When Naledi Mokoena completed her market segmentation exercise for HarvestBox, she finally had a clear starting customer: busy young professionals who wanted to prepare healthy dinners without spending time planning recipes or shopping for ingredients.
Her message had become sharper: “The 20-minute local dinner box for busy professionals.”
But a new question quickly emerged: how large was the opportunity?
Naledi knew that many people bought groceries, ordered takeaway meals, and wanted to eat more healthily. It was tempting to describe all of them as potential HarvestBox customers. However, she also knew that her new business could not be delivered to every household or persuaded every person to subscribe.
To develop a more realistic picture, Naledi explored three connected ideas: TAM, SAM, and SOM.
TAM: The Total Possible Market
TAM stands for Total Addressable Market. It represents the total demand that could exist if a business could serve every relevant customer without limitations such as location, resources, or competition.
Naledi began with the broadest version of the HarvestBox opportunity. She considered working adults across South Africa who purchased convenient evening meals and had an interest in healthier eating.
After reviewing available market information and making a few clearly stated assumptions, she estimated that there could be approximately two million potential customers in this broad market. If each customer spent an average of R600 per month on meal boxes, the total annual opportunity would be:
2,000,000 customers × R600 per month × 12 months = R14.4 billion per year
This was HarvestBox’s estimated TAM.
The number was exciting, but Naledi understood what it meant—and what it did not mean. It did not mean that HarvestBox would earn R14.4 billion. It showed the scale of the wider market if every potentially relevant customer could be reached and converted.
TAM helped Naledi see the size of the playing field, not the amount of revenue waiting in her bank account.
SAM: The Market HarvestBox Can Serve
SAM stands for a Serviceable Available Market. This is the portion of the total market that fits the business’s chosen customer segment, product offering, and practical reach.
HarvestBox was not yet able to deliver throughout South Africa. Its farmers, packing facilities, and delivery partners were based in Gauteng. Even within Gauteng, the business initially planned to serve only selected areas of Johannesburg and Pretoria.
Naledi therefore narrowed her estimate.
She looked for busy professionals living or working inside the planned delivery zones. She considered income levels, interest in convenient healthy meals, and access to online ordering. Based on her early research, she estimated that around 120,000 people matched both the customer profile and HarvestBox’s current ability to serve them.
Using the same average monthly spend, she calculated:
120,000 customers × R600 per month × 12 months = R864 million per year
This was HarvestBox’s estimated SAM.
The difference between TAM and SAM gave Naledi a useful reality check. The wider market might be worth billions, but HarvestBox’s current product and delivery network could only address a specific portion of it.
This was not a weakness. It gave the team a clear and manageable market in which to focus its efforts.
SOM: The Opportunity HarvestBox Could Realistically Capture
SOM stands for a Serviceable Obtainable Market. It is the portion of the SAM that a business can realistically expect to capture within a defined period.
Naledi knew that HarvestBox would face competition from supermarkets, takeaway platforms, and other meal-kit services. She also had a limited marketing budget, one packing facility, and a small delivery team. Winning all 120,000 customers in the serviceable market was not realistic.
She returned to the go-to-market strategy she had developed during the market segmentation activity. In the first two years, HarvestBox would focus on office parks, coworking spaces, gyms, and employee wellness programmes. Naledi estimated how many people on these channels could reach, how many might try the service, and how many trial customers might become regular subscribers.
Based on these assumptions, she set an initial goal of attracting 2,400 regular customers.
The calculation was:
2,400 customers × R600 per month × 12 months = R17.28 million per year
This was HarvestBox’s initial SOM: a challenging but achievable share of the market that matched its resources, capacity and route to customers.
From Impressive Numbers to Useful Decisions
The three figures told different parts of the HarvestBox story:
- TAM showed the total potential demand for a broader solution.
- SAM showed the portion of that demand HarvestBox could serve with its chosen segment, offering and geographic reach.
- SOM showed the share the business could realistically capture in the near term.
For Naledi, the value of the exercise was not simply producing three impressive numbers. Each estimate led to practical questions.
If HarvestBox wanted to increase its SAM, it might need to expand its delivery zones, add packing facilities, or adapt the service for another customer segment. If it wanted to increase its SOM, it would need stronger partnerships, more marketing capacity, better customer retention, or a clearer advantage over competitors.
The exercise also revealed an important operational challenge. HarvestBox could currently prepare only 500 boxes per week. Even if demand grew quickly, the business would need additional equipment and supplier capacity before it could serve 2,400 regular customers.
By comparing its market opportunity with its actual capabilities, Naledi could plan growth without making promises the business could not yet fulfil.
Build Your Estimate from Evidence
TAM, SAM, and SOM are estimates, especially for early-stage business. They do not need to be perfect, but they should be based on evidence and transparent assumptions.
As you complete your canvas, consider:
- Who is included in your chosen market?
- How many people or organizations experience the relevant needs?
- How much might each customer spend?
- Which customers can your current product and business model serve?
- What geographic, operational, or regulatory limits apply?
- How many customers can your sales and marketing channels reach?
- What level of demand can your business actually deliver?
Avoid starting with an enormous industry figure and claiming a small percentage without explaining how you will capture it. Your SOM should connect directly to your go-to-market strategy, competitive position, and operational capacity.
Naledi began with a market opportunity worth billion. She ended up with a practical goal of 2,400 customers. The smaller number was far more useful because it gave HarvestBox something concrete to build towards.
A compelling market opportunity is not only large. It is clearly defined, supported by evidence, and connected to a believable plan of action.
Until next time, Instant Startup community!
