Top-down forecasting starts from market size and works down (TAM × penetration = revenue). Bottom-up starts from your capacity and works up (reps × deals × price = revenue). The best forecasts use both methods and reconcile.
Key Takeaways
- Top-down = market opportunity. Bottom-up = execution reality.
- Bottom-up is the binding constraint for startups.
- If they diverge >30%, an assumption is wrong.
- Present both to investors — shows rigor.