Roughly speaking, the market or product you pick does make a difference in how big the business can be and how quickly it will grow, but there are so many really great markets that this is not a big limitation.
The real trick to early success is in finding a competitive advantage that you can exploit right away. You will find this in primarily one of two places: either the market or yourself.
The market will often have “holes” in it because competitors have a tendency to all do the same thing, or approach the market the same way, often because they are gauging their approaches by looking at each other. This can create an opportunity where there may be traffic sources, special offers or marketing techniques that are not in widespread use by the top competition.
As an outsider, you may actually be better qualified at finding these than people already in the market. It’s the classic case of forgetting, once you find yourself wrestling alligators, that the original mission was to drain the swamp! So by all means look at your competition, but also look at the market and you may find an approach no one else is using.
The other big source of leverage is the different skill set you can bring that existing competitors may not have. In some markets, you’ll find the competition is simply not as good at online marketing in general or in some particular specialty than is the case in other markets.
If you have the better on-line game, you can rule a market by simply doing the same thing the competition is trying to do, but do it better. This is a “frontal assault”, so you’ll have to bring either a lot better skill, a lot more cash, or both to win against entrenched competitors. If that’s too much to ask, then look for a “flanking maneuver”.
For example, for those of who sell information products, we have highly developed the skill of building a list through giving away free information and then converting the folks on that list to customers via email promotions. Could you apply those techniques in some other market to create a competitive advantage? Likely so, and this is not a common model in most markets. By taking a completely different marketing approach you essentially bypass your competitors and access the market in a different manner.
Sometimes you don’t have to get that creative. Look for the traffic sources or outlets where the big players are weakest. By getting some early success, you save a bunch of cash that you can spend on growth later and you do it generally out of sight of your real competition.
Figure out where your strengths lie and find a market where those strengths will create the greatest competitive advantage and go get it.