With an affiliate marketing business, you simply encourage buyers to purchase something from retailers' websites. And, if they follow your link, you get a percentage of the sale. Services companies will pay you for lead generation too. This article explores how to start an affiliate marketing business.

You need to pick a niche to get started. If you're keen on football, you could start promoting retailers that sell football strips. Or, if you're into fashion, for example, you could start promoting designers. However, keep in mind that you're starting an online business - not a hobby. That's why there are other factors to consider too:

• Competition - the more crowded the market is, the harder it becomes to penetrate. If you're going into a competitive marketplace, you have to evaluate whether the opportunity makes it worthwhile.

• Retailers - it's good to be in a market with a number of retailers that have affiliate programs. This means that marketplace dynamics force them to compete for your traffic.You can tell retailer A that you will start sending traffic to retailer B unless they start paying you a higher commission. Also, if one retailer starts to develop a bad reputation or dumps its affiliate program, you'll be able to start sending your traffic to somewhere else.

• Margins - you have to consider the costs of driving traffic versus the revenue you will generate for each lead/sale. This varies from market to market, retailer to retailer and in some cases can be pitifully small.

• Volume - it's all well and good having attractive gross margins, however, if the market isn't big enough, then you might prefer smaller margins with more volume. As a new entrant, volume might be more important in the long term if you have big plans.

Go to the websites of the merchants that you would like to promote. From there you should be able to navigate to details of how to sign-up to their affiliate program. Then, review their terms and conditions and make sure you understand everything. Once they have approved your application, you're ready to get started!

Most successful affiliates have their own affiliate websites. To get ideas about how your affiliate website could look, check out the websites of the serious players in the affiliate marketing space: shopzilla.co.uk, moneysupermarket.co.uk, uswitch.com. If you don't have website design skills, do not buy an off the shelf one. You should use a professional web designer to create your website and employ the services of an SEO (search engine optimisation) expert to drive targeted traffic to it.

You can drive traffic to your website, or to your affiliate link, by most methods that are within the law. However, you should check with your affiliate manager to ensure the methods you intend to use are okay. Some methods, like trademark bidding and email marketing, will not be allowed by certain merchants.

You can use pay per click sponsored links to get your targeted traffic on the two major search engines, Google and Yahoo. Make sure that your return is greater than the cost of your advertising campaign. There are many other ways to drive traffic including writing and posting articles on online forums and article submission sites.

At some point, you will probably want to take your home business out of the back bedroom! To do that you should ensure that you conduct your business more like a serious company, and less like a home endeavour. Have a business plan, be disciplined, work hard, set strong foundations, and think big!