Finding a Market and a product to match

 In the previous example, I assumed that for someone who is running a hotel in Singapore, the nature of their business activities on the internet would be clear, with their primary objective being to establish connections with people looking for Southeast Asian hotel accommodation.
If however you have no specific business notion in mind, the first thing to do is to find a market into which you can launch a successful website.
The golden rule when it comes to launching a new web-based business is that, firstly, you have to find a market which is active and secondly, you must ensure that there is money being spent in that market.

Most of the people who use the net every day do so to seek information.
Hence, if you establish what kind of information those people are looking for, you have taken the first step. By establishing that there is money being spent in this particular market, you satisfy the second necessary criterion too.
There are literally dozens of websites that you can refer to in an effort to discover what people are looking for. Some of these sites are places where people buy products or services, whereas others are sites which visitors use to either ask questions or to give an indication of their interests and hobbies.

Sites like eBay and Amazon fall into the first category, because with both of these sites, it is a fairly simple process to find out what people are looking for and buying.
This is because eBay offers their Pulse page where you can see the most popular products on the site in the previous 24 hours:

Click on the 'Category' drop down menu at the top of the page to discover what the most popular products or services are in each market sector. In this way, you can grasp some idea of what people are looking for when they use the world's biggest auction site.
Amazon on the other hand have a 'Bestsellers' feature that you can use to generate a picture of the products or services that people are buying from one of the most popular online retail sites.
To find these 'Bestsellers', click on any of the categories at the top left hand corner of the homepage:

Click your chosen selection - books is always a good starting point if you have no particular idea in mind - and then look for the 'Bestsellers' link at the top of the page:

Other sites where you can gain an idea of the sort of information that people are seeking, giving or discussing are Yahoo! Answers, 43 Things, MySpace Groups and the DMOZ Directory site.
After researching all of these sites, you should have some ideas for your first business website.

Let's say that based upon your research, you have seen that there appears to be a good number of people searching for information related to dog training on the net. Hence, your initial thought is to create a website that focuses on dog training.
Before you begin to do so however, you need to extend your research a little further. In order to make money online, you give yourself the best chance of doing if you find a market sector or niche where there are plenty of people searching for information but not too much competition.

For example, whilst there are certainly plenty of people searching for information about dog training, there are also quite a few web pages where they can find this information already:

As you can see, Google have 6.25 million pages listed for 'dog training'. Thus, the chances of you being able to successfully promote a site that is focused on dog training would be extremely limited.

If however you were to narrow this down to something more specific, you might find that there is considerably less competition.
For example, were you to decide to create a site that focuses on training just one particular breed of dog, you would stand a significantly higher chance of achieving success and making money from that site:

Any Google search that indicates less than 30,000 competing web pages for an exact search term match (with your chosen search term in inverted commas - ".") is one for which competition is acceptably limited. You could therefore reasonably expect to achieve a top search ranking relatively quickly.
Consequently, rather than trying to compete with 6.25 million other web page owners by building a site focused on dog training, it would make much more sense to build a site focused on 'boxer dog training' instead.