If you want to build a successful home based business, you can’t afford to compete head on with much bigger established businesses. You probably won’t have the money, and you definitely won’t have the time, to come out a winner.

The way to increase your chances to achieve your financial goals is to find a niche - a gap in the market – a product or service where there are too few suppliers for existing customer demand. Of course, new competitors may start up after you – there’s no way to guard against that. But, if you can get far enough ahead, you still have a real chance of success.

How can you make it more difficult for new players to enter into competition with you? If you want a successful home based business, you need to become ‘a big fish in a small pond’ – a phrase that homebased business guru Dan Furman really likes. And that’s why you need to pick the right business from the start. One with realistic profit potential.

Ideally, you need to find a business opportunity that is really quite specialised. The smaller your niche, the less likely bigger competitors are to invade your space. This specialisation can come from a variety of factors. For example, it could be a question of locality (you’re the only bookkeeper in town), or you might make use of particular knowledge (you’re an expert on rare second hand gardening books).

That’s the importance of marketing research in developing a successful home based business. A large part of the potential success of your business comes from this research phase before you start up.

It’s like picking the right sort of ground to sow your seeds of success. Even if you’re fortunate enough to find a big empty field, a large competitor could come in and swamp you later on. Or maybe the field is barren – there are not enough customers with money to help you reap a worthwhile harvest.

In your market research, you need to identify a fertile business opportunity. It needs to be big enough to bring you the money you want, but small enough to make it difficult for the big boys to come in after you.

Marketing research shouldn’t take long, provided you have focus. If you’re looking at starting a local offline business in an area you know well, it should be very easy to find out whether people are willing to pay for what you want to offer – and also to assess whether you would face strong competition. If you want a computer based business, you will probably need to use some simple web based tools to carry out your research. Either way, it makes sense to spend a week or two sniffing out a promising market niche.