Sunday, August 06, 2006

How to Assess the Profits of Your Home Based Business Idea

How to Assess the Profits of Your Home Based Business Idea
Copyright © Monique Hawkins

There are many home-based businesses and opportunities that can be found online. Work-at-home opportunity seekers can easily be bombarded by many offers that promise thousands of dollars per week. However, once a home business opportunity is decided upon, it is important that one crucial step is not overlooked. The step is carefully evaluating the online profit potential the opportunity has to offer. Let’s uncover the secrets of this important step.

In order to analyze the profit potential of a internet home business idea, home based business opportunity seekers should look at :

1. The size of the market

2. The competitiveness of the market

3. Whether or not people are paying to advertise within a particular market, and if so, how much it costs to advertise.

To do this manually, follow this step by step process:

1. Go to This tool permits you to look up the number of searches for the previous months on certain keywords. Some of the information comes from search engines such as Yahoo, Alta Vista, MSN, and CNN.
2. Pick a word or phrase and type it in the suggestion tool. Depending on the keyword you choose, results can range from the thousands to a few hundred or less. It is best to have at least 6,000 searches for a month before you choose to pursue your work at home business opportunity.
3. Go thorough the list and copy the words that are closely related to your keyword. Put all this information onto a spreadsheet and add up all the numbers. This provides you with an estimate of the monthly demand and size for your work at home business opportunity you are considering.
4. Go to and type in all the keyword phrases separately to get supply information for each of your keywords. Type this information into the spreadsheet you previously completed. Name the column supply/demand. Keep in mind that if you get results such as 200,000 and up, that is a lot of competition!

In order to find specific bids on keywords, follow these steps:

5. Go to and type in your keyword. Click on “view advertiser’s max bids” in the upper right corner. A new window will open up where you’ll need to type in your keyword. After entering a security code, you’ll see what people are bidding. It is also important to remember that if no one else is paying to advertise on a home based business opportunity idea’s keyword, its either a smoking hot find or folks aren’t buying the product.
6. Go through this procedure for all of your words and phrases. Write down what the top three bids are for each keyword and put them in your spreadsheet.

Now, we are going to calculate the monthly profit potential. The first part of this formula will be revenue. Take the total demand count from the keywords as gathered in step 2 and 3 of your figures that were taken from and multiply it by 2.5 to get an overall paid search impressions. If you plan on advertising with Google, this multiplication formula will not work.

Next, we are going to figure out profit based or Click Through Rate. Some impressions have high CTR’s and other low CTR’s. You will need at least a 1% CTR. This can be easily achieved by adjusting your titles and descriptions as needed.

In regards to the sales conversion rate, starting off at 1% is Ok. This means an average of one out of every 100 visitors to your work at home business opportunity will buy. If your idea doesn’t show a profit potential of at least 1%, then it’s highly likely it will be difficult to work online.

With the expensive part of the equation, you need to calculate out the average cost per click. This means, what will it cost for your keywords to remain in the top 3 position? For example, if your keywords were bartending and the top three phrases for this keyword were Bartending book-.011, Bartending guide-.10, and Bartending tips-.08 ,the average cost per keyword would be about .10 As you can see, calculating the cost of your home business opportunity idea by hand can be tedious. There is software that can do this for you automatically. Visit for more information.

Before embarking on an Internet home based business idea, it is very important to carefully evaluate the profit potential. Failing to do so can result in frustration, little to no profits, and eventually shutting down your business! So make sure you follow these steps to have a profitable home-based-business opportunity!
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