One of the most crucial tasks an entrepreneur has is to calculate the size of their market, and the potential value that market has for their start-up business. Determining the market size is critical. It tells you and your partners, team and investors how much potential business is really out there. Market size becomes far more important if you ever need to raise funding for your business. It is one of the most basic digits every potential angel and VC investor is going to expect. To calculate your market size, you will either be looking for data on the number of potential customers, or number of transactions each year.
There are a variety of ways to acquire this data. Census and labour bureau hold a lot of information, and most industries have formal associations which compile and track this type of data. Once you have the data you want to make sure that you are presenting it in a powerful way in your pitch deck since it is one of the most important slides. Thiel includes not one, but two slides around the market and its size. Market size, or the number of potential customers or unit sales is one thing. You need to know how much revenue that market has to offer.
Realistically, no start-up should or can expect to gain 100% market share. Trying to capture an entire market, without first targeting several niches, price points, customer sizes or geo areas for roll out, is going to be financial suicide for most entrepreneurs. That is about $1B a year from just one extra revenue stream, at just over 18% of the available market share. Of course, most new start-ups cannot expect to even command that much market share.
Even if you could, most seasoned investors will not believe it until you prove it. If you have no idea what’s a reasonable amount of market share in your industry, Projection Hub says one hack is to anonymously call around to all of your local competitors and find out how much volume they are doing. Also factor in the static versus evolving marketplace. Do not forget to factor in your own impact on the market. Their price cutting also slashed the value of the market in a huge way.
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath