Chapter 1:
How to Find Your Niche Business Idea

But here’s the hard truth:

Very few businesses enjoy that level of success.

In fact, 50% of small businesses fail within 5 years of launching.

Yes, businesses are falling apart around you all the time. You just don’t hear about it, because their failure isn’t worthy of a newspaper headline.

Don’t run away yet. There’s good news too:

A huge factor in your own success comes down to understanding those reasons before it’s too late.

Yes, you can avoid those mistakes if you plan for it.

If we’re going to make an entrepreneur out of you, we’ve got to make sure you’re starting on the right foot. That means starting with the right idea.

So welcome to Chapter 1 of the Beginners Guide to Starting An Online Business, where, we’re getting stuck into Business 101: the stuff you cannot afford to get wrong.

By the end of this chapter, you’ll be able to validate a business idea worth following through on, and you’ll know the litmus test of success. You’ll learn the hard facts everyone needs to know and will be able to separate the winning business ideas from the losers.

It’ll be like reading Matrix Code. Once you know how to see it, you won’t be able to un-see it. Everywhere around you, you’ll start to see why businesses are succeeding and why others are falling apart.

Starting a business means you must have the right foundations. Non-negotiable. So let’s get you off on the right foot.

It’ll be a bumpy ride, but it’s exciting and ultimately… it’ll be worth it.

Problems VS Passions

If you’ve ever scratched your head and thought to yourself, “What do I want to do for a business?”, you’ve already screwed up.

Sorry.

Yes, you’re passionate about something. You really care about it, maybe it's even a hobby of some sort, and you’d like to know if it’s possible to turn it into a business.

You might be able to, but if you want that business to actually succeed without being a waste of time and effort, then you’ve already started on the wrong foot.

Let us explain.

When Passion Fails You

Imagine there’s a woman named… Sally. She bakes. And her cakes are really good. 

She loves baking! So she thinks “I wonder if I could start a business selling cakes?”. She absolutely could…

But let’s get a hold on the reality of the situation. She needs a brick-and-mortar store, supplies, marketing, a shop fit-out and more... all to sell cakes for $20 each.

People only want cakes for special occasions, so the average customer is only coming in maybe twice per year. And even then, those same customers are walking into the supermarket every week where they’ve noticed the supermarket has started selling cakes for half the price.

Is it possible that Sally’s business will still thrive?

Sure! You’ve probably heard of a success story similar to this… 

...but at what cost?

For every success, there are many other Sally’s that started their cake store too close to the supermarket, or that didn’t know how to market their products, or that just couldn’t make cakes fast enough, and failed.

The bottom line is this:

Don’t be fooled into thinking that following your gut instinct is going to land you in a pot of gold. It didn’t for many others, so why should it for you?

But... Passion Is Helpful for Finding Your Niche

Maybe this seems harsh so far, so let’s loosen the reigns. 

Your passion is valuable. Don’t ever let it go. When it comes to pushing through the often challenging steps of starting a business, passion is a fantastic motivator and source of energy.

But merely choosing your business because of passion is a bad idea.

This doesn’t mean you need to start out as a plumber when you have a degree in psychology, or start a dog-walking business when you are deathly allergic.

What you’re looking for is the intersection of a smart business idea and your passion.

Within all the possible business types out there, there's something you’ll be passionate about, something you’ll enjoy and will be proud of.

So for the time being, put your passion on hold. We’re going to start with a different set of questions.

The Answer: Start With A Problem

Clayton Christensen is a smart man. He’s a Professor of Business Administration at Harvard Business School.

A Professor… at Harvard.

Yeah, he’s that kind of smart.

Christensen is best known for his theory of disruptive innovation. Doesn’t that sound fancy?

He saw that innovation - a business’ ability to create something new & better - was at the heart of success. If anyone does the same as what’s been done before, then you don’t have an edge on the market.

Alongside this developing theory, he came up with something called the ‘Jobs-To-Be-Done’ framework. This is foundational to starting a business.

Here’s how it works:

Jobs To Be Done

Any business, no matter how big or small, will benefit from looking at human behavior as a never ending series of jobs that people are ‘hiring’ products to do.

Let’s use a car as an example.

Usually we think of buying a car simply to own it. But instead, let’s consider that someone ‘hires’ their car to complete a job they need to get done.

It seems odd to think that buying a car is actually hiring it to do a job. But in way, it is.

A mother of 5 ‘hires’ an SUV for the job of transporting her children to and from school safely. But a 19-year-old ‘hires’ an overpowered muscle car on a payment plan they can’t afford for the job of attracting attention from the right people.

And once the job is done, they might retire the product. After the kids grow up and move out of home, the mother might not want that SUV anymore - it’s just too big. The 19-year-old might sell his sports car when he turns 30 and gets married since he doesn’t need that attention anymore and it doesn’t suit his lifestyle.

It’s odd, but shifting your view on the product-to-customer relationship will completely change the way you perceive business.

Start with yourself.

Any time you’ve ever bought anything, you hired it to complete a job that you needed done.

You hired your smartphone to keep you connected on the go. You hired your shoes to look good and to replace your older pair that were wearing out. You hired a drink at the bar to loosen you up. You hired a couch to have a relaxing place to sit and unwind. You hire your groceries to keep you fed, but you also hired that expensive restaurant to create an atmosphere that might impress your date.

If you’re going to start a business, you need to see your product or service as completing a job that people need done. It helps you focus on the benefit for a customer as opposed to the benefits for you.

Selfishness Will Kill Your Business

Your business is not yours.

If you’re reading this guide, it's quite possible you are looking to start an online business for somewhat selfish reasons. 

Make more money, quit your job, buy a Lamborghini... We get it. Everyone has some selfish motivations and let's not pretend we should all be above that.

Sometimes those motivations could be semi-selfish, though. For example, your reasons might be: to treat your partner to a holiday or to afford more time to spend with your family. Either way, your end goal has to do with you… and not your customer.

But here’s a truth you need to hear now before it ruins or rots your business plans from the inside out:

It’s there to fulfill a job for them.

Your passions and your hobbies currently serve you. So starting a business with an idea that can actually work means focusing on the job you do for someone else, not the job it does for you.

Right now, the idea of starting a business also has a job you want to ‘hire’ it to do.

Fortunately, starting a business can serve you and serve your customers as well. But only if your priorities are in the right order. That’s why this is the root cause of so many business failures.

The businesses that collapse, that fail and that shut down are those that do not meet their customers’ needs better than the competition - often because the CEO is stubborn and wants to serve themselves first.

Your business must prioritize serving others first. 

What you want will come after that. You can enjoy your business and lead a rich life, but you cannot forget why it exists in the first place.

You don’t get rich by prioritizing yourself: you get rich by becoming an expert at helping other people do the jobs they need done.

Jeff Bezos (founder of Amazon) didn’t become the richest man in the world because he prioritized himself, but instead because he made the biggest online shopping marketplace that offered everything you could think of at low prices and great convenience. People began to ‘hire’ Amazon to make online shopping easy.

Elon Musk made his fortune not by greedily serving himself, but because he built a software tool (PayPal) that made instant money transfers safe and easy for everyone else. People began to ‘hire’ PayPal to conduct business online.

We are Thrive Themes, and we make software that you can use to build high-converting websites - even if you don’t have any website building experience.

Our users have a job to do: they need to start or grow their online business with website technology that is powerful and easy to use. All of our software and training helps you do this. The only reason we’ve managed to grow from 2 co-founders (without a single dollar of funding) into a worldwide established software company (with 70+ employees across the globe) is because we make every decision focused on serving our customers first.

Don’t disobey this law and you’ll be okay. 

Finding Your Niche

Maybe you’ve heard it: the riches are in the niches.

This is sound advice. But what exactly is a niche? Niche is a french word meaning a shallow recess in a wall for the purpose of displaying an ornament or statue. 

What the heck has that got to do with business?

A lot.

It sounds like attempted poetry, but niche has come to adopt a new meaning in business:

A niche was originally a shallow recess made specifically to fit and display a statue. A niche business is one made specifically to fit and serve a group of people/ customers all with something in common.

Now that the word has become colloquial, you might even hear the phrase “Niche-ing down”. Although the french must be offended at the abuse of their original word, the meaning of this has value. Niche-ing down now means tightening the focus of a business so it serves a smaller group of customers, but can serve them far better than anyone else ever could.

Your goal: Provide extremely high value to an extremely specific group of people.

This is vital to starting a business.

Look at this example:

The riches are in the niches.

If you want any chance of surviving in the business world by starting a new business, then you need to define your niche before you even start and work hard to be better than anyone else at serving that niche.

Niche down from the start.

How to Find Your Niche

Remember how we said that your passion and hobbies are not a sign of a good business idea?

It’s true.

But they are great for market research.

If you are really passionate about a topic, it’s likely that you understand it better than someone else. You’ve met people through your interests that share your problems, concerns and passions.

So you can probably identify a niche sharper than anyone else could. Why? Because you live in that niche, or a related niche.

Deciding to start a business in a niche you don’t understand can be risky. Want to create an online course for writing a novel when you’ve never even met an aspiring writer? Bad idea.

Paramount to starting with a rock-solid business idea is knowing who you are serving.

No matter what business you end up starting, it is guaranteed that you will have competitors who are at least somewhat similar to you and sell a similar product. It’s unlikely you’ll be able to steal the entire market away from them (though it’s not impossible... more on that later), but you can better them in one specific area.

Look at these 3 business ideas and how their focus has been niche'd right down:

The catch is that you need to really understand the niche. If you miss the mark by even 10%, the repercussions on your business will be huge. You’ll potentially invest years of time and money to find that your target niche customers just... aren’t that into you.

And the fault is never with the customer. It’s you.

So before you settle on a niche, you’ve got to get into the trenches and do some market research.

Expand Your Niche Market Research

Get ready to Google. You’re going to go on a hunt for as much information as you can about potential niches. 

But it’s your job as an entrepreneur — yes, you can start calling yourself that, but only to yourself — to decipher the masses of information and find clarity in it all.

The more you can find out about them, the better.

Google is a good starting point, but it's not the only place you should be searching. To expand even further, here's a short-list of tasks you can do right from your laptop:

You'll see now that we are advocating a research-backed decision on the business you're going to start, rather than an impulsive passion-informed choice.

Get searching!

As you search, you'll begin to identify who your ideal customer might be and get a sense of what is striking a nerve in the market and what people are looking for.

What do you then do with that information? Read on...

Creating Your ICP: Ideal Customer Profile

You should be starting to realize that the secret to targeting your niche is specificity. The broader your niche, the blurrier it gets. You need laser sharp focus on exactly who you are serving.

So with all your research, you are going to develop something called an ICP.

It’s time to get fictional.

ICP stands for ‘Ideal Customer Profile’. It’s a single fictional persona that you are going to make… and they represent the perfect person that you are going to serve.

No matter what business you create, in an ideal world, there would be someone who will hear about your business and almost burst into tears of joy and gratefulness for what you do.

They need your product so badly. They have a very specific job-to-be-done, and your product or service is the best thing they’ve ever seen.

They’ll buy. 

Then they’ll buy again, upgrading or coming back because they loved their first purchase so much.

They’ll leave 5-star reviews, they’ll advocate for your brand, and they’ll recommend you to anyone else they know that has the same problem.

To this person, spending money on your business, brand or product is not a burden. They are not ashamed or worried about money. There is no friction to buying. They are 100% eager to give you their money. 

But right now, that person is fictional… and you need to figure out who they are.

So you get to be a little creative and invent a biography for that ICP.

 What’s important though is this:

Every defining factor of this fictional ICP must be thought through and grounded in your research.

Choose a name for them, first and last. But think about your choice. What types of names showed up in your research? There’s a lot to a name. It can reflect family values, ethnicity, educational background.

John Doe doesn’t cut it.

Now choose an age, a specific birth year. Again, it should be based off your niche research, a common and specific age for people from that niche.

What does their age mean? It will tell you what decade they had their formative years at school. It will tell you what societal pressures they may be feeling about their career, family or financial situation. For example, a 22 year old single woman thinks very differently about money compared to a 58 year old married man.

As you get creative, make sure you answer the following.

Eventually, you’ll have a character so rich with backstory, a novelist could use them as a main character in their next trilogy or an actor could perform them with ease.

This is going to be the person whose life you are going to change, whose problems you will solve, and who has jobs you’re going to help them do.

Focusing On The Problems

I’m sure that by this point, you’re itching to find your actual business idea. What is it you’re going to sell? How much of the big-bucks are you going to make?

Sorry, we're not quite there yet...

If you’ve done your research right and you have a good grasp on your ICP, something will show up though: common problems.

It’ll be a concern that many people in your niche have. They ask questions about it, they search for answers, they are frustrated (or excited) by it and it’s consuming them.

It’s a problem that keeps them up at night. 

These are their pain points.

Sure, that might sound dramatic in some cases. For example: if you’re going to sell a home cleaning service, are your customers really up at night thinking about cleaning?

Not exactly… but they are up at night feeling frustrated by their household mess, by how little time they have to clean it themselves, and how embarrassed they feel whenever their mother-in-law visits and comments on how messy it is.

Really hitting the nail on the head with your customer’s pain points will be vital to your success.

Remember: This isn’t about you… it’s about them. Get this right and everything else will be much easier.

What Is The Job That Needs To Be Done?

Knowing the problems and pain points of your niche and ICP, you should then be able to deduce the Jobs that need to be done.

Remember, people don’t want products or services. They want outcomes.

In marketing, we call this benefits vs features.

Poor marketing focuses solely on the features: “This new computer has dual core i7 processors, 32 GB of memory and 1 TB of ultra-fast SSD…” --- blah, blah, blah.

Excellent marketing will focus on the benefits to the customer, and use information about features only to highlight those benefits: “This new computer is perfect for video editors because it boots up in 3 seconds, can export 4K YouTube video edits 10x faster than other models, and has enough space to fit a library of 30 hours worth of raw unedited video”.

Customers need to translate ‘feature-talk’ to understand what job it will help them do. Focusing on benefits lays it all out there for them to see.

So, now that you’ve started to identify common problems, ask yourself:

“What is the #1 job that needs to be done for this problem to go away?”

Don’t worry about the product yet, just the outcome. Just the solution. A lot of business development starts with analysis and theorizing before we can even touch any of the money maths and profit projections. That’ll be in Chapter 2.

Crafting The Perfect Solution For Your Niche

I bet you knew where this was going. After you’ve researched a niche, developed an ICP, and become acutely familiar with their problems, it’s time to figure out the solutions.

Plural. There could be multiple problems and there could be multiple solutions.

Sadly, this is another place where so many businesses go wrong. They leap from perceiving a problem to trying to fix it based on their own logic.

If you want to get this right on the first try without wasting years of your life, then you need to talk to your ideal customers.

Yes, that's right. Interviews.

Reach out to your niche and ask if they would be willing to talk about the problems they are facing. You’ll be amazed at how many insights you can gather just from asking politely, listening carefully and showing people they are welcome to share as much or as little as they want.

Chatting on the phone or face-to-face is ideal, but might be unrealistic, depending on your niche. Potential customer interviews can be done through messaging services or social media, that’s fine too.

But the important thing is: try not to put words in their mouth.

You want to hear what language and vocabulary they use when describing their problems. You want to hear their reasons why it’s difficult.

And you definitely want to hear how it makes them feel.

The answers they give will help you with business names, branding, sales pages, product descriptions, marketing, and more.

It's worthwhile to hear what they think will solve the problem, but keep in mind that sometimes their answers can be misleading.

Henry Ford, the inventor of the mass-produced modern day automobile said:

In other words, if a problem is yet to be perfectly solved, you’ll have a better time hearing people describe their problems than trying to describe the solution they want for them.

Working Backwards From The Result

That right there is the goldmine trio. Let’s look at why.

This question will show you what they believe is the problem, or at least what they believe to be the source of their pain.

Answers to this question might be influenced by societal pressures or their personal insecurities. There might be an embarrassment that influences the words they choose, or a mental picture they are responding to when you pose this question.

All of this is data. If you were to go ahead and try to solve a problem without considering the complexity of other emotions and feelings that affect your potential customers, then you could be failing before you’ve even begun.

They want to feel relieved of pain, and they need to see your product or service as a means to do that.

This is a beautiful question! If you get the wording right and you’ve asked it in the correct context, the potential customer should describe your product or service to you.

Note that we aren’t asking “What would solve your problem?”. That’s too high-level. And if they knew the answer to that, they wouldn't have a problem...

Instead, this question invites them to postulate the specific problems that are getting in the way. 

Let’s say you’re in the productivity niche. Your potential customer answers the first question with “I’m getting too distracted and should be doing 200% more work each week”. They’ve identified that the problem is themselves.

But then for question #2 they answer, “What would need to happen? I’d need to have better self-discipline and the skills to manage my own time”.

Aha! See now how the answer shows a deeper insight?

Watch a potential customer’s face when you ask this question. Their face says it all. Do shoulders drop? Tension fades? A smile? A sigh of relief?

That’s how good it feels for them to escape their problems. To put it all behind them.

And if you start a valuable business, you’ll be able to give that feeling to so many people… and get paid for it.

Answers to this question will be insightful for copywriting, which we’ll discuss later. They’ll describe the wonderful life they are trying to get to, but feel blocked and incapable of reaching.

You’ll get a glimpse of their hopes and dreams, of what drives them, and why your product will be valuable.

For the productivity niche, perhaps their answer is: “If I was disciplined enough to be productive, I could output twice the work, impress my boss which might lead to a promotion, be less stressed after work, no longer have to stay back and do overtime, and spend more time with my family”.

Idea Validation

If you’ve followed these steps, you should be getting a good picture of a niche, what an ideal customer looks like, and what their problems are.

So, of all those problems you’ve uncovered, which one are you going to solve?

Again, don’t just trust your gut here.

You want to pick a solution that lets you charge a good price, and that people are willing to pay for. So we’ve got to start doing some Idea Validation.

Pain To Pleasure Scale

Everything we do, everything we buy, everything we respond to is influenced by the Pleasure To Pain scale.

At one end, we have pain- all the awful things we want to avoid. At the other, pleasure- all the wonderful things we want more of in life.

Everyone only wants to move one way: away from pain towards pleasure.

If your product or service only moves them a little bit, you generally won’t be able to charge a good price for it. A chocolate bar is about 2 minutes of pleasurable taste followed by a 30 minute sugar kick, so it’s only worth a couple of bucks.

Whereas a 15 year old bottle of fine red wine is more pleasurable to consume than a cheap bottle made last year… so it’ll sell for more. Supply and demand affects this too, but we won’t worry about that for now.

At the other end is pain. People will pay to avoid pain. They’ll pay a tax accountant to sort out their taxes rather than filing them on their own. They’ll pay a physiotherapist to fix their aching ankle, and they’ll pay a house cleaner to make their stressful mess go away.

Of all the problems you’ve encountered, some are more painful than others.

Some will result in more pleasure if those problems are fixed.

Remember to consider emotional pain and pleasure too, since these are often stronger drivers than physical. The pain of feeling like a disappointment to your family, or the pleasure of feeling appreciated and comfortable might be the reason someone parts with their hard-earned money.

Providing Massive Value

The reason we’ve focused so much on your potential customer and their problem is so you have an idea of what is valuable to them.

What one person considers valuable may not be seen that way to another.

This is why you’ve niched-down with laser focus to a very specific group of people, all with similar problems. If you have done this right, then the one goal or outcome will be perceived as very valuable to everyone in that niche.

If there is a number of people within your niche that don’t see that goal or outcome as valuable, then either you aren’t fixing the right problem or you haven’t found the right niche.

Once you have, it’s about over delivering on value.

If you’re going to sell something - anything - for let’s say… $100, then you’ve got to make sure that you deliver more than $100 worth of value.

If you can do that, your product or service be a winner!

That’s your goal: Providing massive value that solves a specific problem.

Perception: A Marketer’s Tool

We know that pleasure and pain become strong motivators in a customer’s buying decision... But we also know that they are greatly influenced by a person’s perception.

One person’s idea of pain or pleasure is quite different to another. Flying on a private jet for an expensive work trip may be considered pleasurable to one person, whereas to someone else, pleasure means staying home with their kids and never having to work at all.

What makes us see pain or pleasure is largely influenced by our formative years in youth, the society we live in, and definitely the people we associate with and that we compare ourselves to.

The good news is that perception can be changed. And that is a marketer’s tool.

No, I’m not talking about being manipulative and selling the wrong products to the wrong person.

There’s a pride amongst salesman that can “Sell ice to eskimos”. What an awful concept. Why should anyone be proud of selling something that provides absolutely zero value to a person that doesn’t need it?

We’ve got to take a big step away from that sleazy sales approach.

You will sell solutions to problems, and provide massive value. That’s it.

But once you know your problem, once you have your product, it is your marketing that will help potential customers perceive the value of your product and see how it will help them move on the pleasure-to-pain scale.

Marketing is a huge factor in business success. The greatest solution to a problem is wasted if you cannot communicate it in the right way to the right people.

In a later chapter, we’ll dive into marketing to make sure you have a strategy that will shape your business’ perception.

Don’t Disobey These Laws

Everything in this chapter is foundational.

Perhaps to you it seems a little boring. But trust us when we say that this is 100% vital to your business.

When businesses fail, it’s because they have lost touch with the true heart of why people buy.

In fact, it’s highly likely that as you move forward and focus on the practical steps of actually creating your product and building your business, you’ll lose sight of everything we’ve just discussed.

Don’t be that person. If you ever feel even slightly bogged down or stuck, return to this chapter and re-read it again. This is the clarity that every business needs.

You will forget this.

So bookmark it, save it, download it.

Your customers are your compass.

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This chapter has been very theoretical, but the next chapter is a whole different story. 

By the end of chapter 2, you’ll know exactly what kind of business you’ll start.

No more murky theory. It’ll be crystal clear. Promise.