Shrinking is to be expected when felting as the fibers are locked tightly together and air is forced out.  The rate of shrinkage depends on a number of factors, such as the type of wool and the direction of the majority of the fibers. Some fibers will reduce in size by only 20%, while others may wind up 40% smaller than the original shape.  Try felting a small sample piece (called a swatch) before moving on to your main project so you’ll know what to expect from your particular fiber.