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As you do your research, try to assess demand (ie. how many people are looking for that type of product) in relation to supply (ie. how many businesses provide product and how well they do at meeting demand). Ideally, a great niche market would be one for which there is high demand but not (yet) enough supply.
There is always possibility that there's no real demand for product, which is why no one has bothered to create it. Most people would prefer to find this out before they invested a great deal of time, effort and money into creating a product no one wants!
Even if you don't create your own product but instead decide to promote affiliate programs, a great deal of work still goes into promotion of your affiliate link.
One way to research a new idea is to run key phrases that represent your business through NicheFinder software ( http://onlinebusinessbasics.com/findniche.html ). This software will automatically produce several informative and eye-opening reports and charts to help you assess potential of your idea.
Some people start businesses related to their current line of work because they already have many of skills and experience they need. Others build their business around specific interests or hobbies. Regardless of what you do, be sure it's something you *want* to do -- don't choose a niche solely because "other people are doing it" or because you think "you can make lots of money". Do what you love, and *enjoy* journey to building a profitable business.
ABOUT THE AUTHOR: Angela is the editor of Online Business Basics, a practical guide to building a business on a shoestring budget. It features loads of instantly usable tips and tools that were specifically chosen for beginners. For details, visit http://onlinebusinessbasics.com/article.html or download the free trial version of the Online Business Basics manual: http://onlinebusinessbasics.com/freebook.html