Have you ever wondered what the true Total Addressable Market (TAM) could be? Have you also questioned what insight lie behind these numbers?
Entrepreneurs possess the ability to identify opportunities and take the risks necessary to develop innovative solutions. Their willingness to make this significant leap is highly commendable. However, it is crucial to consider whether there is a sizeable market or adjacent markets that could also be valuable. Doing a Market Research will give a good first indication.
In many cases, the true size of the market is an arbitrary figure. While sometimes well-researched, particularly by analysts, it can also be based on mere gut feeling.
Estimating the market size becomes even more challenging when projecting two to five years into the future, where the Compound Annual Growth Rate (CAGR) becomes a critical factor for near-term resource investment.
It is advisable to invest effort in building solid market research. Understanding the actual size of the market, combined with insights into related customers and their spending capabilities, is essential. Reflecting on competitors and current market shares should also be part of this analysis, aligning with the next phase of additional services.
Even when analysts or consultants apply their maximum knowledge and effort to these numbers, or when internal research is meticulously crafted, the volatility of the economic environment must be carefully monitored. Adjusting the outlook numbers annually is a prudent approach.
By incorporating comprehensive market research and regularly updating projections, entrepreneurs can better navigate the uncertainties and seize opportunities effectively.