Before you get too caught up in finding your niche market, make a list of your personal interests, hobbies, favorite pass times, etc. In other words, be honest about what rocks your boat? The most important aspect of finding the right niche begins with you, not with your potential customers. You, above all others, have to be passionate about your business. If you can't sell yourself on your idea, you will never sell it to anyone else. You have to believe in it, because at least in the beginning, no one else will.

If you have always loved birds or building birdhouses, you might look into starting a custom-made birdhouse business. You could offer to make birdhouses that match the color and architecture of the customer's home. It sounds like a great idea, and so far that's all it is.

Once you get an idea, you have several options to test it. Talk to people about it; ask if they would be interested in such a product. Your friends may quickly agree that it is a great idea, but would they pay for it, and how much? It is not enough to pay attention to the feedback you get from your friends and family. You should test your idea with strangers.

Start a PPC (Pay Per Click) campaign with pictures and prices of some prototypes you have built. At this point, your goal is not maximizing profit. You are simply testing the market. It is better to invest a little up front to find out more about a market than to build a business, and hope people will want to buy your product. Don't leave anything to chance test, test, and test more.

A somewhat slower, but effective method to test a market is to create a blog around it. Start blogging about your idea and pay attention to the feedback you receive. Your readers may embrace your idea, or reject it. If they don't accept the product as it is, they might recommend changes. The feedback should help you fine-tune the product. It is possible that your idea is only appealing to you. No matter what happens, at least you will find out what people think of your ideas before you invest a great deal of time and money.