So, you want to build a profitable online business, do you?

What's your plan?

You do have a plan, right?

Let me help you out: before you build anything you need to know exactly who you're building it for – the precise market you're going to serve.

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This is a detailed 4000-word guide on finding and marketing a business within a profitable niche. If you just want the highlights as well as a complete workbook to guide you through niche selection, grab my FREE Profitable Niche Workbook...

What's a Niche? And What's the Right Pronunciation?

Let's get the pronunciation out of the way, first. Technically, it's "neesh." But, most people in online business will think you're a little self-important if you pronounce it that way. Most people – in the U.S. anyway – pronounce it as "nitch."

A niche is a small, specialized section of the population that you can do business with.

Now, you might say, "Wait just a second! Why would I want to target a "small" and "specialized" section of the population?"

That's a fantastic question. Most people who lack experience in business – and online business especially – focus on the what's called, "the short tail."

I don't want to make your head spin, so let me quickly explain three other terms related to this topic that you'll want to know:

  • Short Tail
  • Medium Tail
  • Long Tail

I don't know the full history of these terms, but I'm pretty sure it all started in the mid-00s with the establishment of the concept of the "long tail" and it was initially used as an argument related to product distribution and revenue.

This isn't school, so I'm not going to waste your time teaching you shit that doesn't matter. Here's the important part: the terms have since been adapted to the context of niches and search intent (think website traffic) and I think it's far more important in these contexts. Especially for people like you.

Here's a quick overview:

  • Short Tail – The broadest category (largest market size, least specificity).
  • Medium Tail – A nicely focused category (strong market size, acceptable specificity).
  • Long Tail – A narrowly focused category (small market size, excellent specificity).

Here's an example related to online business:

  • Short Tail – I teach photography.
  • Medium Tail – I teach portrait photography.
  • Long Tail – I teach studio portrait photography.

Now think about someone who is about to start an online photography education website. Should they target people interested in photography? That's a gigantic market, right? They'll make gigantic money, right?

Wrong. Wrong. Wrong. Wrong for many reasons. Lots of wrong. Bathe in your wrongness.

I'm not saying it can't work, I'm just saying it's highly unlikely. It's *much* easier to make money on the long tail. And it's much easier to scale on the medium tail.

I don't want to give away the entire strategy up front, though. Let's talk more about tails.

What is "Niche Marketing?"

Another term you'll hear people throw around is "niche marketing." When used this way, it's typically used in the context of directing your marketing efforts toward a specific niche (obvious since your entire business will be directed at that niche).

The only real distinction here is that larger businesses may operate across a broader market while creating specific products or services that target a smaller niche.

In that case, you would use "niche marketing" to sell that product or service to its intended audience.

For the purposes of this article, though, and the ambitious men and women who are building online businesses and coming to me for help, "niche marketing" and "niche business" are interchangeable.

Finding a Niche Makes Your Marketing Life Easier

market research meme for finding your niche

You know your target market is searching on Google for what you have to offer (or will eventually have to offer), right?

And you probably know that people type in different things based on where they're at in the buying journey, yes?

So, let me give you a little quiz. Based on the two searches below, which searcher do you think will be easiest to sell to and profit from...

  • Searcher A's Search Term: "best photography tips"
  • Searcher B's Search Term: "studio portrait lighting tips"

Think about the psychology of someone searching for "photography tips." What is their motivation?

There's no way to know, right? I mean, they could be brand new to photography and looking for generic tips to help make their pictures not suck. Or, they could be a student doing a book report on photography. Or, they could be a parent looking up tips to help their child who just expressed interest in photography.

There are tons of possibilities.

If you create a generic photography website, how are you going to market that? What kind of content are you going to fill it with? If you fill it with generic photography tips and someone who is interested in studio portrait photography arrives, how can you expect them to get excited enough about what you have to offer that they stick around?

Is someone interested in studio portrait photography going to think, "yes, this is my tribe" when they see a bunch of content and tutorials related to nature photography, landscape photography, and so on?

You can't market to everyone! And if you try, you'll die.

Finding a Niche Makes Your Sales Life Easier

Now consider products you can sell. Are there photography products that fit the needs of every single type of photographer out there?

Even if you're going to promote cameras, which is the most generic photography item that every photographer needs, you can't promote the same camera to all photographers. A beginner all-purpose photographer needs a camera that's way different than the camera a studio portrait photographer needs.

So, what's the takeaway? It's hard to sell things to large, generic groups of people whose interests and needs are all over the map.

Now, let's look what happens when you get specific with your targeting, meaning that all the content and offerings on your site are targeted at a very specific niche.

In order to demonstrate this, we'll go back to that theoretical Google searcher. Except this time they're searching for a product recommendation.

  • Searcher A's Search Term: "best camera"
  • Searcher B's Search Term: "best camera for portrait photography"

Now imagine two blogs, each of which has published a camera review article:

  • Blog A: Best Cameras of 2018.
  • Blog B: Best Cameras for Portrait Photography of 2018

Some follow-up questions for you:

  • Which one would our tribe of portrait photographers be more likely to click on?
  • Which one would our tribe of portrait photographers be much more likely to buy from?
  • If we wrote the same article as Blog A, what kind of traffic would we get?

We could run the same experiment using specific products...

  • Searcher A's Search Term: "DSLR camera reviews"
  • Searcher B's Search Term: "Canon 5D Mark IV review"

This is a perfect time to teach you about the concept of "commercial intent," also referred to as "buyer intent."

When you're marketing and selling things online (and building an audience), you need to know the intent of people who are performing searches or engaging with certain communities.

Their search behavior reveals their intent if you know what you're looking for. In the example above, Searcher A is in "comparison" and "research" mode (that's their intent). Searcher B is more likely to be in "about to pull the trigger" mode – crossing their Ts and dotting their Is before they buy (a much different intent).

Searcher A might not even know what's available. Searcher B knows the exact name of a model of camera and wants to know more about it.

Going back to tails, "DSLR camera reviews" is a medium tail keyword. Canon 5D Mark IV review is a long tail keyword. Can you guess what the short tail keyword would be?

Yep! "Camera reviews."

If you sell (or promote for a commission) Canon DSLRs, good luck selling lots of them with a generic "camera reviews" article full of point and shoot cameras and the like.

Finding a Niche Makes Positioning and Competing Easier

In case you didn't know, I'll just come out and say it: the internet is a big place.

Look at this...

how to find your niche by examining market size

The "photography tips" market has 8+ million results. But, when you "niche down" (get more specific), you can eliminate a lot of that competitive noise...

how to find your niche by finding a more focused market

By getting more specific with the niche, you've effectively reduced the competition by almost 400%.

This might feel counter-intuitive because you don't want to limit your market size but what are the chances that you can gain any traction in a category with 8 million search results? Wouldn't you much rather compete in a category with only 2 million results?

Not only is there less competition, it's easier to position yourself. By choosing a more specific niche, you're also choosing a better position automatically. If you're an "all purpose" photographer, the demand for you is not going to be as high as it will be for a specialist photographer.

Imagine that you're getting married. Do you want to hire a photographer who has shot 1000 weddings and specializes in wedding photography or do you want to hire a photographer who shoots wildlife, babies, cars, and an occasional wedding?

When you try to do everything for everyone, nobody really cares about you. When you do a specific thing for specific people, those people care greatly about you.

Finding a Niche Makes You an Authority Much Faster

Aside from the other benefits I've already covered, it's easier to establish authority on the long tail.

It's easier to be an expert on boudoir photography than it is to be an expert on all photography. It doesn't matter how much experience you have with photography, the skills required to take artistic pictures of half naked women are much different than the skills needed to take good travel photos, for example.

There are gazillions of "photography experts," but there are a relatively small amount of people regarded as experts in the boudoir photography niche. You could probably become an authority in that specific niche in a few short years, versus practically never as a generalist.

This is also true in Google's eyes. How fast would you start to rank for content related to boudoir photography if all the content you were producing was related to said topic? Now consider creating content for photography in general – you're going to all over the place. Google isn't going to know what to make of your site.

The same is true for other sites who might link to you. Whenever another photography site online mentions boudoir photography, they're going to link to a specialist on the topic, not a generalist. By being that specialist, you can earn lots of links from other sites which will skyrocket your websites' authority.

If you're a generalist, you're a dime a dozen. Your visitors have no real reason to follow you and other sites have no real reason to link to you. They can go to a gazillion different places and get the same thing.

Time to Upgrade: How to Find a Profitable *Medium Tail* Niche

Most people talk about the short tail and the long tail as if they're the only two options.

You wouldn't want to build a business on a super long tail topic idea because the length of the tail is negatively correlated with market size.

In other words, as the tail gets longer the market size declines. If you get too specific, you aren't left with enough people to achieve viability.

Of course, if you get too generic you're going to lose before you ever get started. So what's the solution?

I would recommend starting on the long tail, but knowing exactly what medium tail niche you want to end up in.

The medium tail is where your business should eventually live. It's specific enough to compete and build and maintain authority, but inclusive enough to scale.

So, using our photography example, you could start by establishing authority in a long tail niche like, "studio portrait photography" and then eventually branch out into "portrait photography" which is much more medium tail.

Of course, there are no strict definitions of what constitutes long tail versus medium tail. It's really based on the market size.

You could make the case that "studio portrait photography" is actually a medium tail niche given that "children's studio portrait photography" is longer tail and still has a strong market size.

I don't think I could argue against that, so you're really going to have to feel this out. Another piece of advice that you're probably going to want to take into account is the advice given by many successful entrepreneurs – "niche until it hurts."

Lots of very smart business people support the advice of getting ultra specific at first because you can always branch out from where you start without alienating your audience. It doesn't really work the other way around, though. If you start out as a generalist and then start trying to get specific, you're going to lose a big portion of whatever audience you've built.

So, bottom line is this...

Start out by building on the long tail, but have a clear picture of what medium tail niche you ultimately want to transition to.

Find a Niche Where Passion and Proficiency Intersect.

You're not going to build an online business and make six figures overnight. It's a marathon, not a sprint.

This means you need to find a niche that's of interest to you. A niche that you're truly passionate about.

You're going to be eating, sleeping, and drinking this niche. If your passion isn't there, this dream you have of building a profitable online business is going to quickly start to feel like an awful, awful job.

But this passion must intersect with proficiency as well. It has to incorporate skills or knowledge you have that others don't.

Don't get me wrong, you can be successful in a niche you know nothing about. It can be very profitable to play the "follow me as I learn XYZ" game. In my experience, this will take a lot longer, though. For that reason, try to find a niche where you already have some experience or expertise.

If you're starting from scratch, brainstorm various things you enjoy and know a lot about. Look for that intersection of passion and proficiency.

Oh, and keep in mind that the brainstorming might be difficult at first, especially if you fall into the "curse of knowledge" trap. One of the curses of knowledge is the inability to realize that lots of people struggle with something that comes easily to you.

Let's say your passion and proficiency intersect on the medium tail topic of off-camera flash photography. If you've been doing off-camera flash photography for a very long time and you're always surrounded by other experts in off-camera flash photography, it can be easy to forget that there are millions of frustrated people trying to learn stuff related to off-camera flash photography that's brainless and obvious to you.

At first glance, you might think, "Wait, there are people who are still struggling with this?" And the answer is, "Yes! Millions of them!" Just because it's easy for you doesn't mean it's easy for everyone. This is why your research needs to go well beyond what's swirling around in your head.

How to Find Your Niche: Brainstorm Profitability, Not Just Market Size

While you're working on coming up with niche ideas, you should be brainstorming the profitability of the niche.

Let me be clear: there is no way to prove or disprove profitability inside your own head. What you know and understand about a niche is far too small relative to the scope of the niche itself.

There have been passionate experts who swore their area of expertise and passion had zero profit potential only for some less experienced outsider to come storming in and build a killer business in that same niche.

There have been an equal number of passionate experts who swore their niche had tons of profit potential only to fail miserably at building a business. Perhaps that's because they sucked at building a business, but the reality is that there *are* niches where profitability is extremely limited.

If you're going to go through all this effort, you want to make sure that when you brainstorm profitability, lots of ideas and income channels come to mind. If you're brainstorming profitability and struggling to get clear on how you'd make money, it's a red flag. If you're brainstorming profitability and realize that your "market" is broke college kids, or something similar, then that's a red flag.

It doesn't mean it's a bad idea, it's just...a red flag. I'll help you green-light or red-light the idea in the next few steps, but if you have another idea that seems to have much greater profitability you may want to go with that other idea instead.

How to *Confirm* That Your Niche is a Strong, Profitable Choice

The theories in your head are great, but you need to set them aside for now. We're not building a business on theory. It's time to find your target market, connect with them, and get them to tell you exactly how to profit from them.

Here's where most people make the first big mistake. They find a niche they feel good about and immediately go purchase a domain name and start to put up a website.

You should only do that if you want to waste a lot of time, effort, and money.

You don't, right? Then resist the urge to "get to the fun stuff" and do your due diligence.

Here's how...

Find 10 people who fit your target market. For now, that's people who are interested in the niche you're considering.

It's best if you can talk to them in person. The second best option is over the phone. The last-ditch method is email or chat.

Ask these people a lot of questions. Spend a solid 30-60 minutes picking their brain.

Ask things like:

  • Why are you interested in [this niche]?
  • How did you come to be interested in this? What attracted you?
  • How often do you think about this?
  • Has there been anything that's made you want to stop pursuing this interest?
  • How many people do you know who share this same interest?
  • Where do you find these other people?
  • How much money do you spend on this every week/month/year?
  • How much money do you think those other people spend on this?
  • How difficult was it to get involved in this?
  • What do you wish you did differently when you first got involved in this?

You see where I'm going with this?

Your Primary Mission is to Get a Green or Red Light as Quickly as Possible.

You might find a niche where your passion and proficiency intersect, only to find out that it's not very profitable.

If someone says, "I don't know anyone else who is interested in this," that might be a problem (it's not always a problem, but it's a red flag).

If someone says, "I don't spend any money on this," that's another red flag.

If someone definitively says, "Nobody I know who is interested in this spends any money on it," that's a HUGE red flag.

Don't green-light an idea just because it feels good to you. Green-light the idea because your research compels you to green-light it. And if your research has too many red flags, dump it.

Your Second Mission is to Learn Everything There is to Know About Your Prospects.

If you do green-light this, your next mission is to know everything there is to know about the behavior of prospects in your niche.

The insight you get from these conversations is going to form the foundation of your marketing, authority, product design, and sales efforts.

If someone says, "Yes, I know many other people who are interested in this and here is where they hang out," they just gave you a marketing channel.

If someone says, "Yes, I spend $100 a month on this," they just gave you a potential price point for a product.

If someone says, "Here's what I wish I did differently when I was just starting out," they just gave you a content and product idea.

You can't build what you think people need. If you want to succeed quickly, you should build what they ask for.

Being a pioneer is hard. Being a purveyor is much easier.

Your Third Mission is to Find a Unique Angle of Attack.

Please understand something before you go any further: Entering a niche and doing the same thing everyone else is doing is not a smart path to profit.

If there's nothing unique in what you do, you're going to commoditize yourself and end up racing to the bottom.

One of the reasons you're doing market research and talking to people in your niche is so you can start to develop that unique angle. There's always an opportunity to be different. Your job is to find it.

Remember, specialization instantly makes you more unique and increases your profit potential. When all is said and done, people pay more for specialists than generalists. If you have a heart problem you want a heart surgeon, not a general surgeon. And you'll pay more for that expertise.

What should your unique angle be? I can't tell you that. The answer to that question will be born from your market research, intuition, passion, existing knowledge, and experience.

You also have to keep in mind that your unique angle might change.

Sometimes you'll get two years into a project with what you think is a unique angle, only to uncover the real unique angle that you need to pivot to. That's fine. Just know going into this that you need to find some sort of unique angle that clearly differentiates you from the alternatives.

How to Find Your Niche: Recap & Wrap-Up

Finding your niche and getting clear on your market and your focus is one of the most important steps in building a successful online business. Remember...

  • You need to understand and consider the concepts of short tail, medium tail, and long tail when it comes to finding your niche.
  • Finding a profitable long tail niche makes your marketing life easier.
  • Finding a profitable long tail niche makes your sales life easier.
  • Finding a profitable long tail niche makes positioning yourself and competing easier.
  • It's easier to become an authority in a long tail niche.
  • While long tail niches are great, your end game should probably be in a medium tail niche.
  • It's important to choose a niche where passion and proficiency intersect with profitability.
  • You need to *confirm* that your niche is profitable before you pursue it.
  • It's important to do market research and understand your target market before you build anything.

That's a wrap on how to find your niche and build a successful breakout business. Good luck!

Get My Free Workbook & Highlights Guide for Finding a Profitable Niche

This is a detailed 4000-word guide on finding and marketing a business within a profitable niche. If you just want the highlights as well as a complete workbook to guide you through niche selection, grab my FREE Profitable Niche Workbook...