To give you an idea of what is involved I will outline the 7 steps you need to take to set up your own money making website. This will give you the basics of what is involved and allow you to do further research and make progress in each of these seven areas.

Step 1 – Your business idea

If you already have a business or a business idea, you can skip this step. If not, then spend some time writing a list of all the things that interest you. The chances of succeeding in your new business are far greater if you are doing something that you are passionate about. This way it won't feel like you are doing a job when you start spending time on this. Don't worry too much about a product at this point, just think about the things you like to do – perhaps you like cooking, or playing football, or foreign travel. Try to write down at least 5 things that you enjoy.

Step 2 – Research your Market and Analyse the Competition

Once you have completed step 1, you need to find out if there is a market in the areas that you are interested in. At the same time you may want to avoid entering a market that is highly competitive. From my experience the best way to analyse this is by using a tool called Wordtracker. You can try this for free at http://www.homebiz-direct.com/wordtracker.html Note that the trial version is a cut down version of the much more powerful full version and only includes statistics from one search engine rather than multiple engines.

Use this software as a brainstorming tool and type in your interests that you came up with in step 1 (or your original business idea). Wordtracker will return related keywords, which you can then select and add to your “basket”. At this stage it is best to keep an open mind and fill your basket with around 1000 keyword phrases. Finally you can do a “competitive analysis” on the keywords that you have chosen. This will allow you to see how many searches a day are done on a per search engine basis for each keyword phrase.

In addition to this you will also see the number of competing websites and a value called a “KEI” which is a “Keyword Effectiveness Index”. You have a better chance of succeeding if you choose keywords that have a KEI above 100. If the KEI is above 400, then you have an excellent chance of success.

Ensure that you spend sufficient time in this planning phase, repeating the above process again and again until you have a good set of related keywords with good KEIs. Once you have chosen your keywords you should check out your competition by typing the keywords into Google and looking at top websites for each keyword phrase that you have selected. The Google and Alexa toolbars can help you with your analysis of competing websites

Step 3 – Choose a Product

If you don't already have a product in mind, the next step is to decide on your product or group of products. Before you do this, try to do some research and find out exactly what your potential customers are looking for. What sort of questions are they asking? Google Groups are an excellent place for doing this sort of research.

One solution is to join some affiliate programs (related to your chosen keywords of course). Affiliate programs are usually free to join and pay you a commission for directing customers from your site via a special affiliate link. You can find a lot of information about affiliate programs by searching for “Affiliate Programs” on Google.

Another alternative is to sell your own product. This could be something that you have made yourself such as a craft item or an informative e-book, or a product that you dispatch using a drop shipping service. It is also possible to buy resell rights to e-books and software written by other people.

Before you make a final decision, work out what your profit margin will be and do a rough calculation of how much money you will make based on the estimated traffic from Wordtracker.

Step 4 – Choose and Register a Domain name

The next stage is to decide on and register a domain name. There are many websites selling domain names and you should be able to get one easily for less than $10 per year. There is no need to sign up for a domain name with your web hosting company if they are charging more than this as domain names can be transferred easily between hosting companies.

Try to choose a domain name that has some of your keywords in it. It's also an advantage to have a name that is relatively short and easy to remember.

Step 5 – Find a Web Hosting Company

There are hundreds of web hosting companies available. Some even provide hosting for free. I advise against using the free services if you are setting up a business, as this can look unprofessional, especially since most of them use advertising on your site as a way to recoup the cost. This is fine for a personal website, but if you are serious about making money you need to choose a reputable web hosting company.

Ensure that you are happy with the disk space and bandwidth allowances that your hosting company provides. Other things to consider are the customer support services, reliability in terms of the percentage of down time expected and the interface for uploading files. There are many websites that offer reviews and comparisons of different hosting packages.

Step 6 – Build your Website

At last, you are now ready to start building your website. Many people skip the research stage and dive straight into this part, but your chances of success are much higher if you spend time on the research part first.

Depending on your knowledge and experience in this area you may decide to do this yourself, or pay for a web designer to do this for you. If you are doing it yourself, it helps to know HTML, but there are also many web page editors such as Front Page and Dreamweaver which you can use to construct your website with little or no knowledge of HTML.

Try to ensure that your site is clean, uncluttered and easy to navigate and that it looks professional. Have someone proofread your copy to ensure that there are no mistakes. Also ensure that you use your keywords from your Wordtracker research in the title of your page, the headings and throughout your copy. Use one or two of your chosen keyword phrases per page and don't overdo the use of your keywords as search engines may consider this as SPAM.

Step 7 – Market your Website

Finally you need to market your webpage. It is simply not true that you can just build a website and wait for visitors to come without doing any form of internet marketing.

Internet marketing is a huge topic, out with the scope of this article. The sort of techniques that you may want to consider include reciprocal linking, writing and publishing articles, pay per click (PPC) advertising such as Google Adwords and Overture, classified and solo ads, participating in discussion forums that allow a signature in your postings and advertising on related (but not competing) websites.

These 7 steps take time and effort, but if you do your research and persevere you are likely to see excellent results.

Don't forget, that once you have been through this process once, you can repeat it again and again until you have multiple websites making an income for you while you sleep, or relax on the beach!