Many start-ups and small business owners underestimate their position in the economy. You think “we’re a 4-person operation, we don’t compare to bigger companies” or “we don’t really need to know market share because we probably are too small to even make a dent”. I tell all my clients, run your business like a major corporation. Do your research! Follow your business stats! The worst thing a small business or start-up can do is ignore quantitative data.
I recall years ago when I worked as an Office Manager for a very small fire protection engineering firm, my boss and I were discussing the increase in business we had experienced in the past 6 months. Revenue was at an all-time high. So much business had come in that we had to hire 2 new engineers and I had to hire an assistant because I could no longer manage the projects and do all the clerical work. I was trying to convince Mike (the owner) to hire at least 1 more engineer and to find us a bigger office be he was very concerned that maybe we had just experienced a temporary spike in business and shouldn’t make too many permanent decisions until we knew what was happening In the market. We took a few weeks and he did some research and realized our firm was doing almost a 40% of the fire engineering in the Miami market and Miami was experiencing a real estate development boom which meant business was on the upturn. We had a very significant market share in a market that was on the incline. We also assessed that our main clients were the biggest architects and developers in the region so because of their perspective market shares, the more business they did, the more business we had coming in.
The WikiHow image to the left illustrates how to calculate your market share. Use trusted market research sites such as IBIS World or Statista. Or utilize US Census data or SBA (Small Business Association) resources and information. Understand how much revenue your company brings in and how many units you sell (if applicable). Then use the market research you receive to see how you size up against the competition.
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