How to Start a Niche Online Business: Product Development 101

The product development process is, by far, the most difficult element of starting an online business but the focus on niche relieves many of the headaches (and failures) caused by trying to be a “jack-of-all-trades” when it comes to online business.

In the previous segments of the ‘start a niche online business’ series, you’ve learned how to develop an online business idea and setup an online platform for business. In this segment, you’ll learn how to develop a product for your niche business. Let’s get on with it, shall we?

The Niche Product Development Mindset

The process of developing a product is, in many ways, the same type of approach you’ve taken toward building an online business and setting up a website. Think of everything you’re doing, with online business, as a three step process: Idea, Platform, and Launch.

For niche products, it’s a little bit different. Rather than trying to fill a mass appeal for a product such as the next revolutionary car, you’re trying to solve a very specific problem within a larger industry.

For example, here are a few examples of niche products:

• An ebook that teaches people how to play the Ocarina
• An ecommerce retailer that focuses on retro gaming for the ‘Nintendo Generation’
• A company that helps others builds tiny, efficient houses

As you can see, these aren’t necessary your casual ‘cup of tea’ when it comes to market penetration; they’re certainly not an iPod that’s for sure – they’re meant to focus on a very specific group of people.

I’ve mentioned this before and I’ll do it again: a niche doesn’t have to be massive to be wildly profitable.

Years ago, it would have been difficult to find buyers for a book on learning the Ocarina but we live in a wired world where we have unlimited access to find people that are interested in the same things we love and practice. A small market penetration of just 100 customers purchasing a product or service for $200 is $20,000 a year – one hundred customers … think about that.

The Proverbial ‘Fork in the Business Road’

Are you in the mindset for developing a product yet? Convinced that a product that’s specifically aimed at a small group of people can be wildly successful? Good. Now comes the hard part: figuring out which way you want to go in terms of the product development process.

Online business gives you incredible flexibility but you’re still at the whim of the product you offer; if it’s shit than all the other work is really null-in-void, right? Right.

There are three options you can take, at this point, for your product:

• Information Products
• Physical Products
• Personal Services

Information products such as ebooks, video courses and audio guides are mid-level in terms of difficulty because it requires you to take action to apply your knowledge into a channel to reach people (hence text, audio or video). However, information products are extremely profitable because once you’ve created them – you can sell them indefinitely without the hassle of logistics or time restrictions.

Physical products are the most difficult products to begin with but can ultimately become the most profitable depending on the product being offered. Physical products, however, are easier to sell in comparison to services and information products because everyone can wrap their heads around the idea of what a physical product is and how it can fit into their lives – it’s physical, after all.

Personal services are the easiest to get started with because they only require you to hone your craft and offer it to the world. Personal services are restricted by time but can be very lucrative because you can increase your prices, over time, with each new client you gain. Personal services are, perhaps, the best option to get started but certainly not your only option.

All in all, it’s completely dependent on your original business ideas, goals, platform and focus. The good news is that each of these product offerings can be implemented in your business, at some time. However, trying to develop each of these products all at once will result in your failure because you’ll be too stretched out on time and resources. So, choose one and move onto the appropriate sections below which will take you through the process of taking action on each.

The New Product Development Process

Developing a new product is less about the work required to get things launched but to get things started. I couldn’t tell you how many projects I’ve started and dropped because I couldn’t get over the initial curve of product development. The most difficult hurdle you will face won’t be the ideas or promoting a product (you already know how to); it’s going to be finding the time and energy to spend long hours putting things together.

With that being said, I can certainly give you the process of product creation in each of these business models but it’s up to you on getting the work done. Here’s how things break down …

Developing an Information Product Business Model

The information product model, as I’ve said, is one of the most lucrative methods to make money through your online business but is one of the more difficult but cause of one simple fact: most people aren’t’ going to take the time to create an information product.

In reality, information products are extremely easy to create; it really only comes down to dedicating time to distilling your information into a package able product and getting it out to your hungry audience. Hell, if you think about it, this online business series could be a full product if I took the time to slap everything together because it has that much information.

So, using our mindset of Idea, Platform, Launch, here is a basic walk-through of developing infoproducts:

• Step 1: Generate an idea for your information product based on feedback from your community. Listen to the problems that people have an match it to the information you are able to offer. Answer the question: does this problem solve the problem and will it give the solution?

• Step 2: Plan and research your topic to the nth degree. Spend days on end going through the information you’ll need to include in your information product. Plan out how you will be sharing the information; if it’s a book than you’ll need to think of the chapter, videos will need tools to record your actions (Camtasia is good) or audio needs a script and microphone to get the job done.

• Step 3: Remove all distractions and being working on your product. Spend a month getting everything out of your head down onto the medium you’ll be creating your product around. Leave the editing for later; at this point it’s important to get everything out so you don’t miss anything and need to go back later.

• Step 4: Edit or hire a freelance editor to go through and touch up your information. Ebooks are huge and you’ve probably skipped over a few things; an editor can spot these mistakes. Find a freelance videographer to touch up your video editing and make the videos look nice. Let someone that’s great at audio work on your audio course by mastering the sound. In all, make it professional because it’s going to be your business product.

• Step 5: Create attractive graphics for your information product. Fiverr is a good start for graphics but if you want to really go professional than I recommend checking out 99Designs where you can get a ton of people to pitch graphics at you and give you the choice.

• Step 6: Prepare your product for launch by amassing a team that will help promote the product. Get your product listed on Clickbank or Ejunkie so you can recruit affiliates. Give people affiliate content such as banners and emails to aid them with the promotion. Create a few emails, blog posts and articles that will build a bit of hype around your product launch.

• Step 7: Get your product out the door. Don’t worry about perfection because you can always update and improve it later. At this time, get your offering to people else you’re going to miss out on a prime opportunity and someone else will swoop in to take your spot.

For example, with my business, PLRArticlesNow.com, I spent two weeks putting together the information products, PLR articles, which I would be offering through the business. At the time, I also put together a course on how to best use the private label rights articles I offered with added a bonus to people that purchase from me because I’m not only selling them something they want but I’m educating them on how to best use it.

If you need a guide than I suggest checking out the Ebook Secrets course put together by Jim Edwards, it covers just about every aspect of the ebook creation process which is where I recommend you starting off with in this business model.

The process of developing an information product completely relies on the type of online business you are launching. Let’s assume you’re creating a web design blog: you could create an information product teaching people how to get create their own websites or blogs within an ebook or through premium videos for a low price – you can go even further niche by doing different segments of web design such as only covering Joomla or maybe Magento, get it?

So that about wraps up the information product creation process. At this time, you’d be moving onto the next segment of this series on getting your business launched. However, if information products aren’t your thing than take a look at the following sections …

Developing a Physical Product Business Model

I’m a big fan of physical products because you aren’t trying to convince someone to buy information or subscribe to a service which they may not know if they’re getting their money’s worth. Physical products are things that everyone can wrap their heads around because society has been buying physical goods for thousands of years.

Since you’re going to be selling physical products, the “game” is a little different. There are a lot more rules that you have to go through in order to get setup correctly so you can begin selling physical products online and offline; however, if you go this path you have a great opportunity to make a lot of money through your online business.

I’m no expert when it comes to the legal matter which is why I recommend LegalZoom to handle of that end of the business such as setting up your LLC and getting the papers sorted for business. Also, check in with your local Chamber of Commerce to learn about what you need to do in order to collect taxes and offer products to the public.

I have worked at an ecommerce company for a few years so I can certainly give you a few tips on getting started with physical products:

• Step 1: Become a reseller or outright purchase products that you’ll be selling on your website through websites like Alibaba or World Wide Brands. Always drive for lower deals by getting quotes from multiple vendors; in fact, ethically play “the game” and tell people you’ve received a lower deal to get quoted a lower price even if you haven’t, in fact, been quoted the price – negotiation is part of the fun. Note: Always make sure that the product you’re buying are legitimate because there are a lot of companies that sell knock-offs and could lead to legal actions against your business down the road.

• Step 2: Get your products on your eCommerce platform which you’ve built in the previous segment of the series; in case you forgot, you can use platforms like Magento, osCommerce, Yahoo Stores, EBay, Amazon or even setup a store using Paypal for your online business; all are good.

• Step 3: Create amazing product shots for what you’re selling and hire a copywriter to create some very engaging copy for your product descriptions. SEO the hell out of your product pages and work heavily on the navigation of your website – it’s way different than a blog because you want to get people to your products as easily as possible without the distractions.

• Step 4: Advertise your products online. SEO works well in the long run but it’s good to start advertising your business on the web so you can immediately kick up the product sales.

• Step 5: Get active on the social web by joining Twitter, Facebook and LinkedIn to find people that will be your customers or business supporters. Like always, bring quality information to the people and get them on board your brand before making sales – easy enough.

Since the topic of this series is about niche business; I recommend you follow through even during physical products. Because you don’t have to worry about a lot of space when selling products online (especially if you’re drop shipping), you can often get caught up with trying to sell thousands of products. Instead of being that ‘jack-of-all-trades’, pick a few items that are going to be awesome as hell. If you can afford it, patent and create your own product but that’s something way out of my own league and something I’d recommend approaching a lawyer about.

So that pretty much wraps up the physical product portion of building a niche business. There’s a lot of information out there on physical product businesses; one of my favorite is MyWifeQuitHerJob.com because there are a ton of blog posts about sourcing and selling physical products online.

Developing a Personal Service Business Model

Finally, we’re looking at the personal service business model where you will be selling … personal services to people, duh. The great thing about this business model is that you can get started with it the moment you slap together your website; besides a little promotion, you’ve got everything you need to get started in this online niche business.

Here are a few ideas for services you can begin to offer:

• Teach people a language using Skype
• Coach people on how to do something personal in their life
• Tutor people in skills they are seeking such as Math, English and more
• Setup websites for local businesses
• Do search engine optimization, social media marketing and other online marketing stuff
• Do counseling for couples or individuals

The list goes on and on and on; it’s really whatever you’re good at. For example, I offer freelance writing because I do it all the time – it’s a serviced based job. Other people put together websites. Some people do life coaching for couples under stress. Hell, you could be some kind of tutor for people setting up model trains or something – it really doesn’t matter because you can easily find people out there that need your assistance and are willing to pay for your time.

Here are three sources I recommend for getting started with freelancing and selling services:

1. How to Be a Rockstar Freelaner (ebook)
2. FreelanceFolder
3. FreelanceSwitch

Freelancing (and selling services) really gives you an incredible opportunity to make money with your online business because it has unlimited potential for growth depending on what services you offer. In time, when you get really good, you can raise your rates and expand your earnings; you’re also not tied down a physical location since you can sell all of your services across the web by using tools like Skype, Quickbooks and Google Docs.

If you do just one business model, put together a freelance portfolio website and get it listed in the local and global search engines. Don’t worry about getting a lot of traffic because it matters more about conversions; set your rates or how much you need to be making and get active with inbound marketing.

The Hybrid Product Business Model

One thing that I left out in the main section of this segment of the series is the idea of creating a hybrid model of business but I do feel it’s necessary to cover since, in time, you will likely lead to this model.

The hybrid model is simply a collection of all of those that have been mentioned in the post under one roof. For example, you could create a business platform that offers services, sells an information product AND offer physical products on the side. Additionally, with the combination of affiliate marketing your limitation of how to develop a business is truly unlimited.

The addition of affiliate marketing to sell others products gives you access to a wealth of opportunities. You could use Amazon Associates to promote physical products while simultaneously use Clickbank or Ejunkie to offer up information products even though you only have a service based business model.

For affiliate marketing, my only recommendation would be Steve Scott’s Affiliate Marketing without the BS since its jam packed with every bit of information on building an affiliate based business. I’ve gone through the course and its spot on. Highly recommended.

This topic of hybrid business model is too broad for a niche business, at this time in the process, but needed to be mentioned. In time, you will find the opportunities and verticals for your business that will be logical to enter these new markets but it only comes after you’ve done the work to get something setup for the main foundation of business. Focus on one business model at this time rather than being that “jack-of-all-trades” that you don’t want when starting.

Week 3: Action Items

This niche business series is starting to get really complex but we’ve hit our zenith in terms of difficulty because after this point, you’re going to be promoting your online business. Once you have your ideas together, platform setup and product ready to rock – you get to the easy part of getting the word out.

However, there are a few action items I want you to do this week:

• Acton Item #1: Determine which business model you’ll be going after. If you’re doing an information product than get your ideas onto paper and begin working on the product today, not a week from now. If you’re going to be selling physical products than begin going through the listings on the vendor websites like Alibaba and World Wide Brands; try to get a few deals and get a sample of the item before you make a big purchase. If you’re going to be selling services than start writing down what you’re going to offer and create a great piece of copy that will sell your services – think niche.

• Action Item #2: Size up the competition and learn from what others are doing in your niche. Be a little sneaky and give your competitors a call posed as a customer to figure out their sales process. Take a look through your competitor’s backlinks to see what strategy you’ll need to do to outrank them in search engines. Get as much competitive intelligence as you can at this time so you can make a plan for niche domination.

• Action Item #3: If possible, have a ‘soft launch’ for your business to see how a small segment of your industry reacts to what you’re offering. Use the first group of customers as part of your testimonials and feedback to improve the products and services before they hit the mainstream.

Go back through the previous two segments and make sure that everything is ready to go because the next phase of building your niche online business is promoting the hell out of it. Make sure your idea is solid, platform setup and ready to rock and that your product is something that people want.

Product Development: In Conclusion

Whew, this shit is starting to get out of control if you ask me. The series is pushing well over 10,000 words and we still have more to go but I hope you can appreciate the amount of detail I’m trying to put into the post.

The product development process is where most people will fail because it requires work … duh. Believe me, you can mope and slog ass or months before you finally pick up that finger to do the work that needs to be done so shut off the distractions, bite the bullet and get things going. Don’t be afraid to ask for assistance when developing your products or services; there’s a lot of great information out there and people that will coach you on the product development cycle.

Okay, you have your action items so it’s time to get to work. In the next part of the series, you’ll be learning how to promote your business online and generate leads for the business. For now, however, you need to get the previous sections done otherwise you’re just wasting your time.

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