Very quickly we will go through the bottom up market model.
Again this is really different.
Here you want to focus on.
Those building blocks we talked about before.
In this model it's all about the number of sales reps.
So I go back to my staffing plan, and
I pull in the number of sales reps per year that I said I would hire.
Then I go ahead and determine the number of accounts each rep can actually open,
and, from there, I go ahead and say,
well, how many of these procedures are actually performed in each account?
And, finally, I can generate the total cases that my
company completes or the total number of units that I sell.
A lot of people ask me where I get this information from this is
obviously critical information I found that the most helpful
people are sales reps that are actually in the market today.
So, if you can make contact with a sales rep in your market, and
talk to them about their business.
Very often you will learn very quickly the number of cases that are done per account,
the number of accounts that they can possibly cover, and so
you can start to dial in these assumptions yourself.
At the end of the day, you go ahead and multiply.
The number of units that you sell times your average selling price and
you get your revenue.
One thing that I like to do is actually use my top-down market model as
a check to make sure that my numbers are realistic.
So, what I do is pull in the number of patients.
Make the split to understand what, what percent of those patients are actually
addressable, and then do some simple math to determine what percentage of
the market that I actually have in each year, and again,
the temptation here is to create a huge percentage of your market in
the first year, but I'm telling you, that's probably not going to happen.
You need to recognize this is a slow, slowly developing, enterprise, and
it will take time to actually grow your business.
I often get a question on the market model about,
how to, make sure that my assumptions are actually realistic.
And the most helpful thing to do there is to find a comparable company.
Or a comp.
And basically what you want to do is look for
other companies that have done something similarly to what you did.
I can use an example from my time at Aclarent,
and Acalrent was an ENT-focused company.
We sold catheters which were used in surgery.
We found information about a company called ArthroCare which had come before
us, and ArthroCare had also sold catheters to ENTs that was used in surgery.
ArthroCare was a public company and their information was available on the internet.
So you could go back and look at the, the historical sales of ArthroCare.
And you could actually use that as a check against your assumptions in your model.
Probably the most helpful documents to find are something called an S1,
and this one is a document that a company publishes before they go public.
And that information can be used to
see the amount of revenue and the amount of cost that a company incurs from its
inception until the time that it went public.
Or was acquired if they actually didn't go public.
Regardless, these documents are very, very important pieces of information for
you as you build your market model for your company.