TAM and SAM 2.0 for Fractional Sales Leadership

The fractional sales leadership industry is experiencing rapid growth as small and medium-sized businesses (SMBs) increasingly recognize the value of bringing in experienced sales executives on a flexible, part-time basis.

To better understand the financial opportunity within this market, we attempt to calculate the Total Addressable Market (TAM) and the Serviceable Accessible Market (SAM) for fractional sales leadership, using different approaches, and leveraging available macro-data, data from our own recent study, and documented assumptions. The first attempt a few weeks ago included a supply-side calculation that is now being replaced by a purely demand-centric approach.

To recap the definitions:

·?????? TAM (Total Addressable Market): The total revenue opportunity available if a product or service captures 100% of the market demand.

·?????? SAM (Serviceable Addressable Market): The portion of the TAM that a company can realistically target based on its business model, geography, and product/service offerings.

·?????? SMB (Small and Medium-Sized Business): A business entity with limited revenue and employee size, typically defined as having fewer than 500 employees and less than $50 million in annual revenue

TAM Calculation:

What if every Sales Leader in the relevant SMB business space was fractional?

According to the SBA the definition of a “small business” includes those with 500 employees or fewer. Of those, approximately 3.0 million businesses in the US have between 5 and 100 employees.

Extrapolated to cover the US and Canada, and with an average annual billing rate of $116k, the TAM for fractional sales leaders calculates to be $347b.

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SAM Calculation:

What portion of the TAM is a realistic target for the fractional sales leader model?

As already expressed in the TAM, business size is a key factor:

• Small to Mid-Sized Businesses (SMBs): Companies with $2M to $50M in revenue often lack the budget or need for a full-time VP of Sales but still require experienced leadership.
• Startups & Scale-ups: Especially in the $500K to $5M revenue range, where they are proving product-market fit and need scalable sales processes.
• PE & VC-backed Companies: Investors often push for sales acceleration but don’t want to commit to a full-time executive before proving ROI.

Then there are industry segments where the fractional model is a fit, i.e.:

• B2B Technology (SaaS, AI, Cloud Services, IT Services)
• Professional Services (Consulting, Legal, Accounting, HR Tech, Marketing Agencies)
• Manufacturing, Industrial, and Supply Chain Companies
• Healthcare, MedTech, & Biotech Startups
• Private Equity & Venture Capital Portfolios

There are also certain growth stages and specific use cases:

• Founder-Led Sales Transition
• Building a Sales Playbook & Infrastructure
• Turnaround or Sales Transformation
• International Expansion

And finally, there are business model considerations that make a company a fit for fractional sales leadership:

• High-ticket, complex B2B sales
• Recurring Revenue / Subscription-Based Models
• Project-Based or Custom Services

When the starting point is a number of around 3.0 million businesses with between 5 and 100 employees that are part of the TAM, who do we need to deduct, who might not be a fit?

• Leisure and Hospitality (lodging, food, beverage, etc.) - (584,000 businesses according to the Bureau of Labor Statistics (BLS))
• B2C retail and services - (233,000 businesses, BLS)
• Medical Practices, Health, or similar services - (530,000 businesses, BLS)
• Companies without a proven product-market fit (as they need product development more than sales leadership) – but that’s a number hard to come by!

Incorporating the above deductions, extrapolated to cover the US and Canada, and with an average annual billing rate of $116k, the SAM for fractional sales leaders calculates to be $192b.

This market size reflects the growing adoption of fractional models across SMBs seeking cost-effective and results-driven sales leadership. These findings also shed light on the total volume of work and average yield per assignment, further demonstrating the financial potential of the fractional sales leadership space.?

As SMBs continue to seek flexible solutions to drive growth, the fractional sales leadership model is well-positioned to deliver both measurable revenue gains and strategic sales transformation.