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MenuGoogle for Online Shopping: How do I calculate market size and TAM, SOM and SAM? Do the three have to be different? (Please refer to details)
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First of all, starting a business on revenue generated from affiliate sales or incidental revenue is going to be minor and not enough to scale much less build a business. Unless you're a "solo-preneur" you'll need some additional form of revenue if you intend to add to the software-as-service website after it's launched.
Also, you need to determine a) if you have a budget allocated for completion of this project, and you would be able to estimate this based on completing a business plan (if you have not already done so), and then calling several agencies for estimates. Expect to pay (at least five grand to get it off the ground).
As a developer, I used eCommerce daily, and would be interested in a related service that could measure factors such as tracking visitor peregrinations through my site and what drove them to place one order over another, for example, Most other data I get through the eCommerce provider.
So I would say that one of the reason's it's difficult to come up with some of these factors is not yet know enough about the business model itself. You can't determine size of a market without first identifying specifically what it is, and how that may change. You'd need to try a trial run, talk to some similar ventures, (especially similar ones that are local so you can meet them personally).
I have no issue with all the jargon you're using, but I do not agree with the sentiment that traditional business references won't help. You need a business plan if you have not already completed one. The next step is narrowing in on target audience; you're coming up with numbers and estimations based on theory and not on actual product launch and tests - and this can be fatal for any kind of launch where presumptions dominate over exact data.
I think once you narrow this in more, focus on niche market(s), find some ways to test your concept (so you can get what's called proof of concept), figure out how you are going to finance this while it's struggling for its first years, figure out how to scale and measure ROI, you might have something to work with.
I would go to Score.org, and look up some different business plans, business model mock-ups, find references to software as service, then I'd look up similar businesses on Manta, Dunn & Bradstreet, or other corporate intelligence sites, look for similar entities (most of which flopped statistically) and look for local businesses that are similar in practice or intent and break bread with them. There's simply not enough meat on the bones for me to speculate on possible income streams; it's like going in front of investors and explaining to them how big a market share is and how much it generates annually and then that your business will exploit that market share. You need to explain how, why it's different and unique, how you'll compete, and what your revenue sources will be and show some kind of sustained profit through at least 1 to 2 years before they'll part with a nickel. So by the same token you have to assume the onus of conducting more due diligence.
TAM, SAM and SOM are nice terms to put on a powerpoint deck but ultimately they're not useful for you to run your company
Your TAM is huge, that's great, but target a segment where you can make a difference and make that your SAM. Amazon started with books and then expanded, if you start with everything but you only have a handful of SKUs per category you'll get nowhere on revenue, have larger costs, and customer experience will be terrible. Uber started with black car (premium) service only before expanding, amazon books only, Tesla with just one model.
So pick a segment to focus on, do a swag of your TAM, SAM etc... and focus on execution of the business rather than the pitch deck
This is interesting. My specialty is statistics and I love metrics. You could look at online retail metrics. For example, metrics are: average order size, percent of returning customers and percent of new customers. There is average number of items per purchase, and percent of canceled checkouts. There is a wonderful site, kpilibrary.com. It has wonderful metrics. For SOM, metrics are conversion rates for a website, number of retweets and cost per action. For SAM, a KPI is words to sale. Thank you.
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I have this social media idea,but no coding skills. How do I get someone to do the coding (cant afford to pay them) and not give away half of my idea?
Dilip was very kind in his response. My answer might be a bit on the "tough love" side. But that's for you to decide. My intention, just for the record, is to help you (and those like you) on your path to success. And that starts with having a viable philosophy about entrepreneurial-ism and business. And I'm going to answer this because I get asked some form / version of this question very frequently from newcomers to entrepreneurial-ism. The scenario goes something like this: "I have a great idea. It's amazing, I love it, and I just KNOW it's gonna make me a ton of money. But I have no money right now so I can't afford to (fill in the blank with things like "to build it / create it / market it / etc" or "to hire the required staff needed to work in my business to sell it / develop it / etc"). And I don't want to tell anyone about my great idea because I'm worried someone will steal it and make MY million / billion dollars. But I can't afford to legally protect it either... So how do I launch without the skills to personally create the product AND no money to hire anyone else to do that either??" The answer is ... You don't. Look - let's be honest. All you have is an idea. Big deal. Really. I'm not saying it's not a good idea. I'm not saying that if properly executed it couldn't make you a million / billion dollars... But an idea is NOT a business. Nor is it an asset. Until you do some (very important) initial work - like creating a business model, doing customer development, creating a MVP, etc - all you really have is a dream. Right now your choices are: 1. Find someone with the skills or the money to develop your idea and sell them on WHY they should invest in you. And yes, this will mean giving up either a portion of the "ownership" or of future income or equity. And the more risk they have to take - the more equity they will want (and quite frankly be entitled to). 2. Learn how to code and build it yourself. MANY entrepreneurs without financial resources are still resourceful. They develop the skills needed to create what they don't have the money to pay someone else to do. 3. Get some cash so you can pay someone to do the coding. You'll probably have to have some knowledge of coding to direct the architecture of your idea. So you will likely still have to become knowledgeable even if its not you personally doing the coding. (This is not meant to be a comprehensive list of options... And I'm sure some of the other experts here on Clarity have others to add - and I hope they do) To wrap up - Here's my final tip to you that I hope you "get"... It's FAR more valuable to have an idea that a very specific hungry crowd is clamoring for right now - One that THEY would love and pay you for right now - Maybe even one they'd pre-order because they just have to have it - Versus YOU being in love with your own idea. [Notice I didn't say "an idea that some as-of-yet-undetermined market would probably love"] I wish you the best of luck moving forward.DB
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How much equity is typically taken by investors in a seed round?
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VCs: What are some pitch deck pet peeves?
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What companies have successfully implemented both B2B and B2C products or services? Which should I start with for the non-profit sector?
I would suggest the first question to ask is "what problem do I solve?" And of those people I solve problems for "who do I create the most value for?" In the non-profit world you need to add "How does my business help the non-profit run better and/or help the group the non-profit focuses on?" For example, if you've created a platform that drives donations, your company "has created a platform that helps you reach fundraising goals faster." What you don't want to do is market and sell to B2B and B2C audiences simultaneously. They have different ways of buying - a B2B audience needs to have their benefits quantified (using your thing makes me x amount more) - and it's extremely hard for a startup to be able to do both well. Better to start with one, execute really well and move into the other. Feel free to give me a call and we can dig into who your most valuable audience is.AV
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What advice do you give to a 16 year old entrepreneur with a start up idea?
First, hat tip to you for being a young entrepreneur. Keep it up! If you have the funds to build out your MVP, hire a developer and possibly a mentor. If your idea is marketable, you don't need to give up equity by bringing in a co-founder. If this is your entrepreneurial venture, I would recommend you do retain a coach to help you see all the things you may not know. Have you already done your SWOT analysis? Have you identified your target market? What is your marketing plan? What will be your operating expenses? There are lots of questions to ask. If you would a free call, I'd be happy to help you in more detail. Just use this link to schedule your free call... https://clarity.fm/kevinmccarthy/FreeConsult Best regards, Kevin McCarthy Www.kevinmccarthy.comKM
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