A business' market penetration rate tells you how many people have purchased your product or service relative to the market size. As a small business, it can be hard to penetrate your market. When you do break into a market, it's important to track your penetration rate to find out how many new customers you are winning.

Estimate the size of the total market that you are targeting. For example, if your product is marketed to women over the age of 65 in your town, you would need to estimate how many customers fit this demographic using local census information.

Add up the total number of people that have purchased your product, based on your sales records.

Divide the number of people who have purchased your product by the number of people in the targeted market to get your market penetration rate. For example, if you have a potential market of 100,000 people and you have sold your product to 5,000 people, then you have a market penetration of 0.05, or 5 percent.