two virtual assistants and train them on everything you've been doing
  3. After about a month, they get the hang of it and require only 10 hours of management a week. You now have 30 free hours.
  4. BUT, you also have a new cost (two virtual assistants at $5/hr x 15 hours a week = $250/week). You're losing $50 NOW, but you'll eventually produce more apps and that profit will go positive.
  5. More importantly, you now have 30 hours to go out and start making a lot more money than $5/hr. You can consult other apps, you can try to get sponsorships, you can build an ASO course. Literally anything you want that will make you more $$ than $5/hr.
  6. You start doing something that makes you $20/hr. Boom – your business is now making $600 more each week.

Increasing Your ValueThen you repeat this process. Hire more people, build more apps, hire someone to do what you're doing so that you can start doing work worth $50/hr.

Do you see how this works? You are simply replacing what YOU are doing with someone, training them, then doing something more awesome (and lucrative).

The biggest resistance I get from people on this is the idea that “no one else can do what they do” or that “it's impossible to train someone to do it right.” I can promise you, with 100% confidence, that this isn't true. Trust me – I've gone through that too.

By performing Step #1, you will realize how much actually can be done by someone else as long as you realize that it may involve a good amount of time/effort to find and train someone. It's not an overnight process, but it's very important.

That's when you get to Step 3.

Step 3: Calculated Goals and Home Run Hitting

Here's the last piece of scaling and the most fun. It can also be the most stressful – the more you have, the more you can lose. But if you're reading this I'm pretty sure you're not into losing so that's not an option.

Once you get through Steps 1 and 2, you're going to realize that you have a great little business on your hands that is growing nicely. It consistently puts out revenue each month and maybe even grows 10-20%. That's awesome!

Here at Bluecloud, I'm always pushing my own limits. Maybe one month I make $275,000, but I still wonder why I couldn't make $500,000? Answer: there is no reason. That's where Step 3 comes in.

SuccessStep 3 is all about playing two sides of business: Managing a tight system that is consistent and low risk, always growing and producing cash WHILE you're going after high risk, high reward opportunities. This is critical for anyone out there that wants to go big.

Everyone I know in the business (myself included) have specific moments and events they can point to that “hockey sticked” the company. 95% of the time, it was the result of rolling the dice on something.

Step 3 is all about creating those hockey sticks in your business. Just so everyone knows, a “hockey stick” in business is referring to a graph that has a sudden, sharp increase which looks like a hockey stick.

Once you're through Step 2, you're going to want to start splitting time between the consistent, good business and other endeavors. These can be:

  • Investments (think venture capital or other)
  • Building a big app that could go way up the charts
  • Creating a new company
  • Becoming an advisor in a startup in exchange for equity
  • And anything else that could have huge returns

If you think these are hard to find, they're not. You're just not spending a lot of time looking for them because you're thinking about your current business. These are “long shots” that don't usually play out well. But, sometimes they do. If you have enough of them going, one home run is all you need to retire.

Here's how this would work:

  1. You've established your processes and business to be highly systematized.
  2. You're working on more profitable work and bringing in more money for the business.
  3. As you're managing everything, you allocate a chunk of money to build out a monster casino app which you start working on 5 hours a week.
  4. A month later, you put some money into a startup that you think is awesome.
  5. You continue to re-invest your profits into things that COULD have huge returns.
  6. Down the road, one of those investments (app, startup, stock, whatever) goes bonkers and you make a ton of money.
  7. Repeat

OutlierNow, let me be VERY clear: I cannot guarantee that this kind of stuff will work for everyone, obviously. I can tell you that this is how almost all my friends and peers have made lots of money, but I can't tell you what to do or invest in. All I can do is show you the process and tell you HOW it works.

Once you complete Step 1, 2, and 3, you will start to realize how the app business really is just like most others. There's a reason why people can scale business in any category – they follow logic just like this.

It's powerful, stressful, exciting, and 100% worth it. If you're looking for a way to multiply your money, you should really start thinking about creating these types of systems that grow geometrically. If you're looking for more free time, you can just do Step 1, maybe a little of Step 2, and come meet me at the beach for a double mai tai. It's up to you.

Don't Forget To Scale

Chad (Mureta) once gave me a great piece of advice – he said “Dude if passive income is the goal, you might as well focus everything on making passive income from the start.” It kind of blew my mind, especially since I know how awesome he is at that.

The takeaway for me was that if I want to scale my business over the next 5 years, I should be focusing on scaling all the time. I should always be thinking about scaling and doing something each day to get closer, even if it feels like I need to put our fires RIGHT NOW.

That's what I want to leave you with – the ability to identify your goals and build your business around them. I'm talking about personal goals – mental, emotional, physical, spiritual.

Want more free time for your family? Build your business that will get you more free time. Want to own a private jet? Build your business to scale.

It all starts with what you want.

 

 

COMMENTS

  • Marcin August 8, 2014

    Really cool post. It’d be awesome to see some examples of how you/your friends successfully reinvested profits into things with huge returns. Maybe you could share something more?

    Personally I think that starting another company (more risky but with bigger potential than current business) or investing into a great startup are two best ways to hit a home run.

    The hardest thing is to build a systematized business that allows you to put lots of money into those ventures 🙂 Not there yet, but like you, my plan is to constantly scale. Btw, do you have an end goal? I mean do you have a number, like $10 or 50 mln on your bank account, that would satisfy you and make you retire or at least ‘slow down’ (most entrepreneurs have hard time doing nothing)?

  • Carter Thomas Carter Thomas August 8, 2014

    @Marcin – great comments. The best examples of big returns are investing in startups and investing in speculative real estate or property. Honestly it just comes down to finding the biggest risk profile that you have better information about.

    I don’t think it’s necessarily “hard” as much as it needs to be prioritized. It’s so easy to be like “OH MY GOD I just made $1,000 on this crazy app, I’m going to build 20 more!” instead of stepping back and saying “I’m going to set $900 of that aside and stick to my plan, irregardless of the apps that blow up.” You can still invest with $500 just as easily as you can invest with $50,000.

    My end goal is less about money and more about lifestyle. Yes, I love making money, but I think I would be pretty disappointed if I couldn’t share information, help people and give back while I made that money. Put another way, having $50M in my bank account really doesn’t make my life any better, but traveling the world, spending time with people I love, and sharing does.

    The other piece is that I REALLY love solving big problems. Making a ton of money is something that has always been seen as reserved for a few people…so part of my wants to make a lot of money just to see if I can do it. I don’t think I’ll ever stop doing that, but I will probably start focusing on other parts of my life that I want to share, like swimming, mental health, travel, and events.

    Thanks again for your comment!

  • Ronald Ramirez August 9, 2014

    @Carter-Great post, I just recently started outsourcing or rather I created my first app and then paid someone over seas to re-doit from scratch and it has been a headache. However, it definitely has been a great learning experience and it has opened my eyes about which way I want to go with my business overall.

    Like you mentioned in your comment for Marcin for me it’s more about the lifestyle then the money, but the fact of the matter is money is just a part of the deal. Right now I’m trying to focus and figure out how to maximize and scale my business which started on YouTube. I have a growing subscriber base and over 60k unique views per month on something I barely paid attention to so I figured it was about time I put some effort forward and figure out a way to replace my work income with my business.

    One thing I must say for myself is that I have been hitting my goals on a pretty consistent basis so hopefully I’ll see my hockey stick pretty soon.

  • Elli August 9, 2014

    Hi. Gr8 article. Couldn’t agree more with the need to get organized and outsource services. I think that “Marketing” is a wide area. You can do it yourself but you need to know the work. There’s the budget issue, though. When you are small, you can’t afford agencies, consultants or even low priced freelance help. The app industry is very much long tail. Most of the devs are below the “mobile app poverty line”. So after you’ve arranged the “to do” list, assigned the people, and made some prioritization, you should make sure you can do a good job with the tactics. So you must find the right support with learning resources and downloadable templates. Appgo2market.com is an example, with regards to app marketing. Its step 1 of the scaling up. Hopefully, if things go as planned, you will have people doing that for you when you reach step 2 and 3.

  • Samuel August 10, 2014

    Carter you always give good logical insight when it comes to building an app business. I guess it comes from being around other appreneurs as yourself or those that are on a high level in the mobile app industry. I think getting from Step #1 to Step #2 is probably the most difficult because most apps that get published in the store don’t do as well for most individual devs, so the money to scale becomes limited.

    Would be cool though to see a case study of an app you took from zero to hero. I know a lot of people don’t like to share what goes on behind the scenes of their app process. However it would be interesting to see, without you giving away to much of your secret sauce, how you would take a source code relevant to what is current today, find a theme, keywords, publish, market, tweak. Then have the progress followed and tracked with your insights. I would pay for that dude. Especially if it was coming from you.

  • Carter Thomas Carter Thomas August 10, 2014

    @Samuel – Going from Step #1 to Step #2 is indeed tough. One of the hardest parts is changing how you think – switching from “how do i do this” to “how do I find someone who I can train to do this.” It’s a paradigm shift, but it makes all the difference.

    Interesting idea with the case study and something I’m definitely going to work on. Maybe a Bluecloud Select bonus or something. One thing I can promise you is that the best case studies will always come back to what I wrote in my previous post about being first or being the best. That ALWAYS dictates success. I’ll see what I can put together.

    Thanks for writing in.

  • Johannes (AppLeopard.com) August 11, 2014

    Hi Carter,

    awesome articles, very inspirational! Thank you! Reading this exactly at the right time. We are constantly debating how to grow our business, how to overcome “superhero syndrome” and do everything ourselves. We have made huge steps in terms of outsourcing, but there is still way to go. I love your big picture thinking. Reminds me of one of your facebook posts from a while ago “if you want to really scale things in your company, you need to make drastic moves.” that I have on email boomerang. The hardest part is finding those reliable people to trust to do quality work for you at low cost, train them, keep them and still keep the simplicity of a business without real employees that lets you live the kind of free lifestyle we are dreaming of. Also, stepping back, not getting lost in your daily grind, and seeing the big picture can be hard. But your articles are always a good nudge to do just that.

    I’m wondering how you see the future of the AppStore, the future of reskinning and the future of indie developer reskinning business models? Would be great to get your perspective.

    Thank you and keep up the great work,
    Johannes

  • Carter Thomas Carter Thomas August 11, 2014

    @Johannes – Glad to hear you are thinking about growing and you are asking the right questions. I face the same challenges – find good talent, train them well, repeat. It is hard, but I’ve also learned that it’s not as hard as I previously thought once I take responsibility for helping them succeed. As an entrepreneur/hustler who builds things from the ground up (as it sounds like you are), you’re used to solving problems on the fly. A big mistake in hiring is expecting other people to have that same brain wiring as well – you want to hire them and tell them what’s going on, then have them figure out what to do + make it better.

    Doesn’t work like that. I hire SMART people who get shit done. THEN I spend a few hours a week training them on absolutely everything – I’m open for questions (and tell them to ask as many as they can) and provide information. I find that it usually takes about a month of work before they’re up to speed, but the long term impact is enormous. I used to spend a day or two training someone, which led to a mismatch of expectations and I would have to fire them. It was usually my fault – there is a responsibility when you hire people which I didn’t hold up on.

    Stepping back is huge man. So huge. Some people think I travel all the time because it’s about pleasure (which it is, def) but a lot of it is because it makes it REALLY hard to sit behind a computer. The less I sit behind a computer screen, then more big picture I think. My daily limit is about 3 hours – anything after that I start wasting time. BUT, I am still working during the day – sending emails to people, coordinating, finding ways for other people to do things I ordinarily would have done if I was sitting at my desk trying to fill time.

    Future of the app store – new app stores, new discovery, evolution of Android. Future of reskinning – using source codes as foundations that you build on with updates (the way you use templates to build website) and a huge push towards cross platform, future of indie dev reskin biz models – see above + a shift in how teams are built, focus on quality, the customers and marketing to your existing users for lifetime value with blended ad revenue.

    Carter

  • Seth August 14, 2014

    Hey Carter,
    Love your posts and have gained gret insights from them over the years. I was just wondering how repeatable and scalable is the advice given in this post. Have you released new apps since you sold yours for $200k. How have they done?

  • Trevr August 15, 2014

    Great blog post again Carter. Another one you hit out of the park! Interesting point you made about your peers being multi-millionaires in relation to placing big bets on startups or some other investment and then you start seeing a 10x return. This article backs exactly that: http://fundersandfounders.com/serial-entrepreneurs-how-to-pursue-multiple-opportunities/ Kind of like playing black jack, when you’re ahead you should risk a black chip every now and then as this could 3-10X your winnings for the evening pretty quick. If you don’t, you just kind of grind it out and end up ahead only a few hundred bucks at best.

    Curios to see what investments you have done. Obviously you can’t spill the beans and share all of your secrets but here are some things I’ve been looking at pursuing:

    – Real Estate Investing (this can be a laundry list of things from buying investment properties, flipping homes, buying land, etc)
    – Fundrise – makes it easy to get into real estate investing
    – Angel.co – good for finding startup deals to invest in
    – Bizbuysell.com for buying new businesses
    – Stock Market – pick up all the Facebook stock you can 🙂
    – Being a small angel investor or joining an equity investor partnership ( hello doctors and attorneys)

    I believe you live in the bay area and I only can imagine this helps your odds about finding new hot startups that you could possibly get into a series round A, angel round etc. Also you could possibly become an advisor like you said for an equity stake. But being in WI, unfortunately we don’t meet the cool kids doing startups. By the time we read about them, it’s way too late. I do meet some interesting people through Twitter and LinkedIn and maybe thats an approach one should take to meetup with VC’s and find the next big thing. It sounds like you have one hell of a network and I’m sure they have their ears to the ground looking for the next big thing which is fantastic.

  • Jose August 27, 2014

    Hello Carter,

    That was an awesome read. Thank you for your post it gives a lot of insights specially to newbies such as my self. I will subscribe and learn more from you.

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