Financial wisdom (Venture Capital?) often says that when thinking about company growth and growth plans, it is important to have a large total addressable market. The thought process is that if an addressable market is large enough, then company success and financial payout will also be large.
However, total addressable market should be further defined as broad market and addressable market. A broadly defined addressable market does enable visualization of growth opportunities. However, a go to market strategy is rarely successful if it is too broad and hard to define; however alluring a broadly defined market might be in terms of presenting upside potential.
Usually revenue/marketing success is built upon a concrete plan that builds upon micro success and short term execution. The more clearly the addressable market that can actually be executed, the more likely that short term execution will be success.
Therefore, a credible total addressable market has to balance the growth potential of a broad market and the execution of a concrete addressable market.
3 ways to check to see if total addressable market is the right balance between scale and execution:
- Is it possible to identify a concrete pipeline?
- Is the pipeline aligned with the broader market definition?
- Are the revenue projections aligned with pipeline and market scale?
Should you want to discuss your broad and addressable market, feel free to contact us.