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Thursday, March 29, 2007

Developing an Internet Niche Business - 1


It seems that everyone is starting up an Internet business these days, and as you watch others break into the market, it appears that doing so is a simple task. In fact, you feel like you could benefit greatly from the profits of starting an Internet business yourself.

However, you aren’t sure where to begin, and you also know that a lot of people who start up a business tend to fail, leaving them with no income and the debt from having entered into the venture to begin with.

There are some very obvious reasons that Internet businesses fail, and avoiding these pitfalls can save you a lot of heartache when you start up your own business. For example, having too broad of a plan can make your business seem too overwhelming to run and not having a target audience can make it seem as though your offerings are not legitimate.

One of the most important considerations you should have in starting your Internet business is to have a niche market for your business. This will give you a great target for your product, or service, and a simple way to promote these wares without creating a skeptical audience.

What is a niche, and why is it important to have one? This e-book will address all of the concerns and questions regarding niche marketing for your Internet business and how to use this method to assure the profitability you desire


The Webster Online dictionary describes a niche as “a place, employment, status, or activity for which a person or thing is best fitted”. In other words, it is an opening into which you can place yourself, your product, or your service in which to have it best recognized within a specific industry.

For example, if you look at the lighting industry, few manufacturers advertise their wares as simply “lighting”. Instead, they may advertise “incandescent lighting” or “HID industrial lighting”.

These are niches within the industry into which customers will look specifically for the product they require and more quickly and easily recognize the equipment that fits their needs. That means faster and simpler notability of the product or service without having to delve through hundreds of thousands of unrelated products.


If you have a specific industry into which you want to enter into an Internet business, you should most likely choose a niche market for advertisement and visibility.

The particular niche you choose should be determined by several factors, including your own personal interests and the profitability of that particular niche.

Does It Fit My Interests?

One mistake that many people make in starting up an Internet business is thinking that they must choose an industry that is related to interests of their own; however, that CAN be a good place to start. A good way to come up with a good target niche is to look at the things you enjoy.

After all, if you enjoy them, other people probably do, too! Here are some questions that you should ask yourself.

What do I enjoy? – Regardless of how lucrative an industry may be, you will have a hard time returning a profit from something you don’t enjoy doing. This is because drive and motivation are based more on feelings of happiness and contentedness than on money, no matter how it appears to start with.

Therefore, you can set up a business cleaning houses all day long, but if you don’t like putting on a pair of gloves and scrubbing the floor, your motivation level will be nonexistent.

What do I know about? – The success of your business also depends on your knowledge level. You lose credibility with customers when you don’t have the answers they require. Therefore, if you don’t know how to write off particular expenditures on a tax return, don’t offer your services as a tax agent. The niche market you choose should always be based on your knowledge, skills, and abilities in order to achieve success.

Is It Going to Be Profitable?

Once you’ve determined a niche market for your business in which you have interest and knowledge, the next consideration is whether or not you can gain from making a move into that area of an industry. This decision is based on forces beyond your control and requires some careful research into that niche of the industry.

Is it in demand? – Are there people looking for the particular goods or services you will be offering? If not, you need to start the process of determining a niche market for your business all over again.

If someone decided to sell air conditioner units in Siberia, they would not be likely to profit from the business, since it rarely gets warm enough to worry about cooling a space. However, if that same individual had created a business selling insulated gloves and scarves, the demand would have been much higher.

How heavy is the competition? – Regardless of your drive, interest, or even heavy demand for a product, you will find it difficult to profit in a niche market that is already saturated with competition.

For example, if you can do a search on the Internet and find 30 different businesses offering the same product you intend to sell, you may want to rethink your business plan. Being unique in your niche is key to creating a successful business. While some competition can be healthy, you don’t want to enter into a saturated niche market.

Know Your Market - 2

So, now you think you know what sort of industry you want to pursue, and you have some ideas for niche markets within that industry that both suit your interests and seem profitable.

Now, it’s time to bring out the big guns. You need to be “in the know” about the industry you are pursuing, the niche market you at which you are aiming, and the advances within that industry. After all, every marketplace changes all the time, and you have to keep abreast of the changes to maintain your advantage and profitability.


Knowledge is power, regardless of the topic of discussion. When you start a business of any kind, you have to know more than just the ins and outs of your product or service as you see it. You must also know what the customer expects, what other companies in the market offer, and what is involved in becoming part of that niche market you intend to corner.

There are several steps you can take to become an expert on your topic, but the most important aspects of learning your industry and your niche market are research and knowledge of current events and conditions.


The basic problem with conducting research is that most people aren’t sure where to begin. In business, industries, and marketing, it can be even more difficult than ever to grasp the concept of research because it seems that all you really need to know is how much everyone else is making from similar business ventures. However, this is a completely inaccurate assumption

As with research for all things, you must start at the beginning. In researching a particular industry to determine profitability and success of a niche market, starting at the beginning entails researching the history of the industry.

Where did it begin?

How has the industry evolved over time?

How has the industry been divided thus far, and what sorts of niches already exist? Who are the key players in the industry at this time, and where do the holes in the market seem to exist for new and innovative niches?

All of these questions can be answered through thorough research and careful searches. Look to the Internet, as well as publications and periodicals in the library for information.

What niches could you consider?

Once you’ve learned about the past of your intended industry, you can begin to make your determinations regarding the possibilities for the niche into which you can fit your business. How do you know your options? Consider examples from other industries. Think about the pet industry.

Obviously, there are various niches in both product categories and services. You can choose to zero in on a particular species – dogs, cats, birds, fish, etc. Then, (let’s say you choose cats as your interest) you can narrow down your offerings based on whether you are going to sell products geared toward cats or provide services related to cats.

Perhaps through your research you find that there is a need in your area for a cat-sitter. You found that there are hundreds of cat owners within a few blocks of your house, and many of them have problems traveling because they have no one to care for their cats while they are away.

You decide that one possible niche for your business is the cat-sitting business – offering to feed the cats, clean out litter boxes, and perform other necessary chores for the cats while owners are away – all for a nominal fee.

Of course, maybe you would rather work with dogs. Another possible niche for your pet business might be daycare for dogs. A lot of pet owners think of their dogs as more than pets and don’t want to leave them home alone all day.

Your business could therefore be allowing owners to drop off their beloved canine friends at your location, where there is human interaction throughout the day, someone to walk and feed them, and other dogs with which to socialize.

Remember as well, that when choosing a niche market, you can actually include the target audience as part of your niche. For example, most theme parks are geared towards family or children, but what if someone was to specialize a theme park for senior citizens or disabled individuals?

That would certainly be a niche within the theme park industry. In the same fashion, you could take an idea that is typically geared toward a particular audience and alter it to meet the desires of a different target market

Whatever industry you’ve set your sights on, you must consider more than one option that you think could make you happy and fit nicely into a niche market. Remember, the industry itself is most likely a very broad area, and you can’t expect your business to do well if you try to cover the entire spectrum of opportunity.

Therefore, choosing a specific niche market for your Internet business requires narrowing down the target audience, and before you can make a firm decision as to which of the action items on your list will be the best choice, you should also consider the likelihood of profitability.

Where is the cash flow now?

You are staring at your list of niche market options, and in the example above regarding pets, it may look something like this:

 Cat-sitting
 Doggie daycare
 Custom fish tank design
 Pet vitamins
 Custom rodent runs

Now, it’s time to consider in which area of the market you’ll currently find other businesses profiting most consistently. Of course, this requires more research. This time, however, you have narrowed down the information for which you intend to search, and you will be looking at a different set of statistics.

Now, instead of researching the past, you are looking at current events and trends in the market to see what area of an industry is most profitable. This is determined mainly from staying abreast of the latest in news and technology, which will be discussed later in the chapter.

Factors to consider when looking into the niche that is most likely to bring in a constant cash flow include demographics (for example, if there are a relatively small number of pet owners in your neighborhood, cat-sitting will not be very profitable), competition (if there are six other dog daycare centers within a 10-mile radius, you may not find success at this venture), and overall value (remember, people have to be willing to pay what you intend to charge for your goods or services). These considerations may help you further narrow down your list of possible niches.

What are my odds at success?

Determining your odds for success is a little harder than deciding into which niche your business fits. The reason that so many businesses fail is that owners and creators, especially of Internet businesses, don’t think about the future. They are more concerned with the here and now.

However, just like it was important to acquaint yourself with the history of your industry, it is vital to be prepared for the future of your business.

Your odds at success rest on several things, only some of which are within your control. For example, if you are selling a product, you must be prepared to invest with little return. Including working capital funds in your business plan is a must if you are going to succeed because no Internet startup business is going to take off overnight. If you plan ahead, you have a better chance at enjoying success.

Choosing a very specific industry can also help your odds by narrowing down the competition, though opting for too small a market share could make success difficult.

While market trends and customer interests are beyond your control, being versatile so that you can address changing desires will aid you in making a success of your Internet business. The trick to maintaining an evolving business niche is to keep informed of the latest trends.


If you lived in a country that was in the middle of a war, and the battle zone was moving closer and closer to your neighborhood, you would probably spend a lot of time following the evening news and reading newspapers.

You’d be concerned with the latest occurrences in the actual fighting, and you’d probably want to know about the technology being used – how far away can a specific weapon target your home or neighborhood? Are you still safe, or is it time to move underground?

Taking care of your Internet business, especially as you are just starting up, could be considered a war, and it is pertinent to your success that you are aware of and fully informed about the latest news and technology both in your overall industry AND in your particular choice niche. Much like an army, if you lack the equipment, knowledge, and skills to best your competition, you are going to lose.


No one is saying that you have to take part in covert operations to find out what your proposed competition has up its sleeve. However, taking note of competitor websites, especially updates and new offers listed, can help you to keep up with what’s new on the front lines of the war zone.

There are other sources, as well, that can help you keep track of your industry in the news and on the technological front, including impact on the niche you’ve decided on.

The Stock Market

The Stock Market is an incredible tool for tracking the overall success and interest in a particular niche market. Keep track of businesses that offer supplies for your industry, as well as those that have a niche or marketplace similar to the one in which you are interested.

Let’s return to our earlier example regarding the pet industry and say that you’ve tentatively decided to market a brand of pet vitamins on a website. To find out just how lucrative this business could be for you, you can target the value of stock in companies that produce various medications and treatments for animals.

Research veterinary pharmaceutical companies, and keep track of their share trends on the stock market to see how steady and secure the industry is before jumping right in. At the same time, try following other pet-related business trends on the market to see if there may be a better niche for your business.

Online Sales Trends

If you are intending to start a website selling a product or service, there is no better way to keep tabs on the industry than to track online sales trends. Know what the competition is selling, how they are marketing their product or service, and how much it costs.

Also, make sure you find out just how profitable that business is. There are ways to find any company’s reported earnings for a particular fiscal period (usually both quarterly and yearly), and this information can tell you exactly what you can expect should you enter the industry in a similar niche

Trends in the Industry

Look beyond the here and now. Use the knowledge you’ve gained from all your research, including your digging into the past and your knowledge of current trends, to determine where the industry is headed in the future. Cellular phones are some of the best examples of ever-progressive technology.

First, there was a way to reach anyone, anywhere, so everyone went out to buy the huge, clunky cell phones. Then, in no time, there were tiny little flip phones that everyone wanted. From there, the advancement of the industry exploded, with everything from cameras and games to wireless internet services and PDA capabilities right in your cell phone.

Don’t be in too big of a rush for the latest and greatest product to offer – know that there is always going to be an industry standard, as well as those pushing the envelope, and this will create an ever-advancing marketplace. By staying abreast of this information, you can at least be prepared and stay in the lead by updating your niche offering with the rest of the industry (and hopefully before the competition!).


Have you ever looked up a website and seen something that leaves you unfulfilled? Often, this is because of a lack of content, which causes the website to appear empty.

In fact, many sites that are not virtually blank are populated with simple pictures and useless content that is unrelated to the specific product sold or service rendered. How can your customers rest assured that you have the knowledge necessary to provide excellent services or quality products and support if you cannot show them right on your site that you contain such knowledge?

It is vital to know enough about your industry and your niche market to provide quality content on your website. It is essential to include details and important facts on your site that convey a sense of your expertise in your niche marketplace. Without such, you cannot gain loyalty or trust from your clients and will not have great success.


There are many ways in which your website can appear to be empty. Any of these can be detrimental to your success and the attraction of your site to customers. While a site that is “under construction” at least offers hope upon return, one with insufficient information will not inspire returning customers to look for future updates

Lack of Information

Lack of information is probably the top reason that websites are untrustworthy to customers. You can be an expert in your field and have the greatest idea for pursuit of a niche market in a particular industry, but if you don’t include enough information on your website to convey your knowledge to the customers, they will be leery of purchasing any goods or services you have to offer.

On the other hand, a site that delves into the topics at hand, providing not only information on the item or service for sale but also on the industry, the trends in your niche marketplace, and other information that is important to readers as well as to your success as a businessperson, is much more credible.

Lack of Graphics or Pictures

While it’s not necessary to get “picture happy”, graphics and pictures serve an important purpose on a website. The content is what’s most important, but if you have pages upon pages of text with nothing to break it up or illustrate a point, it is as much of an eyesore as an empty website.

Also, pictures and graphics serve to enhance your description of goods and services. A picture should illustrate anything you are selling, whether it is a service or simply a photograph of a product that you are selling. People by nature are visually stimulated and, though you could describe a product with words for pages, nothing speaks as loudly as a picture.

In Demand and On Demand - 3

Now that you’ve considered several areas of research and narrowed down your list, you’ve tentatively made a decision on the niche market that will be most successful for you as a whole.

However, there are a few more things involved in making the final choice of a niche in the industry. You must consider the law of supply and demand – is your product or service going to hold strong in the market based on the trend in demand? And what is the outlook for the profit margin you can expect in the future?

These are the determining factors in finalizing your choice for a niche market.


It may seem obvious to some that a particular product or service is in high demand or is a hot commodity. However, many don’t understand why this is important to their business. After all, if you have a product or service that is worthy of purchase, shouldn’t people want to pay for it anyway?

In an ideal world, your niche market would be such a novel idea that anyone noticing your idea would assume that your product or service would better their lives. In other words, you would create the demand for your business yourself. However, this is not the law of supply and demand, so you must see this function more objectively.


If you observe the various marketplaces in different industries, you’ll find plenty of evidence that the demand for a product causes prices to increase. While some may argue that the increased cost of excess production to meet demand fuels the need to raise the price, the reality is that higher demand allows companies to charge more for their goods and services, meaning they rake in a higher profit margin.

However, the ability to raise prices doesn’t continue forever, and in some instances, it may not even take place. Let’s look more closely at the law of supply and demand, and you’ll see when this drive for a particular product can cause a turnaround in this trend.

The Law of Supply and Demand

The basic rule of supply and demand is that, when something is supplied plentifully and not in as great of demand, the price consumers are willing to pay is reduced. Likewise, if something is in short supply and high demand, the price that can be charged to consumers rises.

In the winter, the cost of gloves and coats increases in the stores because they are in high demand. At the same time, the cost of shorts and bathing suits is reduced drastically.

When a company sees that its niche market is in desperate need of more products or services, this fuels their production level. Most companies will kick into high gear to produce a greater supply while the demand is high and they can gain the greatest profits.

Others will try to enter that niche market to cash in on the trend. Beware of this practice. If you should jump into a “trendy” niche, you’ll find that, as you and others begin providing the goods and services that are in demand, the supply will start to outnumber the demand, and profit margins will disappear.

You must find a balance in your niche market. While you want to enter into a business that is in high demand, you want to start something that will continue to be in demand rather than cashing in on a wave.

Offering What’s in Demand

Choosing your niche market is a lot like fashion. Many people follow current trends and purchase a closet full of clothes to fit in with the crowd. After a few months, the trend is over, and these people have a closet full of clothes they can’t wear, as well as a need to purchase new items to match the latest trend.

Others are more concerned with having clothes that will always fit in and, while purchasing a few trendy items here and there, base their wardrobe on classic items that never go out of style. That way, their basics are always available, and they don’t find themselves running out of money or supply of proper clothing.

The same consideration should be taken with your Internet business. While your niche should be something that is unique, and you should certainly find a market that is profitable for you, keep in mind that you don’t want to offer something that is going to go “out of style” in short order. You want that “classic” that is always going to be in demand so that you can continue to profit in the future.


Let’s return to our pet business example from earlier. You’ve determined that you are going to sell vitamins for animals to promote health and long lives in pets. You’ll have a line for cats and another for dogs.

How can you determine what the potential profit margin for such a niche market is to verify that you’ve made an intelligent decision? Consider two key factors: how many other sources are available for such a product, and how much is YOUR cost for operation?

How Many Sources Are Available?

Obviously, some businesses do just fine with healthy competition. If you look around your neighborhood, you’ll find several different convenience stores operating with little worry that one will shut another down. Department stores carry many of the same types of items and don’t seem to push each other out of business, either

However, in a small niche market, having three or four competitors can fuel hefty competition and make profiting difficult. Because you are offering your vitamins on your website, you will want to carefully perform Internet searches to determine how many other sources are offering the same or similar products. So that you are perfectly aware of the number of competitors, as well as what sort of pricing they are offering. After all, even if there is only one other source for dog vitamins, they could easily offer the product for a lower price and put you out of business.

What is Your Overhead?

One major mistake that you can make in predicting the profitability of your niche market is to forget about your overhead costs. No business is free to run, and even an Internet startup business can incur great costs.

If you forget this important factor or underestimate your business expenses, you’ll be counting on unrealistic profit margins, and your business plan will fall apart.

Remember that business expenses include more than just the wholesale cost of the product you sell or the supplies you use. You must also count yourself as an employee and count the time and effort you place into the business as an expense. If you are not holding a full time job and are simply running your Internet business, this is your sole source of income, and you must treat it as such.

The key to success is knowing that your operating expenses can be covered by what you charge for an item or service while still maintaining a reasonable, competitive rate.

Keyword Site Exposure - 4

Now that you’ve considered all the possible gains and losses, as well as the demand for your niche market ideas, you’ve made your final decision as to what area of the industry you plan to target.

From here, it is a matter of setting up your website to be attractive and get noticed so that you have new customers all the time, as well as returning loyal customers.

One of the most important things to do is make sure that your website shows up on all the major search engines without potential customers having to sort through dozens of pages before ever reaching yours.

The best way to assure a high position in a search return is to make your website keyword rich. This means using a lot of the terms on your site that consumers are likely to search in order to find whatever product or service you are offering.


You can build the most attractive, interactive website possible and still have no traffic directed to your site. How can you make your site visible on the major search engines without compromising your graphics and special configurations? You have to start by including keywords.

Let’s again look at the idea of selling vitamins for dogs and cats. It’s great if you mention cats and dogs all over the site, but what are people really entering into search boxes when they want to find supplements to aid their pets’ health?

These search terms are the ones you want to be sure to include frequently in your web content. How can you determine the best keywords to build a successful web presence for your niche market?


Before you ever begin to research through tools and information centers or hire an SEO (search engine optimization) provider, try it yourself. If you decided to buy vitamins for your cat, what words might you search? Here’s a short list of things that you might look for to find a provider of such products:

 Cat vitamins
 Vitamins for cats
 Supplements for cats
 Pet vitamins
 Cat health supplements
 Pet nutritional supplements

Therefore, when creating the content for your website, you should keep these phrases in mind and be sure to use each one in your content at least once or twice so that, when search engines crawl your site to identify keywords, they will hit on these and bring your business up in a search for such key phrases.

Once you’ve thought of some of these yourself, you can use them to search other sites offering the same type of product and find out what keywords they have used to bring their sites to the top of a search list.

Sources for Information

Many search engines have tools that will help you determine the most popular searches for your particular niche market. Using these sources can save you some time and energy in your own research, though many of the terms found by these tools are so common that most sites offering similar goods and services to yours will be saturated with these words.

There are even websites dedicated to assisting with keyword determination. If all else fails and you simply don’t know what keywords to use, you can consult with a content provider who can take anything you’ve written or would like to write for your website and enhance it with keyword richness.

This is referred to as search engine optimization, or SEO, meaning that the content provided is created so that a search engine can easily identify keywords and pull them up in a user search.

Self Determination

Only you can ultimately decide what keywords you want to use to make your site more visible. Especially since you are geared to occupying a particular niche within the industry, you may not want to use all the keywords that could potentially lead people to your website.

For example, with dog and cat vitamins, you may not want to waste time with people who are looking for vitamins for larger animals, like horses or cows, or those with reptiles. Therefore, you may opt not to use “pet vitamins” or “animal vitamins” as a keyword for your site.

In fact, you may avoid the use of such terms altogether. However, keep in mind that the person searching for vitamins for their farm animals may also own a cat or dog that they hadn’t previously considered giving vitamins. If they should happen across your site in their search, it may still provide a sale for you.

Keyword usage is about balance, and only you through your research and simple trial and error can find the necessary balance to make you successful in your niche market.


Once you’ve determined how you want to advertise your niche business and have found what sort of keywords are providing results for others in similar areas of the industry, it’s time to figure out how you are going to use this research information.

Of course, you have to apply the keywords to your website, but how can you be sure that you have enough keywords to return good search results without making your website appear to viewers as though it’s just one big search engine ad?

Application of Keywords

When applying keywords to your website, there are some guidelines you can follow to assure that you don’t lose quality while still maintaining a reasonable quantity of keywords.

This is vital to the success of your business in its particular niche. Without the right wording, no one will ever find you on a search engine. However, if a potential customer pulls up your site and is bombarded with keywords surrounded by a bunch of meaningless text, he or she will simply hit the “back” button and move on to the next listing.

Keep it simple. Choose five or six keywords or phrases directly related to your niche market, and filter these into quality information on your site. Count the number of words total that you are writing, and reference this number as you add in the keywords.

Try to keep the percentage of keywords per text to between 4-10%; any more than this, and your viewers will never be converted into customers. However, fewer could mean that your site isn’t coming up on a search engine

Finally, remember that you can always edit your content. If, after a month or so, you aren’t seeing the search results you desire (you should continuously check this for yourself), reevaluate what you’ve done and consider changing some keywords, adding some, or taking out those that aren’t getting results.

Should I Use an SEO Provider?

If you are insecure about your own ability to provide the correct content for your niche Internet business, there are sources you can tap to help you. You can find both companies and individuals who provide SEO content for websites. However, there are some things to keep in mind when hiring an SEO provider.

First, make sure that the company or individual is legitimate and has produced good results for others on previous assignments. Also, check out references, and verify that these services didn’t litter the pages of previous jobs with advertisements for their own work.

Lastly, be certain that you completely cover the nature of your industry, niche market, and personal Internet business so that the SEO provider is able to offer the best possible keyword content to draw the appropriate attention to your website.

Specializing Your Niche Marketing - 5


At this point, you’ve determined the niche market you are going to enter, and you’ve begun the process of building your Internet business through the initial formation of your website. However, you’ve also found that, as you take the time to start up your business, your competition seems to be increasing.

You’ve already invested a lot of time and money into your business, and you are certain there is still a lot of profit to be made in your niche. However, you are concerned that other individuals in the same pursuit will be able to capture the business on which you were counting.

One way to make this less of a possibility is to further specialize your own niche by using a brand name or type. What does this mean? Well, let’s return to our running example of dog and cat vitamins.

Instead of simply advertising that you have wonderful supplements for dogs to keep them younger and healthier longer, advertise that you sell XYZ brand of vitamins, guaranteed to be the best on the market at reducing aging in pets. Using a brand name can definitely change the view of your business.

Much like specific lines of clothing, a brand name on any product or service can increase credibility and value.


In some cases, advertising the brand name of your particular product or service
can actually bring its rankings higher on a search engine. How is this possible? Well, if the name brand on your product is well known in the industry, some individuals will most certainly be searching for the product by name.

For example, if a pet owner always feeds his dog a specific brand of food and is pleased with the way it affects his dog’s health, he may also look for dog vitamins of the same brand to see if they are available.

By advertising and using your name brand as a keyword, you allow individuals who are brand loyal to seek out that brand and, should you be the one carrying such products, pull your website up more immediately at a higher ranking on the search engine.


In the process of adding branding to your website, you are also refining your keyword content. You’ll have more consistent, flowing keyword optimization in your content, and through the branding, you have actually added a layer of keywords.

As stated previously, many people are loyal to brand names, and adding the brand name to your site several times over can help to drive more traffic to your website.

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» Developing an Internet Niche Business - 1

» Know Your Market - 2

» In Demand and On Demand - 3

» Keyword Site Exposure - 4

» Specializing Your Niche Marketing - 5

» Niche Market Growth - 6

» Dealing With Competition - 7

» Final Word - 8

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