When creating a niche website it is important to take your time and not make any fast, uneducated decisions. It may be tempting to register the first domain name that pops into your head or start writing all sorts of articles on what you think is a sure-fire niche, but that only ends up costing you valuable time and money. Finding and developing a niche is no easy task, but if you do the work now, you can reap the rewards later.

Researching is the single most important step in the process. If you accidentally choose a niche that is too competitive or isn't popular enough then you will not be able to make a significant amount of money from it. Assuming you don't have a niche already in mind, start your research by visiting the following websites: Amazon, Ebay Pulse, ePinions and Google Product Search.

On Amazon, choose a general niche and then click on the "Bestsellers" option. This will help you find popular products that people are buying in that niche. Ebay Pulse's "Category" option enables you to see what buyers are searching for and what products are "most watched". Google Product Search provides a handful of quick and easy keywords from a variety of niches. These can be used for more in-depth research. ePinions provides consumer product reviews which helps you to find what products are popular based on personal experience. Once you have written down some niche ideas and keywords from the above sources, it's time to do some keyword research.

There are many keyword research tools out there. Some cost money, and some are more accurate than others. Google's Keyword Tool provides relatively accurate search statistics and displays great keyword variations. Enter the keyword phrases you found earlier one at a time into the search box and be sure to select the "Exact Phrase" checkbox to refine your search. This option limits the reported values to searches that only your phase, in that order. A broad search counts any search that contains any of your keywords in any combination. Many people make this mistake which makes them think that their niche is larger than it really is. Using the "Exact Phrase" will tell you exactly how large your niche is for that term.

The key is to look for keywords that are popular enough to bring in good traffic, but if they are too competitive then it will be hard to rank high in the major search engines, which will be the main source of traffic for your website. Look for exact phrase keyword volume of around 3,000-8,000. Record all of these in another list.

Now it is time to find out how much competition these niches are facing. Search the terms that you wrote down in the previous list in Google. There are many things to look for in order to determine whether or not the keyword is competitive. Is Wikipedia the first result on the page? This probably means that you should forget this keyword. This is not always the case, but the authority and ranking ability of Wikipedia makes it very hard to overtake in the search results. Are there websites that have the exact keyword phrase in their domain name? (Ex. Phrase: "mountain bikes" and the top results are sites like mountainbikes.com and bestmountainbikes.org) This usually indicates that the niche for that keyword phrase is already filled up and is too competitive to rank against, unless you feel like doing a lot of extra work. Click on a few of the top results to take a closer look. Are the top results professionally managed with tons of content or are they hobby websites with very little valuable content? If you spot many weaknesses, this niche is ripe for the taking. Highlight these phrases on your list. Make note of the urls of the top ten results for each of your awesome niche website keyword phrases.

The next step is to find out how strong each competing website's backlink profile is. This of course can be done using a variety of tools, but Yahoo's Site Explorer and SeoMoz's Open Site Explorer give you a great idea of how strong a website or particular page is. Yahoo's tool is much more accurate so you should use it first. Type in each of the urls and make note of the total number of backlinks. When doing this, be sure to select the "Except from this domain" option in the drop-down list beside "Show Inlinks:" (see above). This will only show the incoming links which are much more important when determining page/domain strength. Analyze the backlink profile of each of the sites from the search engine results. If most of the links are from spammy sites or places where you could also obtain a link and the backlink count for each of the top ten sites is around or fewer than 500, then you have found your niche! Congratulations!

The next steps in the process of creating a niche website are optimizing your niche website and monetizing your niche website.