My First Attempt at an eBiz

First off, if you have not yet read The 4-Hour Work Week, stop right now, read it and come back. The entire book it great but concentrate on the “Finding Your Muse” and the rest of the online business related material.
Welcome back!
My general understanding of author Timothy Ferriss’s methods are as follows:

1. Find a Niche Product - This is the hard part. Pick a general area that you enjoy and then really narrow down an audience that you can specifically market to. To do this, after writing down a few ideas you can use keyword tools such as Yahoo! Ovature, Google Keywords and WordTracker to see if the search volume on your keywords is high enough to support a profitable ad campaign. The basic rule of thumb using google Adwords is that about 1% of ad impressions shown on Google search results and its content network will result in clicks to your site. Out of that 1% of unique visits to your site, about 1% of people will buy your product. These number can fluctuate a lot obviously depending on how well you researched your niche product, the competition, and your sales copy on your website.
2. Test Your Product (No Need for an Actual Project to Ship Yet) - There are 2 ways to quickly and cheaply test if your product will sell and at what price.
   • Option 1 - eBay
     

     Write up a 300-600 sales copy for your product that entice people to buy. Put it up as a short Ebay auction and see what people would pay for it. Near the end of the auction, you must cancel the auction! Remember, you still don’t have an actual product to sell to someone if they win so make sure you cancel it. If you are not comfortable with this, go to option 2.

   • Option 2 - Google Adwords
     

     Set up a mini 1-3 page website to test product sales. Page 1 has your sales copy. Page 2 has a form to collect the Buyer’s information. I have them fill out their shipping and contact info with a button that says something like”Next => Billing Info” If they click this button then you can presume that this person was a sale. Page 3 is a simple page thanking them for their interest in your product but due to high demand the product is currently onback order.

     Now, Sign up for Google Adwords and and create a campaign. I am not an Adwords expert so you will have to go elsewhere for tips on how to do this effectively. Your goal is to run the ad campaign for about 5 days. The cost per click (CPC) will vary depending on your keywords, probably between $0.20-$1.00. Remember that if you need about 100 clicks to get 1 sale then it will cost you about $20 (at a low $0.20 CPC) to make a sale. That is why Tim Ferriss suggests a product that sell for 8x-10x cost between $50-$150. This should give you enough advertising room to turn a decent profit. Use Google’s conversion tracking within Adwords to track your sales.

     Run your Adwords campaign for about 5 days. Tweak your ads, your max bids, your keywords. Test a little more.

In Part II, I will go through the numbers I got from my first test business to see if to see whether or not my idea will fly.

To be continued…