Analyzing your market opportunity
Once you have put together a business model, the market opportunity analysis will help you understand and evaluate the size of your potential customer base. It is important step in order to assess if your idea is viable.
One of the things we keep asking our startups to think about is "how big is this opportunity?" That's just a fancy way of saying when you're all done and you're spending the next couple of years on the startup, are you going to make a million or are you going to make a billion?
To find this out, you need to do what's called a market opportunity analysis. By this point you've already put together a business model canvas with your hypothesis about a product or service you're passionate about and another hypothesis about a set of customers out there who are willing you pay for it. You have a revenue model and a first hypothess saying you're going to make a lot of money — but now you need to discover if this business model can work.
The video below explains the concepts of Total Addressable Market (TAM), Sizeable Addressable Market (SAM) and Beach Head Market as a way to identify the size of your potential customer base and you're going to want to compare that with your competitors to see if this market can grow.