The term used by venture capitalists to refer to a company's market potential is its "running room".

This is a crucial aspect to how investors will value your business. You may have a fantastic proposition, but if the total market potential is just a few million, your growth will be limited even if you capture 90% of the market.

From a sales outsourcing perspective, we're also interested in your running room. We know that, to deliver rapid results, we need to hit your target market and capture that "low hanging fruit". This uncovers qualified prospects who are ready to buy.

As a rule of thumb, there's always a percentage of companies who have the issue your business addresses on their radar. The percentage varies, but let's say it's about 25%. The rest of your market could be categorised as not being ready now, already found an alternative elsewhere, or just not interested - yes, they're out there.

The art of getting traction with new business acquisition is to quickly qualify and work with companies in that magic 25%.

If you've only got a very small potential market, then your "low hanging fruit" will also be low in numbers.

However, if your proposition is either extremely compelling or of significant sales value, then it can still be a great return.

Labels: sales, start-ups, venture capital