Predict the number of future clients – howto

Total addressable market analysis – what does it mean for your plans

To predict the number of future customers we use Total Addressable Market analysis, TAM. The technical term TAM refers to the number of possible customers and the number of products that they will buy as a whole. This is the full market. If you sell cars, everyone can be your customer. There are competitors, and not everyone is going to buy cars from a new producer. So the number of cars you are going to sell is smaller like the market for automobiles. If you want to sell Yoga classes, everyone is a potential customer as well. The vast majority of clients for Yoga classes are women, which decreases the number of clients. People who need to go over 30 kilometers for the workout are unlikely to buy your lessons. For a year now, Covid-19 has been a big problem – either lessons together in a gym are prohibited, or older clients do not want to come due to fear of infection.

The total addressable market narrows down to the servicable accessible market.

These are the customers who may be ever hear from you and suscept you as your potential supplier. You have to be able to sell your products to them. This is much closer to the reality and is one step calculating your future sales.

The third and most important technical term is the “_S_ervicable _O_btainable _M_Market”, SOM. These are the real customers, the ones you can serve and the ones who want to buy your products. They need to know your products and services.

The math

For calculationg, demographic statistics are important. These data indicate the number of people in the target region.

How to find the number of potential customers? The primary source is Wikipedia (really) and the governmental Statistics Office. Their data is normally free. The state administration places great value on correct data. They use this to distribute taxpayer money.

You can find more than population data there. The number of dairy cows is also there, and a lot of the data by economy. So it is possible to predict the number of future clients.

Boutique market researchers sell premanufactured reports

Using google to search for the data you arrive at several websites that are trying to sell industry reports. The normal price for these reports is between 800 and 3700 Euros. On my Fiverr account, a website that acts as an intermediary between freelancers, a lot of requests are aimed at selling these reports for less, say 80 €. The reason the prices are so high is that the authors use the most expensive data, for example at Bloomberg.

Is it necessary to pay more? For small entrepreneurs who offer specialized products, the answer is no. The reason is: it doesn’t say anything which we can use to predict the number of future customers.

Data Quality needed to predict the number of future clients

To estimate the SOM, industry associations offer a lot of data. Perhaps this data is old, but there are no or little fees.

The internet offeres a lot ot data about what is popular with users and what they think an want. That data is hard to find and to be familiar with with web evaluation and web scraping ist helpful. In 2020 I worked on a market study for flower pots. There was a lot of data coming from the associations of the friends of the gardens. They show me that all people love their garden and their flowers more and more. Are the data true and dear to the seller of the flower pots? How much money do they want to spend on the jars? What appearance will they like? Lots of work to do.

Quick and only a little dirty

For very quick results it is possible to do an analysis of reviews on Amazon and other sellers. There is software to do this. Youtube is full of videos that show you this technique. Here are some basics how to analyze that (German) and how I do it.

Storytelling makes successfull

How do I find the right story for my product, how does my storytelling become a success?

Products are enhanced with storytelling. I am looking for a 17 mm socket, which of the three available nuts or wrench sockets will I buy:

  1. Simple picture on blue background, price € 5.60, supplier unknown
  2. Same picture as 1., but additional information that it was made in China by a small factory in Shenzen from the best steel for heavy use, price 8.30 €
  3. Again the same picture as 1., and the same manufacturer as 2. The dealer introduces himself as Franz Müller from Rottweil in deep Swabia, who specializes in the sale of quality tools. Price € 9.20.

I learned that Swabian dealers are very quality conscious. Franz Müller connects to my experience, and his story gives me expectation that the tool will run smoothly and that can use it without any problems. I order his stuff despite the higher price.

Storytelling has to appeal the customer’s mental world

Good examples for that:

  1. Promise of getting rich fast with Network Marketing. You are shown the beauty of wealth. The way to do this is very simple: you win a few customers who in turn win new customers.
  2. Anyone who has ever been to partner exchanges surely knows the many supposedly young and good-looking women and men who promise the perfect relationship. Fortunately, they don’t present their price list until late, so you don’t have to pay for the illusion of a perfect relationship due to the lack of a valid contract.
  3. Berlin advertising agencies in particular currently love telling stories from the ideal world of the rurals village or a small city with intact neighborhood “where everybody knows your name. The stories are pinned to every product whose distributor requests it.
  4. Coaches encourage other their coaching clients to tell their history. That is supposed to induce more interest from potential customers. A very common story is that of the poor lady or gentleman, stricken by fate. This person believed him/herself and made it again into great wealth. And there are photos from trips to exotic places or they buy artworks.

How to find your story?

Take care that your story does not disguise the product, unless the story is the product. Example: an email from a coach who promised me a great development as a globally admired speaker and expert in my discipline. I asked myself: “What does he even offer”? It was simply an rhetoric training, as I learned later. By reaching into the rhetorical multi-level marketing language, however, he created unpleasant associations for me. If any kind attention was the target of the action, the coach is successful. If he wants to be a serious personnel developer, less so.

Market Research helps you to find about more about your targeted group.

To the featured image: Thanks to Allie for sharing their work on Unsplash.Photo by Allie on Unsplash

Why we use Bitcoin for creating wealth, not for daily payments

Bitcoin is a freely tradable cryptocurrency. A currency needs security against unauthorized copying. With normal money this is done by the central bank and the state, with bitcoins with strong encryption and a publicly accessible database with 262 gigabytes of data in May 2020.

There is a maximum of 21 million Bitcoin to be scraped. Currently there are 18.4 million. A limited amount of a good gives hope for an increase in value. That is the matter with gold, in some areas with housing. The prospect of increased value makes people to invest in goods who bear no interest. In the following, I analyze whether buying and selling Bitcoin might bring a good return.

Bitcoin lures with impressive price fluctuations, longer periods of steadily rising prices and, unfortunately, a few crashes.

The lowest price for a complete Bitcoin in the period covered by the graph was 3207 US-$ on 2018-12-14. Successful traders bought for example for that price and sold high for 19107,46 US-$ on 2020-11-24. Which good makes six times its value in two years?

In the years after I wrote this article the bitcoin reached 40.000 US-$-

I used the close prices of the days. Bitcoin prices are changing fast along the day. About 15% of all existing bitcoins are sold on one day. Also high prices slower the market: it is visible and statistcally noticeable that high prices lower the trading volume. That is not only in cryptocurrency market. Real Estate also knows this phenomena.

The picture shows that during the normal day the prices fluctuate by 5-10%. Only on explosive days, less than 11 days out of 723, did prices fluctuate more than 15%. Considering usual transaction fees of 0.1-5%, you can win and lose very quickly. Current sales offers and trading conditions can be found e.g. here.

Bitcoins are very speculative. The reason for the many offers for investing in Bitcoin is that if somebody owns already the currency convincing others to buy it also raises the prices. Now it is possible to sell the the own stock and make a little fortune.

Using Bitcoin for payments

Bitcoin als Zahlungsmittel
Bitcoin for payments

for legal transactions:

The fees for exchanging cryptocurrency into stone age currency such as Euros or US dollars are 3-5% of the value, as is the case for transferring an amount of money to another account. The reason is the high computing power required for the encrypted currency. PayPal takes 1-2.5% of the transferred amount for the same service, the banks go down to 0.1%. The advantage of Bitcoin is the secure transmission: are the bitcoins stored in your wallet they are yours. There is no chance for the delvering side to get it back, like for example in European direct debit authorizations.

Bitcoin for the darker side of business

Are Crooks dishonest
Are Crooks dishonest

For transferring unlawful earned money the cryptocurrency is well suited. The account owner can remain anonymous; no connection can be established between the account holder and a natural person. The Bitcoin accounts are publicly visible, so the threatened person can, for example, see how much the account holder has already harvested with his criminal actions in the case of extortionate emails.

How do I change the price?

The price elasticity of the demand for Bitcoin is positive overall. That means rising prices increase demand and vice versa. It therefore makes sense to find as many co-investors as possible. These buy with you, and your bitcoins go up a bit in price. You just have to get out before the co-investors want to sell. The price may drop and eat up your gains.

Food Truck – how to use it for making money

Business location for starters – the Problem  We think there is  a lot of money to be made with a mobile snack stand, a food truck and other sales vehicles. Additionally it is not only making money: it is fun to  prepare and selling food and drinks.

For example, independent sausage sellers in their food trucks and carriages on the Freiburg Münsterplatz are estimated to have a six-figure annual income per car. These people endure the market in cold and hot weather and most of them do not have to publish balance sheets. There are therefore no generally available figures on the income from sausage sales, it must be estimated.

The following article contains a model calculation to determine the expected profit with a food truck or trailer. Advertising and the very important factor “sales per customer” are taken into account.

If the dream of your own food truck or trailer is to become a reality, you need a wagon and one or more selling places. When researching a truck, I will quickly come across offers from franchisors. At first glance, at least to me, these look new and inspire me very soon. After the first impression, I just want the car.

The smart entrepreneur thinkss: “First check the calculation”. The sample calculations submitted by franchisors could be daring and presented very nicely. The realistic scenario is possibly hidden between airier calculations. Speculatively high assumptions about workloads create unrealistic high earnings.

A serious seller does not lie, he arranges the facts nicely. A simple trick to make things beautiful but not wrong bases on the fact that people love the middle. We intuitively think the middle scenario is realistic, the left one is bad and the right one is so good, that it will not happen. And already we are in the mental trap. The scenario in the middle is in reality the extreme upwards. The very good case shown in the “good” column of the sample calculation, usually on the left, cannot be achieved.

The formula for the financial success of mobile sales stands and food truck

Here is a formula that is simple and works well. Some market research is necessary for some of the necessary information, I just give estimated figures.

Lets start with the sales volume.

The turnover U is calculated from the number of passers-by n, the purchase probability for each passer-by p (p) and the turnover per buyer u (p). So daily turnover = n * p (p) * u (p). We see 500 passers-by every day. Of those, 10% buy. Everyone makes a turnover of 5 €. This results in a daily turnover of 500 * 0.1 * 5 = 250 €. That is not much, as we shall see later.

The costs add like that:

Daily costs = stand rental + purchase price of the car / service life in days + maintenance costs + energy costs + labor costs + cost of goods + advertising other ancillary costs.

Fixed costs: stand rental, depreciation, wage costs (fixed jump)
Variable costs: maintenance, energy, labor costs, goods


A food truck or trailing carriage with the same purpose has space rent of € 30 per day, depreciation is € 25 per day, energy costs € 10, maintenance € 5, our minimum wage worker costs € 100 per day including social security contributions and vacation. We make € 250 in sales every day, the cost of goods is 40% of sales. Taken together, this results in a daily loss of € 20. What to do? The employee complains about stress and how much he has to do.

We check what the employee is actually doing. He needs three minutes per customer and has 480 minutes a day, of which he needs 45 minutes for preparation and cleaning. That equates to 435 minutes for the customer – with three minutes per customer that’s 145 customers a day. Nobody can serve customers quickly and permanently for 8 hours at a time. There are also times of weak demand. We therefore assume a maximum utilization of 50%. That would be 72 customers every day. So far we have had 50 customers a day. So the employee could do a little more.

We decide to do a promotion. This costs 30 € daily and brings 20 customers daily. The turnover increases to 350 € per day. Previous costs + advertising + more cost of goods = new costs.

270 € + 30 € + 40 € = 340 € costs, 350 € income, we finally earn a little. But not enough to cover our entrepreneurial risk. We want 15% of sales, € 10 per day is just over 3%.

We achieve the 15% minimum profit with a slight increase in customer sales to € 5.5. With 70 customers, this equates to a daily turnover of € 385, the costs then amount to € 324 per day.

The number of customers matter

Mobile food trucks and trailers are a a business of big numbers. Additionally it has some similarties to real estate business: location is everything. In addition, a clever price and product policy. This increases sales per customer. He is offered what he wants and his wishes are addressed. Franchise concepts must be checked to see whether they allow an increase in customer sales. In addition, the sales time per customer must be low. The sausage barons can serve a customer in less than a minute and generate € 2.20 in sales.

More revenue per customer

Here, high sales per customer combined with mass business lead to the desired profit. The sales car must offer enough space for this.

Sidelining with a food truck

They are easy to operate part-time. Because of the lower capacity utilization, the depreciation per working day is higher. In addition, a parking space is required for the idle time. For this we can choose days and places with high turnover at public festivals and in summer. The good places are hard to come by at first. With patience and a start-up time, they will also become accessible in the long term.

If you think help helps you:

I have another article about finding a good place for the carriage /food truck.

finding a place professionally (German)

Food Truck on a Motorbike
Food Truck on a Motorbike