In a previous tutorial (How to Size a Market - Part 1), we showed you two methods for sizing a market. Here, we continue with two other methods that can be used to size a market for Business-to-Business (B-to-B) and Business to Consumer (B-to-C) companies.
This method is most suitable to B-to-B companies. You will see this method used in many business plans presented to venture capitalists.
Here's a step-by-step approach to the Market Buildup method. Notice how we first break down a market into smaller units, estimate the size of the smaller units, and build the estimates up into a larger estimate. That's the idea behind this method.
First you want to take the market, broadly construed, and break the market up into reasonably defined and identifiable categories.