One of the biggest mistakes I see with people starting online businesses is that they get excited about an idea, throw up a website or blog on the subject, and then some months into the future they sit back and wonder why they are making no sales or getting no website traffic.
This is the extreme example of the ‘build it and they will come’ mentality in action.
When you’re setting up an online business there are 4 quick things you can do which will give you a reasonable idea whether your proposed online business idea will fly or not. You should be able to complete these 4 steps in around 60 minutes.
To use as a control for this article – and also to show you exactly how to work through the steps and be able to interpret your results – we’re going to use my How To Play Bass Website.
Now I love the bass guitar – but it’s not the most lucrative market in the world. If you’re wanting to set up an online business with the goal of making a reasonable income then you don’t want to be entering into a smaller market than the ‘how to play bass guitar’ market.
So we’ll test our procedures with the How To Play Bass market and my advice to you is to make sure your results are better than the ones we are about to find before you go ahead and commit to a particular market.
Amazon is a goldmine of information for online business owners if you know what to look for.
Firstly we’re searching for products in our proposed market area. So if it were me I’d be typing variants of ‘Bass Guitar,’ ‘How To Play Bass Guitar,’ ‘Learn Bass Guitar’ etc into the search box of Amazon.
The reason we’re searching for products is that if we can find existing products in our business area – and even better, a whole bunch of existing products in our proposed business area – then we know we have found a field where there is a big enough demand for products that they are being written and/or filmed and sold.
Amazon.com is probably the number 1 marketplace in the world, so it’s a great place to start. Additionally Amazon lists products in different formats – so as well as books (in both physical and electronic formats), you might find DVDs, Videos On Demand, Audio Books or Magazines.
There’s two pieces of information we want in this initial piece of market research. We want to see if there are multiple products in our proposed market – and we want to see how well they are selling.
So let’s start with books. Enter keywords that you would use to search in your chosen market into the ‘search’ field at Amazon. Then you can reorder the search results by clicking the ‘Sort By’ tab on the right hand side of the page. If you choose ‘Bestselling’ as your sort filter, then Amazon will resort its returned results and list books in order of what is selling the most.
In the bass guitar market at the moment the Number 1 selling book is called The Music Lesson by Victor Wooten (who is a guy I love – in a good way J ). If I click on the listing for The Music Lesson and scroll down to the Product Detail, there is a ‘bestseller rank’ towards the bottom of the Product Detail Section. The Music Lesson is ranked Number 4,795 in Amazon’s system.
So ideally you’d want to find at least a couple of books that were ranked around 4,500 or so. Obviously if there are books in your proposed market that rank much higher, then that’s a great sign that people are hungry for information in that market
OK. That’s the first step. That should take you about 5 or 10 minutes at most. Make a list of what your search turns up – and make a list of the Amazon Best Seller ranking. And remember – you ideally want to find books that rank around 4,500 or higher.
Let’s move onto the second test.
2) Google Your Market and Look For Adverts
For the second phase we’re going to Google.
What you need to do is type the key phrases that people in your proposed market would type into Google. And then when the results come up you want to have a look and see if anyone is advertising on Google.
Google delivers two kinds of results – the natural, organic results. And what it often refers to as ‘sponsored links.’ That’s a fancy way of saying adverts. And usually these Adverts appear on the right hand side of the results that Google delivers.
Hopefully when you type in your key phrases a bunch of these Adverts will appear on the right hand side of your search page.
Why are we interested in these? Because people pay every time a web surfer clicks on one of those adverts – it’s called Pay Per Click. And if there are a bunch of adverts, it means that are people and/or companies in your proposed market who actually make money from selling products and/or services as a result of the traffic they get from web surfers clicking on those ads.
In some markets those ads are cheap – a few cents per click. In competitive markets those clicks are much more expensive.
Now in our control market, the how to play bass market, there are not many Google Ads. When I typed ‘How To Play Bass’ into Google there was only one sponsored link. If I type ‘Bass Guitar’ into Google there are more sponsored links – but the bulk of these are from manufacturers of guitars. If I type ‘Learn Bass Guitar’ into Google I get a few more ads – but often from the bigger music schools out there.
So for your proposed market you’re really looking to see a bunch of these short ads. Again this should take you just a few minutes. Although when you’re looking at the Ads it might be worthwhile clicking a few of them and having a quick survey of what your potential competitors are up to, and more importantly what they’re selling.
3) Google Keyword Searches
For our third indicator we are going to use another of Google’s tools. It’s called the Google AdWords keyword tool. (If you Google it, you’ll find it!).
This tool allows us to two things. Firstly it allows us to enter a phrase that people in our market might use and Google will then give us actual variations of that phrase that are being used – very handy data by the way.
But secondly we can also type in phrases and get estimated monthly search numbers for that phrase.
So Google estimates that the phrase ‘How To Play Bass’ gets around 27,000 monthly searches worldwide.
Now from personal experience now, I’d advise that this is on the low side. You should be looking for at least one key phrase with around 50,000 estimated monthly searches worldwide as a sign of a healthy market.
This tool is free by the way, and you can also fine-tune your use of it. If you were researching a purely local market, you could use it for that too. Let’s move on and look at the last test.
4) Alexa Ranking of Prominent Blogs and Forums
Alexa.com is a website that measures how popular a website is in the world. Now it’s only a rough measure, but it’s still a very useful guide. Google is Number 1. Facebook is 2. YouTube is 3. And on and on.
What you’re looking for is to find some prominent blogs and forums in your proposed market and check their Alexa ranking. The reason for this is that using Blogs and Forums is a great way to start goosing your website traffic and building relationships in your market.
Rather than visiting www.alexa.com and manually entering the address, there are a number of Plug-Ins that are available to add to the internet browser Firefox that will display the Alexa ranking of a website or blog that you visit in real time as you visit it.
So what I suggest you do is install a plug in that does that, and then go searching for the top 3 or 4 forums in your proposed market, and the top 10 websites or blogs.
In the ‘how to play bass’ market there’s only really one Forum worth speaking of. That’s called ‘talkbass.com’ and has a decent Alexa ranking of around 30,000.
For websites and blogs though it’s a sorrier tale. There’s a site called ‘studybass.com’ which has an Alexa ranking of around 200,000. And there’s my friend Thomas’s ‘Playbassnow.com’ that has an Alexa ranking of around 498,000. And then there’s me, down at around 875,000. And that’s about it.
What I’d suggest you’d be looking for is a couple of Forums with Alexa rankings around the 10,000 mark. And then if you can find 5 authority websites or blogs in your proposed market that are all below the 100,000 mark, that’s a really healthy sign. If there’s a bunch more stretching back from 100,000 to the million or so mark, then it’s a sign that your proposed market will generate some decent web traffic.
This stage is the longest – as depending on how well you know your market you might need to spend a bit of time finding out which are the well-known blogs and websites. But it still shouldn’t take too long – especially with a Toolbar add on.
You can very quickly check the viability of a potential online business idea using the 4 parameters we’ve looked at today.
However there’s a caveat – if you find a market where the ‘numbers’ are less than the numbers I’ve suggested in this article that doesn’t necessarily mean your proposed market isn’t profitable. But it does mean that to make that market work you are going to have to work much harder than someone who’s entering a market where the numbers are greater than the benchmarks I’ve suggested.
This is a topic I’ll be coming back to in the coming weeks and months.