Words of the Week – back of the envelope calculation
Back of the Envelope (image: KellyLWatson)
A back of the envelope calculation is a rough estimate that is completed quickly to make a point. While not rigorous, back of the envelope calculations are logic based and can typically be used for initially presenting potential opportunities. For example, you might hear a budding entrepreneur say to a potential investor, “I did a back of the envelope calculation and believe this could be a billion dollar market.” The term originated from the practice of grabbing the nearest available piece of paper to complete a calculation.