While the expectation is to see a slowing economy in the midst of a global pandemic, the U.S. Census Bureau reported a surge in new business applications. This astounding pace of growth was the successive news to an evolving societal sentiment of rethinking how we, as individuals, invest our resources (i.e., time and money). Consumers rallied behind local businesses, businesses pivoted to build better relationships with customers, and entrepreneurs found opportunities to pursue meaningful passions.
In particular, subscription services saw a “COVID bump” that catalyzed further growth off the backs of a pivot in consumer spending preference. Beyond the bump, subscription app revenue continues to trend upwards with a ~20% increase in 2021.
But what’s really happening? Why has what’s been perceived as a socially dire time created unprecedented business creativity and optimism? The answer lies in three key factors that represent long-overdue and percolating trends in the founder’s journey, which have democratized the ability for businesses to grow and stretch their visions based on the pure power of good ideas and hard work.
1) The barriers to entry are coming down
For decades, founders faced near-insurmountable odds of getting a handle on the assets needed to launch and grow their businesses. Consolidated corporate power and resources once acted as a form of incidental gatekeeping to innovative newcomers, but the balance of power has begun to shift thanks to the overall rise in accessibility.
This refers to accessibility on all fronts — technology, talent, funding, or whatever fuels companies to build their operations into revenue-producing machines. With advanced tech now available at the click of a button, companies can develop analytics, build workflows, and tap into powerful and time-saving automation that were otherwise reserved for much bigger spenders. Now, small- and mid-sized companies have the same operational opportunity to expand and develop their capabilities.
Of course, access to such technology is useless without the right people behind the wheel. In lock-step with the democratization of business technology, educational opportunities for employees have massively expanded in just the last few years, giving founders the ability to expand their staff’s understanding of better operational processes and more robust tech stacks to make the workplace more efficient. Simultaneously, accessible and affordable talent portals, like ZipRecruiter and SimplyHired, have made it easier than ever to expand talent pools and compete directly with big players.
At the root of these lower barriers to entry is more direct access to funding for businesses of all types. In particular, the old-guard institutions that once directed the floodgates of capital have given way to more specialized methods of funding. While equity and debt still control a significant portion of the conversation — whether from banks, VCs, or investment firms — other innovative, nontraditional forms of investment are sparking greater interest for savvy founders looking for a competitive edge.
Though not entirely new, revenue-based funding and similar ideas have developed a larger following. These areas champion specialized methodologies designed for subscription business models, which in turn provide an opportunity for sustainable, long-term growth (more on that later).
2) The market demands good ideas above all
A historical perspective on the app-market-as-meritocracy can inspire mixed reactions in founders. Sometimes it can feel like the loudest voices with the biggest named backers (whether financial or within the industry) get the easy, paved road to success. But don’t panic — what always ends up winning in the long run are effective business strategies built on accessible resources and a keen focus on product or service strengths.
A cliche reminds us to “find what you love and do it,” which romanticizes and even cheapens the Herculean struggle of making a truly excellent consumer mobile subscription app and finding success with it. Instead, consider the value of your idea, and what makes your company stand out — whether by operating in a niche industry, using a unique methodology to deliver your service, or just having great content that hits an untapped customer need.
Now, founders have analytics and marketing tools at their disposal that help them tap into specific audiences. Diving into consumer cohort characteristics and behavior using these tools is critical in navigating a market deferential to bigger players. Carving out success comes from trusting the strength of an idea, building powerful relationships with target audiences, and leveraging the tools used to make those pivotal connections. The goal from there is to acquire the resources to make those actions possible.
3) Rethinking funding through the lens of a long-term strategy
This shift isn’t just on the consumer side — investment firms, VCs, and newly developed innovative forms of funding have revitalized the relationship between founder and capital. Consumer subscription app businesses have been unique beneficiaries of the changing tides of funding, which have given greater precedent to long-term sustainability and funding built in tandem with growth.
- 📚 Read a real-life example 👉 How One Company Used Cohort-Based Funding for 4x Revenue
To begin developing a comprehensive, long-term funding strategy, founders need to understand what is the right fit for their business — not just in terms of their operational structure, but also taking into consideration the lifecycle stage they’re in and what milestones they’re looking to achieve in both the immediate and distant future.
To scale your mobile subscription app into a multi-million dollar business, consider these essential steps (all of which require access to funding):
- 1. Product/service launch
- 2. Early and ongoing customer acquisition
- 3. Prove value (e.g., that users will pay and continue to renew)
- 4. Marketing to larger customer cohorts, increasing user base over time while upselling to existing customers to increase monetization
- 5. Leveraging unique user retention strategies, driving up LTV, and generating consistent revenue streams for the sustained growth of your business
Throughout the business lifecycle, you might revisit any one of these major initiatives several times. Each occurrence could demand different types or levels of funding, depending on the size of the investment and the speed with which the goal needs to be accomplished. The point here is to find the right funding fit and treat your funding stack as an ongoing, fluid structure. Learn more about mobile app funding options.