This is by far the most important step in the entire road map. Not only does you need to come up with some niche ideas but you want to make sure the final niche topic for your site is indeed profitable and not one of the most competitive niches out there.

Please don’t rush because you are planning a business.

It is important that you don’t fall into one of these traps:

1. Rush through to get started. I’ve seen people do it all the time. They impatiently want to start building their first website. As the result, they unscrupulously choose a niche that they think was either cool, or just follow the crowd.
2. Choose an overcrowded and competitive niche. Given enough resources in time, budget and people, you can possibly dominate any niche. But, if you are to start a business doing it mostly by yourself on a shoestring, you want to choose a topic that is not only less competitive but also easy to write about. Don’t get me wrong. Competition is good, just you don’t want an overly competitive niche when you start.
3. Not something you are passionate or interested in. Some might argue that you can start an online publishing business in any kind of niche. I somewhat disagree. Often in the process you are going to be very tempted to stop what you are doing and quit. There could be a new opportunity waiting that you can not resist. If what you are doing right now is not something you like to do, chances are slim you will persist in this business. Consider yourself warned. Follow your passion, with the right keyword research and a bit of luck, you might be able to do it while chasing the money at the same time. On the other hand, other people have succeed pursuing niches they have no passion in. Just the process is not so exciting. Given the choices, I would go for the former any time.
4. Not something profitable. You might be passionate about smoking. The thing is if you plan to sell your website space by joining advertising network like Google AdSense, you will not be able to place AdSense ads on your site because some topics are against Google AdSense policies. You also want a niche where people in it are regularly buy stuff online. There should be some lucrative affiliate program that could fit in your site’s theme.

A free tool to check keywords and valuable keywords or key phrases is Overture. As a guideline, you want keywords that advertisers are paying at least 30 cents per click for the top position. Of course, the higher the better.

Getting into the right niche often takes you on the right path, if not guarantees your success online. It is the difference between success and otherwise. So, take your time to ponder and do some actual research before deciding.