Decide on a Business Model and Define the Perfect Niche

Originally published April 26, 2019 on the original SPEN10 blog. The full original was lost when the old site went offline — only its opening survived — so this version was rewritten in October 2026 from that opening.

In my experience, coming up with a solid idea and defining the perfect niche is always the hardest part. Here are a few tips to get you started.

First, decide on a business model

Before you pick a niche, decide how you'll make money. Your business model shapes everything else: what you build, how you market it, and how much time and money you need upfront. Common online business models include:

• Physical products — selling goods you make, buy wholesale, or have shipped directly from a supplier (dropshipping). You'll deal with inventory, shipping and returns.
• Digital products — ebooks, templates, courses and other downloads. No shipping, and you can sell the same product over and over. (Just watch out for fraud: as I learned with an early digital game-key store, digital goods attract chargeback scammers.)
• Services — doing work for clients, like web design, marketing or consulting. Fast to start, but your income is tied to your time.
• Affiliate marketing — recommending other companies' products and earning a commission on sales. No product of your own required.
• Content and audience — a blog, YouTube channel or podcast that earns from ads, sponsorships and affiliate links.
• Software and apps — a tool people pay for, often by subscription. In 2019 this needed a development team; in 2026, AI makes it realistic for one person (more on that in the guides).

There's no single right answer. Pick the model that fits your skills, your budget and how you want to spend your days.

Then, define your niche

A niche is the specific group of people you serve and the specific problem you solve for them. "Fitness" isn't a niche; "home workouts for busy parents" is.

A good niche usually sits where three things overlap:

1. What you're interested in — you'll be working on this for a long time, so it helps if you actually care about it.
2. What you know (or can learn) — your experience gives you credibility and a head start.
3. What people will pay for — passion alone doesn't pay the bills.

Narrow it down

When you're starting out, narrower is almost always better. A focused niche makes it easier to:

• Write marketing that speaks directly to your ideal customer.
• Stand out from bigger, more general competitors.
• Find your audience — the groups, forums and searches where they hang out.

You can always expand later, once you've earned a foothold.

Check that there's demand

Before you commit, make sure people actually want what you're planning:

• Look at search interest. Are people searching for solutions to this problem?
• Study the competition. Competitors aren't a bad sign — they prove there's a market. No competition at all can mean no demand.
• Join the communities. Read the questions people ask in groups, forums and comment sections. Their exact words make great marketing copy later.
• Ask. Talk to a few people in your target audience about the problem and what they've already tried.

2026 tip: AI assistants are great brainstorming partners for this stage. Ask one to list problems people in your niche commonly face, or to poke holes in your idea — then verify what it tells you with real research.

Describe your ideal customer

Finally, write a short description of your ideal customer: who they are, what they struggle with, what they've tried, and what a win looks like for them. Keep it handy — every decision from here on gets easier when you know exactly who you're talking to.

Once you have a business model and a niche, it's time to create a plan of action.

— Spencer