In this second lesson of our six part series, we start building the foundation of a successful Internet business with understanding the importance of finding the right niche market and defining the target audience.
This is the second of a six part series that will cover the step-by-step process of building a profitable Internet business on a shoestring budget. A new step in this series will be presented each week for the next six weeks, until the process is completed.
Where we left off
We are in phase 2 of building our profitable Internet based business. In lesson 1, for the sake of this learning series, we assumed the following:
- You don't have a web site
- You don't have your own products to sell
- You don't have a merchant account
- You can't afford subscription web site software
- You don't have an 'app on tap' to offer clients
- You don't have products to sell on eBay
- You don't have any products to offer affiliates
- You don't have much of a budget (less than $100 a month)
- You do have a little free time
We must understand, at this point , that we are limited in the direction we can take with this business, but surprisingly, we still have quite a few profit models available to us. The focus of this lesson is to build toward those profit models.
Start by understanding the goal
Due the restrictions we stated above, the profitable Internet business models we have available to us are:
- Generate income from banner advertising and sponsorship
- Generate income from affiliate links
- Generate income from Google AdSense program
- Generate income from informational products that can be downloaded
- Generate income from subscription sales
You will notice that the last two business models will require the ability to process credit card payments. As we mentioned earlier, for the sake of this lesson we assumed that you do not have a merchant account. Even with this restriction, you can still process credit card payments for down-loadable products and subscriptions. I will show you the tools that use to accomplish this later in the lessons.
The importance of finding the right niche market
This is absolutely the most important part of a successful business model. Get this right and you have a great chance to succeed. Get it wrong and it is an instant recipe for failure.
When it comes to searching for the right niche market, it best to understand your goal.
In almost every case, your goal is to:
- Find qualified customers, within a sub-niche topic of interest, that have been totally ignored by the mainstream media and product providers.
- You are looking for a small, highly qualified market where customers are starved for the products or information that you have to offer.
- Understand that you don't need, or want, hundreds of thousands of customers. All you need is a few thousand customers that are willing to spend a $100.00 a year with you.
- Keep in mind that your goal is not to find a market with millions of customers. A market that size is most likely already over-saturated with product offerings by many other businesses. This will create lots of instant competition.
- Your goal is to find a market that is filled with qualified customers that are starved for the products or information that you have to offer.
So what is a qualified customer and who is target audience?
Basically it is a customers who:
- Have the ability to spend money – They have credit cards or PayPal accounts
- Have the desire to spend money on the products or services that you have to offer
- Use the Internet to find the kinds of products or services that you have to offer
- Will continue to buy products or services within the niche market that you have chosen
If you find customers with the above qualifications in a niche market with little or no competition and if you then offer these customers the products or services that want, you will be successful.
Not so surprisingly, most entrepreneurs don't do this. They do the exact opposite.
Instead of finding a sub-niche with little or no competition and instead of finding qualified customers in a non-competitive market and offering these customers the products and services they really want, most would-be entrepreneurs enter a non-niche market that is way to general, ridden with the same tired, old products that are sold by everyone else, and overridden with competition.
In the early years, of the Internet, I have experienced this misfortune first hand. It took me 4 years to turn a site around that began with a niche market that was too general and started with no marketing and product strategy. Rather than blame this failure on a marketing problem, rather than in customer and product selection , I began my study of what works and the formulas to achieve success.
You can avoid this problem by finding the right niche, the right customers first, and then coming up with the right products and services.
How to find niche markets
First off, I start off by knowing my passions. This is very important. When you do become successful, you want to be doing something that you are passionate about. It just is more fun and if you are successful, you may be involved in it for quite some time. Life is too short – Do something that you enjoy doing.
That being said, to find a niche market:
- First look within your hobbies and interests
- Discover Internet forums were people congregate to share their passion for these hobbies and interests
- Visit magazine sections of bookstores to review the latest headlines
- Visit eBay and review thousands of sub-categories
- Visit http://pulse.ebay.com
- Review our Trends in the News section of DNN professor
As you conduct your research, always keep your goal in mind. You are looking for a sub-niche market that is not overly saturated with competition and free mainstream media content. You are also looking for a sub-niche that has qualified customers that are willing and able to spend an average of a $100.00 dollars per year with you on your products and services.
Remember, you do not need a large market and in most cases do not want one. All you need is a qualified market of people willing and financially able to spend money on products and services that cover their area of interest.
Successful niche market research takes time and most entrepreneurs are too impatient to do it right. But, as I have stated above, it can mean the difference between success and failure of your Internet business.
In the next lesson, I will show you the importance of selecting the right domain name, how to establish a web hosting service for your new web site, and setting up email accounts.
Once we have established this solid foundation, then we can proceed on how to create our profit streams, how to set up the major credit card processing services (at no cost to you), and begin to create our business models.
Watch for the next installment of this series at the end of each week.