How to Pick a Profitable Niche for Your Online Business
The Perfect Niche Could Be Right Under Your Nose and You Don't Even Know It
So you’ve decided to start an online business. That’s a big first step towards financial freedom. As an Internet entrepreneur you can escape the drudgery of the rat race and make your own destiny, bringing in a high income but enjoying a flexible schedule and ideal work/life balance.
One of your very first steps to becoming a successful Internet entrepreneur with a profitable online business is to pick a niche. Essentially, a niche is the industry you will be in and the types of products you will sell; it’s what you specialize in.
For example, Tony Robbins is in the personal development niche. Dr. Andrew Weil’s niche is natural healing and nutrition. Suze Orman is in the financial planning niche. There are thousands and thousands of niches out there.
There are people who help their customers eliminate personal debt and adopt better financial habits. Weight loss is a huge niche. You also have: tomato gardening … supplements … getting the most out of your Disney vacation … learning to play piano … the list is endless.
The key is you want to focus on 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. But in this article you’ll learn how to match one of your passions or interests in life with an Internet venture that makes money. That way work doesn’t seem like work.
Why You Must Pick a Niche Online
Picking a niche has a lot of benefits. Being focused on one area allows you to concentrate your efforts in one direction. You know what appeals to prospects in your specific audience… how to approach them with your marketing with laser-focus so that they are more likely to buy. 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.
One common mistake among budding online entrepreneurs is believing that a website offering a large variety of products, something like Amazon.com, is the way to go. At first glance, it makes sense. If you have products and services that at least somebody in the marketplace is willing to buy… you can’t go wrong, right?
First, you don’t have the start-up budget that an Amazon has. Next, if you have 100 different types of products on your site, how will you advertise? You won’t be able afford the time and money it’ll take to put out ads, create email marketing campaigns, optimize web pages for SEO, and more for so many different topics.
Secondly, you’ll simply be overwhelmed, trying to keep track of so many aspects of your business – you’re a one-person operation.
Finally, if you focus on just one niche, you can keep selling the same customers different products and services over time, increasing the amount of money from each new customer. Rather than constantly trying to chase new customers all the time you can spend more time selling to your existing customers, which is much easier to do.
The great news is that by focusing on one niche, your start-up costs will be lower, and your path to success will be much quicker. There is also less risk. And if the niche doesn’t work out, you can move on to different one easily.
And even if you focus on one niche, that doesn’t mean your business can’t grow. You start small and then, once you have a proven marketing strategy, you sell more and more of your niche product. Then you add other similar products. And that means more sales. If you want to build your business even further, you could get into other niches… and start the process again.
How to Pick Your Niche – Research, Research, Research
So you understand why picking a niche is so important. Now we’re going to look at how you figure out which niche is right for you based on your interests and the demand in the market.
1. The first step is to make a list of possible ideas for your business. Go crazy here. Don’t analyze or think too much about it yet. (By the way, I always recommend carrying a notebook around to jot down ideas – you never know when inspiration will hit. The voice memo function on your smartphone is also good for this.)
Here are questions to ask yourself as you go through this brainstorming process …
- What niches are you a customer of?
- What are your biggest passions and interests in life?
- What are your hobbies?
- If you could have a dream business, what would it be?
- Do you have any previous work experience that could potentially turn into a business?
Write down anything that comes to mind. We’re going to narrow down the list in just a moment.
2. Now, you’re going to pick your top five niches. Focus on the ideas you would most enjoy as a business. Remember that you are going to pouring your heart and soul into this new venture so you want to pick a topic that you are passionate about. If you don’t enjoy the topic… you won’t be motivated to work hard to make it a success.
3. Once you have your top five it’s time to look at them closely and determine if there is profit potential. Most of your research can be done online. Once you've found a niche that you are both passionate about and has profit potential, you're ready to move forward and start making money on the internet.
Narrowing Down Your Niche to #1
For each niche topic you will go through the steps below. And to help illustrate these steps, I’m going to walk through the process myself using the niche of yoga as an example.
1. Do a Google search of keywords related to your niche. Search for the broad topic, as well as more specific aspects of that niche.
In our yoga example, you could search for “yoga,” but also “yoga videos,” “yoga pants,” and “yoga course.” You’re looking for a robust search results page. Websites dedicated to the topic, articles written about the topic, blogs… and, of course, 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. Don't make the mistake of thinking, "nobody else is doing this so I'm going to dominate the market".
The reality is in 99.99% of cases, if nobody else is doing it, it's because there isn't money to be made.
2. Do a keyword search. There are several services out there. But I like to go to the source and use the Google AdWords Keyword Planner. It’s free although you do need to sign up for AdWords if you haven’t already. There you search for those same keywords. 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’s usually a good indicator of a winning online business niche.
In my example, “yoga” yielded 1.2 million searches, “yoga pants” – 368,000, “yoga videos” – 49,500, and “yoga course” – 1,200. These are good numbers. There is a ready market out there for my niche.
3. Check out Amazon. This behemoth online retailer is a great research tool, too. (Just resist the urge to buy something while scanning the site!) Here you’re going to search for those same keywords, as well as others related to your niche. When I searched for yoga-related terms, there were a ton of results – thousands of yoga products, from instructional DVDs to yoga mats to yoga clothes. It’s another great indicator that a yoga business will work well. Amazon is also a great place for you to make money selling your own digital books on Amazon.
Another more traditional way to do this is to go a local bookstore/magazine stand. If there are publications that cover your niche then there is probably profit potential in that market.
4. Finally, go to affiliate marketing sites like Clickbank.com. This particular site specializes in information products like ebooks. But there are plenty of other affiliate sites out there. Do a search for your niche. If there are many products available, that means a ready market.
As a bonus, you know have a source for some of the first products you can sell with your online venture. As an affiliate you will promote the products and get a commission on each sale. It’s a great way to start up your Internet business because you don’t have to take the time to create your own products.
Again, it may seem counterintuitive to start a business in a niche that has plenty of competition. But having so many other companies means there is a large market of customers ready to buy products in that niche.
Picking Your Online Niche - Next Steps
Picking a niche can take a lot of effort. But it’s well worth it as you’ve laid the foundation for a successful and profitable online business. Now, the real work begins. It’s time to launch that business by getting your products sorted out and beginning your marketing campaigns. Having a clear niche makes that process so much easier and much more profitable.
Once you've picked a niche market and have your own products or affiliate products to sell you'll want to start to build your audience and make money with your new niche market.