In order to make money online you need to sell products or services – either your own, or someone elses. No matter whether you’re developing and marketing your own products (ebooks, DVDs, membership sites, whatever…) or promoting as an affiliate, you need to be marketing to the right audience.

One of the first, and most important steps in starting an online business is researching the market and developing your niche. It’s no good trying to sell golf equipment to an audience whose primary interest is computing. Sure, there will be visitors who come to your site looking for computer information who also happen to play golf, and you’ll probably make a few sales, but you would do MUCH better offering those visitors a computer related product, or marketing your golf product to an audience of golf enthusiasts.

There are many different ways to choose and develop your niche market. The first thing you should do is think about yourself. What are your hobbies and interests? What are you passionate about? This is probably the niche you’ll do best with for 2 reasons. Firstly, if you’re passionate about it then you will put your heart and sole into it. You won’t mind the early mornings and the late nights to get your business off the ground if you’re working in an area that really interests you. Secondly, if you have a true interest in a subject then you have a head start in developing a product for that niche.

Let’s take our golf example. If you are an enthusiastic golfer you probably know many of the frustrations that golfers have. You know what sort of product or information YOU would be likely to buy that might help you improve your swing, or get better at putting. That ‘inside’ information might not seem like much to you, but it will give you a great starting point for developing content.

Once you’ve decided on what subjects you’re interested in and passionate about you need to know if there is a market. It’s all very well being passionate about building theramins if there are only 10 other people in the world with the same hobby – your target audience is just too small.

Luckily, on the Internet it’s very quick and easy to see at a glance how popular a topic is. For a start, do a quick search on Google. If there are only a handful of sites about your chosen subject you may have chosen too narrow a niche, and may need to expand it. Try searching for variations of the keywords (for the golf niche you might try ‘golf’, ‘golfers’, ‘how to improve my golf swing’, ‘how to play golf’ etc.) and see what turns up. See what content is already available – is it free or commercial? Is it of high quality? Are there gaps in the information that you might be able to fill? Is it fresh and topical content which is being updated regularly, or is most of it stale and out of date?

It’s worth mentioning at this point that you want to be writing all this down. Write down the URLs of sites you find, products about your niche, ideas for possible sub-niches. Keep all the information you gather together so that you can refer back to it when you’re done.

Amazon is a great tool for researching your niche. Not only can you see which are the most popular titles for any subject, you can even read the table of contents for many books and get a break-down of exactly what is covered. Look at the ‘For Dummies’ titles and see if your niche is covered there… The ‘For Dummies’ publishers are anythig but dummies, they know what sells and if they have published a book then there is obviously a market for that niche. Can you expand on it? Can you find a profitable sub-niche – a niche within the niche?

My other favorite way of researching a niche is to use keyword tools. There are a number of great ones but Wordtracker and Google Adwords are my favorites. Both are free (WordTracker have a paid upgrade) and both will give you statistics on how popular keywords are, how much competition they have and give alternative keyword suggestions. Enter a couple of words relating to your niche into WordTracker and you can drill down through lists of related keywords to your heart’s content. Sometimes you’ll hit a dead end and realise that a niche is either too small (no market) or too crowded (too much competition), other times you’ll hit the nail on the head and decide that you have stumbled upon a perfect niche, a goldmine waiting to be dug! More often than not however, you’ll find that there are related niches and sub-niches that demand further investigation.

Don’t rush this vital stage in setting up your business. To be successful you are going to be spending a lot of time dealing with this niche which is what I said right at the beginning that it’s best to choose something that you are both interested in and passionate about. You will be blogging about it, writing articles about it, maybe producing videos about it, doing teleseminars, wraiting ebooks and so much more. You will be totally absorbed by your niche and your market if you’re going to be truely successful and the last thing you want is to be spending all that time working in an area that bores or frustrates you – if you wanted that you could get a J.O.B!