How many customers exist.
WHY IT MATTERS
It determines whether the opportunity is worth pursuing.
WHAT TO ESTIMATE
How many potential customers exist How many you could realistically reach What each is worth
WHY THE MIDDLE ONE MATTERS MOST
The total is usually irrelevant; what you can reach is not.
HOW TO ESTIMATE FROM THE TOP DOWN
Start with a published total, and narrow by criteria.
WHAT ITS WEAKNESS IS
Published totals are frequently unreliable, and narrowing is guesswork.
HOW TO ESTIMATE FROM THE BOTTOM UP
Count what you can observe, and extend.
WHAT EXAMPLES LOOK LIKE
Businesses of a type in one area, multiplied by areas Customers one competitor appears to have Registered entities in a category
WHY BOTTOM-UP IS MORE RELIABLE
It is built from things you can check.
WHAT TO DO
Estimate both ways, and compare.
WHAT A LARGE GAP INDICATES
An assumption that needs examining.
WHAT TO STATE
Your assumptions, explicitly.
WHY
It lets you revise the estimate when one proves wrong.
WHAT TO BE SCEPTICAL OF
Very large market figures Assumptions of small percentages of enormous markets
WHY THAT LAST ONE
Capturing a small share of a huge market is not a plan.
WHAT TO CALCULATE
How many customers you need to be viable.
WHY THAT NUMBER
It is the one that matters, and it is frequently reassuringly small.
