Market Analysis
Research
A strong market analysis proves you understand the landscape your business operates in and that the opportunity is large enough to justify investment. It should move from broad industry context to your specific target segment with clear data at each level. Investors and lenders use this section to assess whether your revenue projections are grounded in reality.
What to Include
- ●Industry overview and current market size
- ●Total addressable market (TAM), serviceable addressable market (SAM), and serviceable obtainable market (SOM)
- ●Target customer segments with demographic and psychographic profiles
- ●Market trends and growth drivers
- ●Regulatory environment and barriers to entry
- ●Customer pain points validated through research or interviews
Example Outline
- 1.Industry overview: size, growth rate, and major trends
- 2.Market sizing: TAM, SAM, and SOM with methodology
- 3.Target customer profile and segmentation
- 4.Customer needs and pain points
- 5.Market trends and tailwinds supporting your business
Common Mistakes
- ⚠Presenting a massive TAM without a credible path to capturing even a small percentage of it
- ⚠Relying exclusively on top-down market sizing from industry reports without bottom-up validation
- ⚠Failing to define a specific target customer segment, which makes the marketing and sales plan unfocused
Tips
- ✓Use both top-down and bottom-up market sizing. Top-down gives context, bottom-up shows you understand how revenue actually builds.
- ✓Include primary research. Even five to ten customer interviews add more credibility than a dozen industry reports.
- ✓Show your market is growing. Investors back businesses in expanding markets, not shrinking ones.
- ✓Define your ideal customer profile with enough specificity that you could find them in a database or on a street corner.
Frequently Asked Questions
Everything you need to know about BusinessIQ
TAM (Total Addressable Market) is the total revenue opportunity if you captured 100 percent of the market. SAM (Serviceable Addressable Market) is the portion you can realistically reach with your business model and geography. SOM (Serviceable Obtainable Market) is the share you expect to capture in the near term, typically one to three years.
Start with industry reports from sources like IBISWorld, Statista, or government data. Then validate with bottom-up analysis: estimate the number of potential customers in your target segment, multiply by your expected revenue per customer. Compare both methods and explain any differences.
Look at year-over-year growth rates in your industry, shifts in customer behavior and preferences, regulatory changes, and emerging technologies that create new opportunities. Use Google Trends, trade publications, and analyst reports to support your claims. Investors value trend analysis because it shows whether you are building into a growing market or swimming against the current.
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