This free Total Addressable Market Template and Evaluation Model is available to our readers in partnership with Visible.
To access the free template, complete the form at the right then click the arrow on the bottom left sheet and copy it to your own Google Sheet workbook. See below for instructions on how to use this template.
How to Use This Template
First, you’ll want to start either with a top-down or bottom up approach (more on the differences here). For this model and exercise we recommend bottom-up.
If you are a SaaS company you may want to break down between SMB, Middle Market and Enterprise and the yearly contract sizes for each type. eCommerce companies may want to break down by yearly revenue per customer type. The model should work for any type of business. For marketplaces we would recommend your transaction cut and not “Gross Merchandise Value” (this is 2016 where unit economics matter after all not bubbly 2015).
Feel free to replace the “Customer Type” headers with your own descriptions. The green cells are the inputs for number of customer and pricing for each respective type. The 100% market penetration is a quick gut check to say “If we captured 100% of the stated market how big would our business be?”.
After the inputs have been entered you’ll see a Sensitivity Analysis which provide Yearly Revenue based on your % of Market Penetration and Pricing. We use the Total Number of Customers from your inputs and various Yearly Revenue numbers to provide the results.
In the first column I just added a simple calculation for Number of Customers. This simply takes % of Market & Total Customers. It also provides a quick gut check…e.g. “Is it reasonable to acquire and service X customers?”.
The analysis is color coordinated. Red means your business is below $10 Million a year, yellow is $10 Million to $100 Million and green is >$100 Million a year in revenue. Most investors will want to see a clear path to $10 Million per year and the vision to get you to $100M. Anything short and they will likely tell you that “your business is not venture backable and you won’t be able to return our fund”.