Picking a Profitable Niche for Your Online Business

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When you decide to start an online business, one of the first steps you'll need to take is to choose a niche. Having a focused niche allows you to more easily grow your audience, connect with sponsors and advertisers, and concentrate your marketing and content creation efforts.

Whether you intend to blog, start a social media business, create an e-commerce platform, or any other type of online business, you will need to select a niche.

What Is a Niche for Online Business?

A niche is the area of expertise in which you will specialize. This guides the type of products you will focus on, partnerships you will accept, content you will produce, and customers you will try to attract. Most online businesses choose a broad niche, then focus on something even more specialized within it.

Examples of Specialties Within Niches
Travel Fitness Finance Home Decor
Solo travel Yoga Personal finance Budget decorating
Budget travel Fitness gear Paying down debt Minimalism
Planning a Disney vacation Home workouts Retirement planning Decluttering
Family travel Personal training Tax tips Home renovations
Traveling for business Weight loss Investing Luxury style

There are thousands and thousands of niches out there. You will want to find one specific market that you can serve, over and over again, rather than spreading yourself too thin by trying to operate in multiple niche markets.

Not all of the niches out there make for a profitable online business. And not all will appeal to you. The most successful online businesses combine an interest of the entrepreneur with a popular and searchable topic that people are willing to spend money on to learn about or add to their lives.

Why Do Online Businesses Need a Commercial Niche?

Choosing a niche for your business makes building a business easier and faster by:

  • Allowing you to concentrate your efforts on a single area of expertise.
  • Connecting you with a focused and interested audience.
  • Making your business more searchable online.
  • Helping you connect with advertisers, sponsors, or other businesses.
  • Giving your business a clear direction for developing content or choosing products to sell.
  • Simplifying your marketing by giving you a clear message about purpose and benefits.

When you focus on a single niche, you can more easily identify your ideal customer and approach them with targeted marketing. At the same time, you build expert status, which speeds up the process of your prospects coming to know, like, and trust you. That’s essential to turning prospects into paying customers.

By contrast, trying to create a website covering a wide variety of topics or offering dozens of different products requires a larger start-up budget. It requires more complex advertising and SEO to put all those products in front of different customers, and more work to build relationships with those customers. And when you don't have a focused, targeted audience, companies are less likely to work with or sponsor you because they don't know which customers you can help them reach.

Focusing on one niche doesn’t stop your business from growing. Once you have a proven marketing strategy, you can add related products and revenue streams. You can also take what you've learned into other niches and start the process again.

Spreading yourself too thin is a mistake that causes many new businesses to fail, preventing you from connecting with customers and draining your budget before you can start making a process.

Instead, if you focus on just one niche, you can keep your marketing as focused and simple as possible to reach a specific set of customers. Once you have an audience, you can continue to sell them new products and services, increasing the amount of money you make from each customer.

How to Choose a Niche for Your Online Business

How do you go about picking a niche that both interests you and has enough of an existing customer base to be profitable?

Start by making a list of possible niches for your business. Brainstorm interests that you already participate in, hobbies that you wouldn't mind turning into a business, specialties or training that you already have, and previous work experience that could potentially turn into a business.

Next, choose the top five ideas that you are most interested in turning into a business. Running a business takes a lot of time and commitment, so you want to pick a topic that you are passionate about. If you don’t enjoy the niche, you won’t be as motivated to work hard to make it a success.

Once you have a shortlist of ideas, it's time to research them to see which one has the best potential to turn into a profitable online business.

  1. Google search. Research the popularity potential of each idea. You want to look for a topic that is popular enough online and in search engines that you know plenty of customers will find you. Do a Google search of keywords related to your niche. Look for a robust search results page: websites dedicated to the topic, articles written about the topic, blogs, products, and other online businesses in that niche. Competition is a good thing: it means there is a market interested and ready to buy. If you don’t find many results for your topic, there probably aren’t many potential customers online.
  2. Keyword search. Use a keyword resource, such as Google AdWords Keyword Planner or Answer the Public, to search for the keywords you already looked up. You want to find popular search terms that lots of people are already searching for. If you see above 10,000 searches per month for your “main” keyword and 50,000 total for the other related but more specific keywords, that indicates a strong niche for your online business.
  3. Look offline. Visit your local bookstore or magazine stand. If there are publications that cover your niche, there is probably profit potential in that market. You can also look for digital publications related to that niche or industry, which are both good for research and potential sites where you can establish your expertise and market your business.
  4. Check affiliates. Search affiliate marketing sites like Clickbank for products related to your niche. If there are many products available, that means a ready market.
  5. Social media. Look at social media platforms like Instagram to see what hashtags and content related to your niche are popular and how many people follow or use them. This will give you an idea of how large the audience for that topic is.

When doing your research, search for a broad topic, as well as more specific aspects of that niche. For example, if you search for yoga, you can also look into yoga videos, yoga gear, yoga courses, or yoga for beginners. This helps you narrow down your niche to the area that will be your specialty.

Once you have finished your research, you should have a good idea of which niche will be the most profitable for your business. And as a bonus, you should also have ideas for products you can sell, what type of customers are interested in your niche, keywords you can use for search engine optimization, and how to start growing your social media presence.

Having this information, along with a clear niche and purpose for your business, will make the process of launching and growing your audience quicker, smoother, and more profitable.

Article Sources

  1. Virginia Wesleyan University. "Niche Marketing Examples." Accessed Feb. 1, 2020.

  2. University of Maryland Extension. "Niche Marketing ─ Outside of the Box, but in the Black." Accessed Feb. 1, 2020.

  3. PennState Extension. "Find Your Niche: Cultivating Customers that Share Your Passion for Your Business." Accessed Feb. 1, 2020.

  4. Knowledge@Wharton. "Many-stop Shopping? How Niche Retailers Are Thriving on Internet 2.0." Accessed Feb. 1, 2020.