TAM, SAM, & SOM Analysis Guide 🔍 Agency & Coaching Business Tutorial

All right in this video we're going to be covering Tam Sam and sum analysis this is going to be a complete guide and walk through so let's get right into [Music] it all right so Tam total addressable Market Sam serviceable available market and some serviceable serviceable obtainable Market is you know what we're going to be covering and I will say to start off this video this may be somewhat I don't want to say Advanced or confusing but it is kind of

Something that you may not necessarily have to do um if you're watching this video already I would you know you may as well do it but at the same time this is really made for some of our clients that may be really struggling determining their Niche determining what's the best uh you know Market to go after and this will teach you some good skills to do this and this is good regardless because even in the future whether it's your business different

Offers uh other business Endeavors this is a good skill to have and to be able to go over so bird's eye view here's what we're going to cover today there is um a lot of info so Tam Sam some analysis introduction um Tam what is Tam why is calculating Tam important how to calculate Tam C same thing with Sam we're going to cover that stuff as well as some why it's what is what it is why uh is calculating it important

And how to calculate it we're going to go through a couple examples and then utilizing Tam Sam and sum in your business strategy whether it's a coaching business marketing agency whatever the case may be developing business strategy investor presentations product development and pricing strategy marketing and sales strategy setting goals and forecasting and then Tam Sam some analysis guides so step one Define the problem and objective two total addressable Market uh three service addressable Market four serviceable serviceable obtainable market and then

An an uh five analyze and interpret the results six build a presentation seven use the findings to inform uh strategy and then additional steps which is eight ongoing monitoring and updating nine incorporating qualitative insights and and 10 consider considering market trends and predictions and then Tam samum examples The Tam calculation Sam calculation s calculation more different examples and the the conclusion all right so let's get right into it Tam Sam sum analysis introduction so total serviceable Market uh so Tam serviceable

Available Market Sam and serviceable obtainable Market sum are essential metrics used used by coaching businesses really any business investors and entrepreneurs to estimate the potential of the market they help in understanding the market size share and potential growth opportunities here's a diagram here total addressable Market 100% of the market serviceable addressable market so percentage of Tam within the business oper uh oper operable uh territory and then serviceable obtain able Market sum um percent of Sam of business can realistically achieve so

First is total addressable Market Tam what is Tam so Tam or total addressable Market refers to the total market demand of or Revenue opportunity that exists within the market for your business or your services in simple terms it includes everyone who could benefit from your service or the maximum amount of Revenue your business can earn by selling these Services now why is calculating Tam important so calculating the Tam helps your business identify how large opportunity is and how much revenue can

Be made with your business with your service if you achieve 100% of the market share now it helps to determine the Market's potential for growth the viability of your concept your business concept I know it says coaching everywhere but you know this applies for whatever business so that's why I'm not saying that and then and the effort and funding that you that might be required to operate in the market now how to calculate Tam so the equation to calculate Tam is

Average revenue times number of potential customers for the entire segment of the target targeted market right and the calculation can be challenging as it requires comprehensive market research or access to Industry reports you can use methods like top down approach bottom up approach and value Theory um to help you with this and then two serviceable addressable market so or serviceable available market so Sam Sam or service available Market is the portion of Tam that your business can actually acquire it considers

Factors limiting the reach of the total market like geographical restrictions demographic restrictions resource restrictions regulatory restrictions cultural restrictions and behavioral restrictions and why is calculating Sam important well Sam gives a realistic picture of the market that can be actually tapped in after considering the limiting factors that cannot be changed for example if your business offerers coaching Services specifically for small business owners the Sam would not be the total number of coaching customers but rather small business owners who are potential coaching

Customers right now how to calculate Sam to calculate Sam you start with the Tam and then reduce it based on the factors listed above if your Tam was 100,000 potential customers and you estimated that only 20% of those customers are small business owners your Target demographic your Sam would be 20,000 potential customers I hope that makes sense now three serviceable obtainable market so sum so what is sum sum or serviceable attainable Market is the portion of the Sam that your business

Can realistically achieve within the short term it takes into account competitive Financial Niche and resource-based restrictions while predicting realistic reach during the initial years of operation so why is calculating sum important some is of vital importance as it helps your business set realistic short-term and medium-term objectives and goals it also helps you understand the potential of the market and guides you to make the most out of limited resources initially so how to calculate sum sum represents the realistic value of what

Can be achieved to get to this realistic value the following factors are taken into consideration market share of competitors the value proposition of the offering performance of offerings uh pre-releases your sum can be a percentage of your Sam based on your assessment of these factors so examples of Tam Su Sam and some in a coaching business business so total number of people/ businesses worldwide who could benefit from coaching Services example small business owners executive professionals uh students Etc now that's a

Large Market I wouldn't um you know recommend going for all those but this is just an example so Sam number of small business owners worldwide or in a specific region who could benefit from specific coaching services so now we're getting more specific and then some number of small business owners who could realistically serve in the first few years based on resources competition and marketing always remember these figures are estimations and should be continually updated as your business grows and as you

Gain a better understanding of the market all right and then utilizing Tam Sam and some in your coaching business or you really any business so developing business strategy use your Tam Sam and sum to help establish your business model and strategy your Tam can help you understand the maximum potential of your Market while you'll while while your Sam will allow you to focus on a more immediate reachable Market your sum is your short-term goal representing a segment of the market that

You can realistically reach with your critical or worth your current resources and business model investor presentations so if you're seeking investors for your business Tam Sam and some are crucial factors uh in to include in your pitch they demonstrate that you understand your market and have realistic expectations of your businesses growth potential it shows you've done your homework and can present a strong case for your business and a worthy investment uh why it's a worthy investment and uh product development and

Pricing strategy understanding the size of your uh your Market can also guide your product development and pricing strategy if you're targeting a large Tam you might decide to offer a v variety of services at different price points to appeal to a broader audience if your Sam is smaller and more specific you may choose to offer more specialized high value services at a premium price marketing and sales strategy so your Sam and sum can help you decide where to focus your market

And sales efforts you can use these figures to identify the most promising geographical areas Industries or demographic groups to Target with your marketing and sales initiatives and then setting goals and forecasting so your Tam Sam and some are essential tools for setting goals and forecasting your business's growth your sum provides a realistic grow uh realistic goal for the first few years of operation as your business grows you can aim to increase your market share within your Sam over time you may

Even be able to expand your Sam by moving into new market segments with the ultimate goal of reaching a larger portion of your Tam in conclusion conducting a tam Sam and sum analysis is a critical step in understanding your market for your business these figures can guide your business strategy product development and marketing efforts help you Ma helping you maximize your success in the market remember to keep refining these numbers like I said and as you gather more data about your

Market and use them to make strategic decisions for your business and then here's a comprehensive step-by-step guide on conducting a tam Sam and sum analysis for a business so here is the guide step one Define problem and objective the first step is to clearly Define the problem and statement and object problem statement and objectives of your research for example your objective could be to determine the market size for a new coaching service offer to Total addressable market so Tam The Tam

Represents the Entre higher Revenue opportunity that's available for your coaching service if 100% of the market share was achieved it assumes that every customer who needs coaching would be your client there are three main methods to calculate Tam so top down approach this involves using industry research and reports toine total revenue for existing coaching services for example you can use data from professional coaching associations or market research firms that specialize in your industry um B is bottomup approach so this involves

Ref in a unit price for your coaching service and then multiplying it by the number of potential customers in the market for instance if you offer leadership coaching you can might multiply your fee by the number of Executives in the relevant industry and then C is value Theory approach so this approach estimates the value your coaching service provides to the clients and calculates Tam based on that all right three is serviceable addressable market so Sam is the portion of the Tam

That you're your coaching service can serve it is it's the total sales volume of a service that your business can expect to achieve based on the constraints of such Dem uh Geographic locations and targeted uh demographics to calculate Sam you need to segment your Tam into the market which your coaching service can actually reach and effectively serve this segmentation could be based on geography such as your city or country demographic characteristics such as Executives in a certain age Reign or you

Know job titles or customer behaviors like a perfor preference for virtual coaching among other factors and then four serviceable obtainable market so sum is the portion of the Sam that you can realistically capture it's the short-term sales Target or quick and realistic Market penetration goal to calculate some you need to consider the competitive landscape including the number of other coaching Services their size and their market share you also need to consider your own marketing and sales uh capabilities and the capacity

To serve the market five analyze and interpret the results so after calculating Tam Sam and sum you should analyze and interpretate these numbers uh if the Tam or your business is large but the Sam or Su are very small it can mean that there's a lot of competition or that your offer only caters to a small Niche within the overall Market six build a presentation now that you have the information you can put it together in a clear concise visually appealing

Presentation you could also explain this methodology um you use Ed to calculate each figure and then seven use the findings to inform strategy so finally use Tam Sam and some findings to inform your business strategy um for example if the Tam is large but the Sam is small you might consider expanding to other demographics or adjusting your coaching offer or your whatever the case is any offer if the sum is small but you uh if the sum is small you might

Need to differentiate your service orine your marketing strategy to increase your market share and then if few additional steps that are bonuses that you could continue doing after conducting the analysis it's Al also worth considering the following steps ongoing monitoring and updating so market dynamics change over time due to a variety of factors such as evolving customer needs emergence of new competitors and shifts in economic conditions therefore it's important to regulat regularly visit revisit your Tam Sam and some analysis to

Keep it relevant nine incorporating qualitative Insight so while Tam and some are largely qual quantitative incorporating qualitative insights can provide a further picture of the market this can include customer interviews feedback and expert opinions which can all help to further refine your understanding of the market and then 10 considering marketing Trends and predictions so part of the business strategy should also consider the future trends of the industry factors such as techn technological advancements changes in regul regulations or cultur shifts can

Have a significant impact on your market analysis and then by conducting an in-depth Tam salmon sum analysis and regular regularly revisiting and adjusting your strategy based on your findings you can position your business for sustain success all right guys now I know this is a lot um and especially if you kind of already have an idea you don't need to it doesn't need to be perfect um this is just something like this is a bonus this is a bonus strategy that

You can use and it's something that you can always have in your back pocket and just training you to think like this you'll automatically start thinking of the Tam Samm and sum if you're you know going into a new market or if you're thinking of different offers and whatnot so here's another example let's consider an example for a leadership coaching program aimed at Mid to senior level Executives in the tech industry in the United States so this is a bit better

Because it's a bit more specific right so the Tam calculation let's say there are 500,000 mid to senior level executives in the tech industry in the US we're assuming that all of these Executives could benefit from leadership coaching if the average annual cost of your program co uh coaching program is 10K then your Tam would be 500,000 Executives times $10,000 equals boom right here um and then let's see so so your Tam would be $5 billion this is the total market

Demand for your coaching program assuming every potential executive in the tech industry opts for your coaching program now Sam serviceable addressable Market calculations so however your business has some limitations you plan to deliver your coaching services in person uh so you can only cater to Executives within commuting distance of your location let's say San Francisco Bay Area according to the data there are approximately 100,000 mid to senior level Executives in the tech industry in B the Bay Area so your Sam

Is 100,000 Executives times 10,000 which equals 1 billion so your sim is 1 billion this represents the portion of the market you can serve given your GE geographical and delivery constraints all right doesn't have to be just G geographical constraints there's other constraints like I mentioned before this is just an example all right and then some calculation however not all these Executives will choose your coaching program you're new to the market and there are many established competitors after analyzing comp competition

Pricing market trends and your capacity you can only coach a limited number of Executives at a time you estimate that you could realistically capture about 1% of the market in the Bay Area during the next first few years this gives you a sum of 1% times 100,000 Executives times $10,000 so your sum is 10 million this represents the short-term sales Target or a quick realistic Market penetration goal all right so conclusion your Tam s in some calculations show the potential of

Your coaching business Tam 5 billion shows the entire Revenue opportunity if you were to able to capture the whole Market of mid to Mid to senior level Tech Executives in the US Sam 1 billion is the mar uh segment of the market you can serve due to the current geographical and Service delivery constraints and then some 10 Bill million is the realistic potential for your business that they could achieve in the short term considering the Market entry strategy and competition these

Numbers can help inform your business and marketing strategy and can be crucial part uh crucial part of your business plan When approaching potential investors remember these are estimates and uh the actual Market size of your business business's potential may vary based on a variety of factors such as changes in the market competition and effectiveness of your marketing strategy it's important to revisit these calculations regularly as your business grows and evolves so you may not know these numbers right off the bat

You may need to do more research and you may not even be able to do this or you may not even need to do this this is just like I said at the start an extra bit of you know tools and you know Frameworks you can have in Your Arsenal just so you're a Better Business entrepreneur in general you can think like an entrepreneur if you're looking to penetrate a market you understand Tam Sam and some someone mentions this to you

You're going to understand what it is but at the same time you could do this um and it could like really help you um but it doesn't have to be perfect perfect and even you know a lot of the other videos in this training section you may already have the perfect industry Niche and offer and everything like that but this is just a bonus and you know sometimes if you even if you do think you have the perfect offer and whatnot

When you actually um do an analysis or when you start going to the market you're going to see that there you know may not everything may be as you think so um I hope you enjoyed this video I hope you you know digested it well if you have any questions definitely reach out to us and I will see you in the next video keep hustling keep grinding and of course accelerate your stride talk soon