How To Know A Profitable Niche

How To Know A Profitable Niche

The following considerations will reveal if the niche you selected can be profitable:

1. Is there an existing demand for products and services in your chosen market? In rare cases, you will be offering something which has never been seen before. In most cases, however, some competition is usually a good sign (more on that later). If you see companies with similar products and services, then you know there is a ready-made market and customer base for what you will be offering.

2. Will you be focusing on products and services, or a particular customer type? Product and service niches are usually aimed at a narrow prospect pool. A customer-based niche doesn’t focus on any one particular product or service. Instead, you tailor niche market business solutions to certain audiences.

3. Can you add value to this business segment? Think about how your niche-specific skills, abilities, and passions can benefit your prospects. If you are entering the mousetrap marketplace, you will need to add inherent value and differentiate your product from the competition. Simply releasing mouse traps that are identical to your
competitors’ products is unlikely to lead to success.

4. Can you provide a solution in a way that has never been seen before? If so, you could immediately become the leader in your chosen field. A unique value proposition (UVP) identifies your product or service as the only logical choice for anyone in your niche marketplace. Originality combined with functionality means you can dominate your market and remove the possibility of choice… if you can
discover a unique way to offer value-based products and services.

 

Evaluating a Market’s Financial Potential

The above considerations can give you a rough idea if a particular market will fulfill your financial goals. Now you need to dig deeper. In this section, you will learn how to effectively gauge the earning potential of any marketplace.

It doesn’t matter if you deliver physical goods or virtual services. Whether you will be running an online or off-line business is not important either. Take the following steps and you can determine if you have a chance for financial success in your chosen market.

Let Google Do the Work

Google is far and away the most popular search engine in the world. Used properly, it can reveal some relevant information concerning the potential profitability of any business. Here is what you do:

 

 

1. Type the general name of your niche into Google’s search engine, without any quotation marks. A recent search for “Christian dating services” turned up more than 8.8 million results. It is going to be hard to break into such a large market. However, Googling “Christian dating services for baby boomers” returned just 172,000 results. Try to aim for markets that deliver less than 200,000 results.

2. Repeat the process just described. This time look above and to the right hand side of the Google search results (depending on your browser set up). You will see listings marked by a yellow “Ad” or “Ads” icon. If there are several companies advertising services in your niche marketplace, that is a great sign. This is where Google places paid advertisements. If companies are willing to pay for expensive Google pay-per-click (PPC) advertisements, there is money to be made in that market.

 

3. Type industry-specific keywords and phrases into Google’s search engine, with quotation marks surrounding them. Using the above example, “Christian dating services for baby boomers” returns just 5 results! This tells you it would be very easy to rank web pages using that specific keyword phrase. Do this for other important words and phrases that you think people might be searching for in your niche.

4. The Google Adwords Keyword Planner can be found here. It shows you how many people search for certain phrases and words every month. Select “Get search volume data and trends”. Under “Option 1: Enter keywords”, list the keywords you are researching. Click on the blue “Get search volume” button. You will see the average monthly search volume for those terms. Google also reveals whether your competition is easy, medium or hard, and they suggest pay per click bids if you want to advertise with Google. (Monthly search volume above 1,000 is a minimum recommendation per keyword or phrase.)

5. Type your niche market name followed by the words “affiliate program” into Google, without the quotation marks. If there are companies paying affiliates commissions to sell goods and services in your niche market, you know those companies are making money.

 

Now head over to Amazon and YouTube.

In 2014, Google’s Executive Chairman, Eric Schmidt, stated that, “Really, our biggest search competitor is Amazon.” You may have heard that YouTube is the second largest search engine in the world. This is true, but here is something you may not have known … Google owns YouTube. So, the largest competitive search engine as far as Google is concerned isn’t YouTube. It is Amazon.

That means you should type your business niche into Amazon and see how many products, services and books are listed. Several thousand listings reveal a potentially profitable market. Whether you are opening an online or off-line business, using Google and Amazon to explore your marketplace is a smart move.

 

The same is true for YouTube. The YouTube search engine provides video tips, strategies, product specifics and service ideas you can use in your own business. Again, you want several thousand YouTube search engine results to identify a niche where customers are spending money.

 

Other Profitability Considerations

Competition

We mentioned above how to use Google and the Google Ad Words Keyword Planner to uncover your level of competition. You can also check the first couple of pages of Google search results when you search for the name of your niche market. These are the companies which Google finds most relevant to people searching for products, services and solutions in that niche.

Spend some time looking at these websites. What do they have in common? What are they not doing very well? Pretend you are a customer in your niche market and see how you feel about those companies. This can quickly tell you how difficult or easy it will be to compete in this particular niche.

If every business listed on the first couple of pages of Google search results for your niche market is a big, recognizable brand name, you may have trouble competing in that industry.

 

Understanding Demographics

Alexa.com and Quantcast.com are online tools that reveal a wealth of demographic information concerning your niche. This is extremely important knowledge you cannot live without. You may find that a particular market has tens of thousands of web searches each month.

Unfortunately, if your customer demographics reveal a low-income level and you are offering an expensive product, your business may be doomed before you get started.
Online and off-line trade journals, magazines, groups, forums, “meet up” groups and industry-specific organizations are all excellent resources for understanding the demographics that make up your marketplace.

 

Product or Service Availability and Future

Try to find out if a similar or identical service to the one you are offering is available locally. If you have to battle a big retail chain with thousands of national outlets, you are going to have serious business problems.

The opposite is also true. If you are the only place to turn to for a unique niche offering, you will probably find sales and profitability relatively easy to come by.
Concerning future business success, you need to explore two possibilities – unique products that have yet to be made, and repeat sales of current goods or services. Disposable baby diapers do not make for a very sexy business topic. However, repeat sales are guaranteed to be needed by your current customers, as well as new parents for the near future.

That kind of “must-have” disposable product which has to be re-ordered virtually guarantees future sales. It is harder to look into the future and imagine what types of products or services you could someday be offering which are not currently available.
You can, however, get an idea about the longevity of your prospective niche. Buggy whip salesman saw the writing on the wall when motorized vehicles became commercially available to the masses.

Cost of Entry

You must understand how much capital you will need to launch your business. Most small businesses fail within 3 years of opening their brickand-mortar or virtual doors. Approximately 50% of those that survive 3 years in business never see their 5th anniversary.

 

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