I was very honored when one of my subscribers contacted me this week and asked me about an opportunity that they were considering. This got me to think about the process I go through when analyzing an opportunity and I thought I would discuss some of the things you should consider when looking at buying an opportunity yourself.
Ultimately, the process when considering an online business is not that different to analyzing an offline business opportunity. It’s a little easy to do the analysis for an online business though.
In this case, the opportunity was a prebuilt website, with products, videos and articles provided. Sounds great doesn’t? Nothing to worry about, just buy your domain name, activate the site and away you go.
It really isn’t quite that simple though. Yes, an online business can be very successful, certainly a lot easier to run than an offline business and it can be far less costly than an offline business – but it doesn’t mean that it’s simple.
The site was prebuilt to sell into a specific niche and I’m certain the products and articles were first rate. The question that was raised in my mind, was just how active the niche is and how competitive it is.
These two questions are actually fundamental to successful business planning – whether you are considering an online or offline business opportunity, you need to understand what the dynamics of your target niche are.
Get Quantifiable Numbers
The questions to ask yourself, is how many people are really looking for the information you are going to be promoting? A quick and easy way to find this information is to use the Google Adsense Keyword tool and find out the searches that are being conducted on a monthly basis…. To use this tool, you’re given an input box to enter your selected search terms and, once you submit the terms, you will be presented with the number of searches conducted each month, and the number of paid advertisers ‘competing’ for that keyword. Here are some screenshots:
After you enter your keywords, you’ll be given a screen that looks similar to this:
The first three columns are the ones of interest to us.
Column 1 is the keyword that has been presented as related to the keywords you entered.
Column 2 is the number of paid advertisers for that keyword. The more green in the bar, the more competitors.
Column 3 is the total number of searches conducted for that keyword for the previous month.
Preferably, you want a set of keywords that have a relatively high number of searches and a moderately low number of paid advertisers…. However, at a first cut, check and see how many searches are conducted each month.
Once you’ve convinced yourself that there are enough searches to indicate that the niche is viable, you need to look at who your potential competitors are and what they are offering.
Finding your potential competitors is relatively easy – go to Google and type your keyword in. The resulting list of sites, in both the Paid ads and the organic results, are your potential competitors. Now, go and look at the top 10 sites – look at the offerings, what they’re charging, what they’re offering – and gain a feel for what customers are used to receiving and what they are used to paying for it.
You should do this process for 5 or 6 of the top ranking keywords – it will give you so much clarity.
Once you’ve got a feel for the number of competitors, the range of offerings and the pricing of the niche – you can compare that against the number of searches and your proposed offerings and prices and decide whether the niche is still viable.
Do An Emotional Stocktake
Now that you have some quantifiable to assess, you need to take an emotional stocktake – how do you ‘feel’ about promoting the products or services that the site is set up to sell? If it doesn’t feel right – and I mean by that, that the products and services don’t meet your own integrity standards – don’t do it.
I say this because, it is going to take hard work and effort to be successful. If you really aren’t passionate about what your promoting, you’re less likely to ‘do what it takes’ to be successful.
The last thing to consider when looking at an opportunity is the costs. Look for all the costs – is there an upfront fee, is there an ongoing fee, do they require you to use their hosting infrastructure? I’ve seen offers that have a really low upfront cost, but the ongoing hosting charges are high when compared to what I can pay and there is no exit clause – generally, if you stop paying the hosting, you loose that business. When I analyze how much it will cost over 12 or 24 months, I find that it is a lot more than I am prepared to pay.
I hope you’ve found this article helpful – these are some simple steps that you can take to analyze an opportunity before getting in too deep.
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