How to Calculate Your Small Business Market Share

  • 1 min read

By Emily Suess

If you take the time to calculate your small business market share, you can measure how well you’re performing in comparison to your competitors. Simply defined, market share is the percentage of business that your business controls out of the total amount of business within your given market or industry.

Calculating Your Market Share

There are essentially two ways to determine how much control you wield within the market: by sales percentage or by unit percentage.

Calculating your market share by sales percentage is straightforward. Let’s say you sell sports apparel. If you sell $1 million in a target market that sells $5 million, your market share would be 20%.

($1 million / $5 million) * 100 = 20% Market Share

Calculating you market share by units sold is just as easy. Let’s say you sell 5,000 pairs of tennis shoes and your defined market as a whole sells 47,000 pairs of tennis shoes. Your market share would be 10.6%.

(5,000 pairs / 47,000 pairs) * 100 = 10.6% Market Share

Identifying the Variables

While the math for calculating market share is simple once you have the numbers, you may find it difficult to define your target market.

For example, should you include customers who also buy sports apparel at big-box stores in addition to other small business retailers? Probably! And you’ll need to find a way to include only sales data for relative products. That big box store sells everything from diapers to DVDs, and it won’t be relevant in your calculations.

That leads to another sticky point in calculating your market share—getting the rest of the market data. If you keep great records, you can pull your own numbers, but you’ll need to track down other industry stats. Sites like SBA.gov and FedStats.gov are a good place to start. You can also purchase market data from for-profit sources if necessary.

Quick Tips for Increasing Your Market Share

Once you crunch the numbers, you might decide it’s time to take action and increase your share of the market. There are several ways to accomplish this:

  • Add products: One way to increase sales is to add more products to your inventory. Not just any products will do, however. Survey your target market to find out what items they’d be most likely to purchase.
  • Adjust pricing: Dropping the prices on your products might move inventory, but increasing prices might generate revenue. Before you make price adjustments, you need a goal for building your market share and a plan for achieving it.
  • Add markets: Add new locations or cater to a wider demographic to grow your customer base.
  • Advertise more: Get the word out about your business through the channels your target audience uses most frequently. Name recognition is a major component of business growth.

Once you’ve determined your place among your competitors, you can compare business practices and develop a plan for increasing your control of the market. The larger your share of the market, the more potential income your business can generate.

Picture of Chaz Michaels

Chaz Michaels

TRENDING AROUND THE WEB

The signs of a hard childhood rarely look dramatic by adulthood, therapists who work with trauma survivors say; more often it is a habit of apologizing before speaking, flinching at a raised voice that was never aimed at them, or checking that everyone else is okay before letting themselves relax.

The signs of a hard childhood rarely look dramatic by adulthood, therapists who work with trauma survivors say; more often it is a habit of apologizing before speaking, flinching at a raised voice that was never aimed at them, or checking that everyone else is okay before letting themselves relax.

Global English Editing
A national survey found that the share of men reporting they have no close friends at all climbed from 3 percent in 1990 to 15 percent by 2021, with the steepest rise showing up right around the age most men leave the workforce

A national survey found that the share of men reporting they have no close friends at all climbed from 3 percent in 1990 to 15 percent by 2021, with the steepest rise showing up right around the age most men leave the workforce

Global English Editing
People who apologize before anyone’s said what’s wrong may be doing more than displaying extra manners — research on parentification has found that children who grow up feeling responsible for a parent’s emotional state can carry that habit of anticipating, managing, and taking responsibility for other people’s feelings into their adult relationships, long after the household that taught it is gone.

People who apologize before anyone’s said what’s wrong may be doing more than displaying extra manners — research on parentification has found that children who grow up feeling responsible for a parent’s emotional state can carry that habit of anticipating, managing, and taking responsibility for other people’s feelings into their adult relationships, long after the household that taught it is gone.

Global English Editing
There are things about a life that are worth keeping to yourself even with people you trust completely, not because there is anything shameful in them, but because privacy is one of the few forms of ownership nobody can take from you once you have given it away.

There are things about a life that are worth keeping to yourself even with people you trust completely, not because there is anything shameful in them, but because privacy is one of the few forms of ownership nobody can take from you once you have given it away.

Global English Editing
Researchers on self-regulated learning have found that effective learners do for themselves much of the checking a teacher might otherwise supply — setting goals, monitoring what’s working, and changing strategy when it isn’t — and that habit can make them better at adapting when they run into a problem they haven’t seen before.

Researchers on self-regulated learning have found that effective learners do for themselves much of the checking a teacher might otherwise supply — setting goals, monitoring what’s working, and changing strategy when it isn’t — and that habit can make them better at adapting when they run into a problem they haven’t seen before.

Global English Editing
Saying “thank you” on reflex and actually feeling grateful aren’t the same event, and decades of gratitude research suggest that the benefits come less from simply saying the words than from genuinely noticing and appreciating something good, which means the automatic version and the deliberate version may be doing two different jobs.

Saying “thank you” on reflex and actually feeling grateful aren’t the same event, and decades of gratitude research suggest that the benefits come less from simply saying the words than from genuinely noticing and appreciating something good, which means the automatic version and the deliberate version may be doing two different jobs.

Global English Editing
Load more

Subscribe to receive our latest articles!

Get updates on the latest posts and more from Small Business Bonfire straight to your inbox.