Estimating our market size helps us as founders determine if there is enough demand to support our business idea and have an estimation of its revenue potential. By the end of this exercise, we will know which market we want to focus on and why, as well as which sales targets to achieve in the next months.
To correctly identify the size of your market we use a 3-step process:
💡 Concise overview of the market we are addressing: To assess the size of your market, you need to first define who your potential customers and competitors are.
🔍 Methods to run research: From industry reports to customer interviews, choose which market research approach is most suitable to calculate the size of your market.
🚀 Assess the different potentials of your market: Identify how much revenue you could achieve in your market depending on how realistic it is to obtain it. Set realistic revenue targets and create a growth roadmap.
| The Market We Address Who are the customers that potentially would buy our product or solution?
Examples for SmartBooks - AI-Powered Accounting Solution:
Which Companies: SMEs, Startups, Scaleups
Which Buyer Personas: CEO, Head of Finance, CFO | The Market We Address Who are the customers that potentially would buy our product or solution?
Examples for SmartBooks - AI-Powered Accounting Solution:
Since market sizing is all about understanding how much revenue is potentially generated in the markets we’re addressing, we need to collect information about how big the market is in terms of the number of potential customers and how much they would be willing to invest for our solution. To do so, we need to first decide whether primary or secondary research is suitable for our goals. Primary research involves collecting new data directly from potential customers through surveys, interviews, or focus groups (e.g.: with SurveyMonkey). Secondary research uses existing data and sources, like industry reports, articles, or online databases (e.g.: Gartner, Forrester, Statista, OECD, The World Bank, Eurostat, CIA World Factbook, etc.). Secondary research takes usually less time, but might not be as accurate as if you do the research yourself or detailed enough for your specific needs (for example you want to know how much your potential customers spend today on a particular service).
Total addressable market (TAM)