How important is understanding the market size, and how best to go about it?

For start-ups and turnarounds, one of the key questions for investors – as well as other stakeholders like suppliers and potential employees – is:

How big is the market you’re targeting?

This is a really important question for a number of reasons:

1. How the team responds gives a great indicator of their levels of critical thinking. Have they built this idea for a company on a gut feel or hunch, or is there some really clear thinking and business strategy about what they’re trying to achieve?
2. From a valuation perspective, it’s important to understand the eventual size of the prize.
3. It’s a foundation step before going on to the questions around go to market (GTM) strategy. If you don’t have clarity on this fundamental question of what hill you’re trying to walk up, then it doesn’t matter how good your network or plans are.

No-one expects a start-up or turnaround to be perfect, and it’s sometimes really challenging for businesses with limited resource (ie all of us) to get their hands on great data to crunch. But don’t use this as a reason not to spend time on developing as strong a narrative as you can on this topic.

Get in touch if you want to discuss market sizing workshops and tools – happy to help!