Disciplined Entrepreneurship, 2nd Edition

STEP 4Calculate the Total Addressable Market (TAM) Size for the Beachhead Market

In This Step, You Will:

• Estimate how large your Beachhead Market is—specifically the total revenue you could achieve in your Beachhead Market 100% market share (while unlikely, the number is still useful).
• Use this market size number to determine whether you need to further segment the market to have a more appropriately sized Beachhead Market.

It is important to start to understand the size of the Beachhead Market you are targeting early; you will modify this as time goes on. This systematic estimate of market size reassures you are heading in the right direction.

Why This Step, and Why Now?

The TAM needs to be an appropriate size for your new venture. Too big and you won't be able to mobilize enough resources to compete; too small and your company won't have enough revenue to sustain itself. The exercise of calculating the TAM also increases your team's knowledge of the market. Beyond just a simple number, your team will exit this step understanding what makes the selected Beachhead Market attractive. This understanding may be more important than your specific TAM size and a simple “go/no go” decision. The data you gathered to create your End User Profile in the previous step will be ...