Last updated on February 7th, 2025 at 08:55 pm
If there’s no demand for your product or service, you can have the best sales funnel in the world and you will still struggle to make money.
Unfortunately, we often see entrepreneurs spend months or even years working on business ideas that were doomed from the start.
That’s why today we want to share our step-by-step guide to determining whether your business idea has potential:
Step #1: Sell a Product or Service That has a Proven Demand
Entrepreneurship has come to be associated with innovation in our culture.
Perhaps that shouldn’t be surprising considering that the most iconic entrepreneurs of our times are the tech billionaires of Silicon Valley.
However, if you want to start a business, you don’t need to have an innovative idea. In fact, pursuing one would decrease your likelihood of success. How so?
Well, if you go with a product or service that has proven demand, you’ll know for sure that people want it, you won’t have to waste time explaining to everyone what it is and you will be able to learn from the mistakes of your competitors.
Meanwhile, if you attempt to do something that has never been done before, you will be starting from absolute zero, without even knowing if anyone is interested in your product or service to begin with.
And sure, if you already have an innovative idea that you believe has incredible potential, then it might make sense to pursue it. Who are we to say that you shouldn’t?
However, if all you want is to create a better life for yourself and your loved ones by building a sustainable business, then going with something tried-and-true is a much better bet!
Step #2: Do Competitive Research
Competition is a good sign. Why?
Because if there already are a bunch of companies selling the same products or services that you intend to sell, it means that there’s money to be made doing that.
However, if you want to carve out a market share for yourself as a newcomer, you need to first learn everything you can about the main players in your niche:
- Purchase their products and services yourself to see what their entire buyer’s journey looks like from the customer’s perspective. Screenshot and save everything so that you can use it for reference later. We call this “funnel hacking”.
- Make sure to actually try the products and services that you bought. Do your competitors deliver what they promised or is the experience disappointing? Think about how you could do what they do but do it cheaper, faster, and better.
- Read customer reviews on your competitors’ websites, various third-party platforms, and online forums like Reddit.
- Watch YouTube reviews and read the comments. Just keep in mind that if it’s a sponsored review then it’s unlikely to be objective.
- Use text analytics software to uncover more insights. For example, you could use it to analyze all tweets that mention one of your competitors, which may not be possible to do manually.
Your aim here should be to get a good understanding of the general landscape of your niche and then look for a market gap that you can capitalize on.
Generally speaking, as businesses grow, they tend to expand the scope of their products, which typically leads to them gaining a broader appeal but becoming less suited for any particular use case.
This is something that you can exploit as a newcomer: instead of competing against the big players in your niche directly, you can steal a slice of their market share by creating a product that only has one use case but is perfect for it.
Keep in mind that there are plenty of people out there who have made their first million with a single eBook, online course, WordPress plugin, Shopify theme, e-commerce product, etc. So it is possible to become a millionaire by solving one problem exceptionally well!
Step #3: Create a Minimum Viable Version of Your Offer
The concept of the “Minimum Viable Product” (MVP) was popularized by Eric Ries, the author of the classic book “The Lean Startup”.
An MVP is an early, bare-bones version of the product that only has the core functionality required to solve the main problem that it aims to address.
We recommend creating a lead magnet – a freebie that you will offer to potential customers in exchange for their email addresses – that you can use as your MVP.
So think about what you can give away for free that would solve a narrowly defined problem related to the problem that your core product or service addresses.
Here are some ideas:
- Thinking about writing a non-fiction book? Write the introduction and the first chapter and use them as your lead magnet.
- Thinking about writing a novel? Write a short story or a novella in the same genre, ideally one that is a prequel for the novel, and use it as your lead magnet.
- Have an idea for a computer game? Create a 30-60 minute demo and use it as your lead magnet.
- Want to sell services? Offer the setup service for free as your lead magnet.
- Want to sell an online course? Create one lesson and use it as your lead magnet.
- Want to sell software? Create a free app that only has one feature and use it as your lead magnet.
Of course, this approach only works if the product or service already has proven demand.
If you have an innovative business idea, you should only consider it validated once you get enough people to pay you.
In that case, we recommend reading “The Lean Startup” and going with that strategy instead!
Step #4: Build a Simple Squeeze Page Funnel for Your Offer
The squeeze page funnel has two pages:
- A squeeze page where you explain what your free offer is all about and encourage the potential customer to take advantage of it.
- A thank you page where you thank the potential customer and tell them what they need to do to redeem the free offer.
Our software, ClickFunnels, includes a proven squeeze page funnel template that has been optimized for conversions!
Step #5: Start Driving Traffic to Your Squeeze Page Funnel With Paid Ads
It doesn’t really matter which platform you advertise on, what’s important is that you put your free offer in front of your dream customers.
If you don’t have any previous experience with paid advertising, we recommend picking up a Facebook Ads course on Udemy and going through it to learn the basics.
Then, set up an ad campaign, start running it with a small daily budget, and see what happens. Are people giving you their email addresses?
If your free offer is related to something that has a proven demand, you should be able to get leads provided that your targeting, your ads, and your squeeze page copy are all on point.
If you aren’t able to get leads no matter what you do, it’s possible that your free offer isn’t appealing enough, in which case you need to either find a way to make it more valuable or come up with something new.
Ideally, you want to optimize everything to the point where your cost-per-lead is $2 or less.
We would say that if you can build an email list of 1,000 subscribers at that cost-per-lead, your business idea is probably worth pursuing!
Okay, But What if You Can’t Afford to Spend Money on Ads?
There are other ways to drive traffic to your squeeze page funnel such as building a following on social media and promoting your free offer there.
However, getting to that 1,000 subscriber milestone will probably take you at least a year with this approach.
If you want to reach it faster, it might make sense to simply pick up a part-time job so that you would have money to spend on ads.
That would also help you learn paid advertising, which is a skill that will likely prove to be extremely valuable in your entrepreneurial career.
Finally, if you want to sell a service that has a proven demand, you can always start with cold outreach and get some money coming in that way, then build a proper sales funnel later.
Want to Learn How to Build Sales Funnels That CONVERT?
Our co-founder Russell Brunson used sales funnels to take ClickFunnels from zero to $100M+ in annual revenue in less than a decade.
He is now widely considered to be one of the top sales funnel experts in the world. Want to learn from him?
His best-selling book “DotCom Secrets” is the best place to start because it covers everything you need to know in order to build sales funnels that convert.
This book is available on Amazon where it has over 2,500 global ratings and a 4.7-star overall rating.
But you can also get it directly from us for free…
All we ask is that you pay for shipping!
So what are you waiting for? 🧐
