I asked a robber why he robbed the bank and he told me he did it because that’s where the money is.

The robber knows where to find the money, but do you know where to find the money in the market you are operating in?

Even in the ‘not for profit’ sector, knowing how to generate sufficient revenue is needed to invest in your community social impact, organisational sustainability and growth.

Maybe you think about the environment you are working in as a ‘sector’ instead of a market. But we are all working in a market of sorts: disability providers are competing for a share of the spend of NDIS participants and grant driven businesses are competing against other providers for limited grant funds from governments and other grant funders.

Most not for profit organisations set out to do what they do out of a passion and vision to serve their communities. Some of them have a sustainable business model and others feel like they are always looking for ways to raise the funds necessary to pursue their social purpose.

Since the introduction of the NDIS, disability service providers have had to transition from government grants and contracts, to a place where they are competing for fee for service clients – in a market where the clients have choice and control. The new marketplace is structured completely differently.

Understanding the size and profile of your market will help guide organisations’ decisions on where and how to allocate your resources to have the most impact. It will also provide insights in to the possible size you could grow to – and what your share of the market is.

Here are four practical steps to figure out your market size:

  1. Understand your market structure
  2. Understand your role in the market (now and future)
  3. Find the data
  4. Analyse it for key trends

Understand your market structure

Do you know the size of your total market, target market, potential market and your own market share? This isn’t just for big organisations to look at, but is increasingly important for small and medium providers. You might think that you are doing a great job in growing 25% over a few years but if the rest of the market doubled then you have actually gone backwards relative to other organisations.

Using the NDIS as an example, it is useful to know that the Total Market Size is anticipated to be $22Bn per annum at maturity of the scheme.

Your Target Market is the geographic locations you are in, type of disability served and services you provide at the moment. For example, an organisation might work in Melbourne serving people with intellectual disability with occupational therapy services. It’s possible to estimate the size of this market (in revenue terms) from available NDIS data.

Your Potential Market would include your Target Market and any aspirational new markets that you want to add as part of your strategic plan, including new locations and services. For example, our Melbourne based occupational therapy business might want to expand to Geelong, providing similar services to people living with intellectual disability. That forms part of the Potential Market.

Understand your role in the market (now and future)

What is your role in the market? Are you a significant provider that has the ability to change how your target market behaves, just by innovating your services? Are you a small or medium size provider that feels blown around by the trends in the market which are set by government (funders) or competitors? Or are you a small niche?

Where do you want to get to next, or by the end of your strategic planning process?

Coming back to the concepts of target market and potential market, what new areas could you move in to that will create growth?

Find the data

Market size data is available in various different forms but you should always expect to have to do some analysis and interpretation of it yourself. The data available never seems to be perfect for what you want.

Within the NDIS, there is a wealth of data that the NDIA provides on a quarterly basis. Other data sources include state and local government, the Census and Australian Bureau of Statistics. Annual reports and financial statements for charities you might compete against are accessible on the ACNC website. The relevant funders of your work may also have other sources of data.

If you feel overwhelmed or unable to do this yourself, then a consultant could help to analyse it for you, providing insights in the process.

Analyse it for key trends

It is the trends in the data that will help you determine business decisions as to where resources should be allocated – subject to your mission, purpose and who your organisation is meant to be serving as priority. You also want be allocating resources to areas of growth, rather than any which might be going backwards.

If all the services you provide are in declining markets, then your business will likely decline eventually; even though it may look stable now. Look for areas of growth in the data. Is one section growing faster than others? Is there an underlying trend that could create opportunities or risks to your type of business? Where are new opportunities likely to come from?

For example in the NDIS, there are trends of underutilisation of NDIS plans, with even lower rates of utilisation in regional areas – creating opportunities for providers. Plan management is growing at a rate faster than the number of new plans being approved. Support coordination is growing in the number and percentage of plans it is in.

It’s worth spending some time to have a look at the data. It will help you to better understand what’s going on in your market, which helps to make more informed decisions on strategy.