Want to start selling online?
Here’s our comprehensive guide for complete beginners:
Step #1: Decide What to Sell
What Is Your Unfair Advantage?
As a first-time entrepreneur, you are probably underestimating just how much “business stuff” you’ll need to learn and how difficult it’s going to be to get your company off the ground.
Now consider this: if you go into a market that you are completely unfamiliar with, you’ll need to acquire relevant domain knowledge in addition to the aforementioned business skills.
In theory, that is doable but in practice, it would be extremely difficult because you’d be competing against people who have both the business skills that you lack and the domain knowledge that you lack.
That’s why we recommend taking stock of your current skills and knowledge to see where you might have an unfair advantage against your competition.
We are assuming that you are an adult which means that you have been alive for at least 18 years. This means that there must be something that you have at least some expertise in.
Maybe you have been doing gymnastics since you were 7 years old. Maybe you have spent a decade working in a particular industry and know it inside and out. Maybe you are an experienced hiker and camper.
Things like that may not seem like a big deal to you because you are probably used to them and take them for granted. But domain expertise like that can give you an unfair advantage in business if you can figure out how to monetize it!
Sell Something That People Are Already Buying
In our culture, entrepreneurship is associated with innovation but that is not how you should think about it if you have never built a business before.
Once again, you are probably underestimating how much business stuff you’ll have to learn and how difficult it’s going to be to get your company off the ground.
That’s why your focus as a first-time entrepreneur should be learning how to run a business. And the best way to do that is by selling something that already has proven demand.
Once you acquire business experience and build a track record of launching, managing, and growing profitable companies, then you can start experimenting with innovative ideas if you still want to.
But until you reach that point in your entrepreneurial journey, forget about “building the next Facebook” and just focus on selling something that already has proven demand.
Being a first-time entrepreneur is already hard enough as it is, there’s no need to make it even harder by pursuing crazy ideas!
The Pros and Cons of Various Business Models
Now let’s take a closer look at the three most popular online business models: selling services, selling digital products, and selling physical products.
Selling Services
Pros:
- Low startup costs – In a lot of cases, all you need is a marketable skill and an email account that you can send cold emails.
- Straightforward marketing – You can start reaching out to your dream clients immediately via cold email. If you send 100 cold emails a day, you will land your first client sooner or later. “The Cold Email Manifesto” by Alex Berman is a great book on this.
- High profit margins – You can have high profit margins if you keep overhead costs low and package your service well.
Cons:
- Clients from hell – Dealing with clients can be a headache until you learn to set realistic expectations, maintain boundaries, and negotiate well.
- Selling services requires sales skills – You will need to learn how to close sales in person or via video calls.
- Scaling service businesses requires employees – You will inevitably hit a ceiling on how much work you can take on as a solopreneur and will have to either accept it or start hiring people to scale your business beyond it.
Suitability for first-time entrepreneurs: We would argue that this is the best business model to start with because low startup and overhead costs mean low financial risk.
That being said, if you have poor social skills or are struggling with social anxiety, this business model may not be the best fit for you due to the necessity of interacting with clients.
Of course, you can always look at it as an opportunity to get out of your comfort zone!
Selling Digital Products
Pros:
- Low startup costs – You can produce digital products at zero or low cost, promote them for free on social media, and distribute them using software that only costs a few hundred bucks a month.
- High profit margins – Due to low production and distribution costs digital products can have insanely high profit margins. This means that getting to the break-even point with them is relatively straightforward.
Say, if you have a $7 ebook and can figure out how to sell 100 copies of it every month, you should be able to not just break even but make a few hundred bucks in profit.
And sure, you won’t be able to flex your lifestyle on Instagram with that amount of money but it can help you cover a part of your rent, pay for your groceries or simply go straight into savings. It’s not much but it’s a start! - Tempting impulse purchases – You don’t need to have exceptional copywriting and marketing skills to make some money with $7 ebooks.
At that price point, all you have to do is pique someone’s curiosity and they might buy your ebook on impulse because why not, it’s just seven bucks. This is especially true if you have a no-questions-asked 30-day refund policy.
Cons:
- Getting started will take time – Creating a digital product, figuring out the marketing and making your first sale will take time regardless of the product or the marketing strategy.
- Getting your business off the ground without paid ads will take a long time – You can promote your digital product for free with social media marketing but building an audience that is sizable enough for you to generate a decent amount of revenue will probably take at least a few years.
- No guarantee that anyone will buy it – There’s no guarantee that you will make any money with your digital product. It might turn out to be a complete flop.
Suitability for first-time entrepreneurs: Selling digital products can work well for first-time entrepreneurs provided that you don’t mind either spending money on ads or growing your business slowly via social media marketing.
It can be a great option for people who don’t like the idea of personally interacting with customers and would rather sell their products through completely automated sales funnels.
Selling Physical Products
Pros:
- Tons of business opportunities – You can build a business by simply taking some mundane everyday item and creating a premium, high-quality version of it. There’s a lot of money to be made by selling high-quality socks, backpacks, toothbrushes, and so on.
Cons:
- High startup cost – Starting an e-commerce business requires a significant amount of startup capital, especially if you want to manufacture your own products instead of going the dropshipping route.
And if you intend to do dropshipping, you should be prepared to spend money on ads in order to test various product ideas until you find a winner. - Low profit margins – Physical products have low profit margins because they are expensive to produce, store, and deliver to customers. But what exactly do we mean by “low”?
In ecommerce, 10% profit margins are pretty typical but lower margins such as <5% are not uncommon. - Hard to differentiate yourself – Speaking of dropshipping, it tends to be a race to the bottom because everyone is selling the exact same stuff from AliExpress.
This means that your business has no moat: you are selling a commodity and anyone who can figure out how to sell it for less can come and take your market share.
Moreover, online shoppers are catching on to the fact that they can do a reverse image search, find the exact same product on AliExpress, and order it directly from there!
Suitability for first-time entrepreneurs: We would advise against selling physical products unless you can produce them yourself with low overhead costs.
Say, if you are an experienced knitter and want to open an online store where you sell your hand-made wool socks, then sure, go for it.
Other than that, you can play with dropshipping if you want to learn more about e-commerce, but when it comes to making money you’d almost certainly be better off selling services or digital products.
Step #2: Choose the Right Market
Alex Hormozi is an entrepreneur, investor, and author who reached $100M+ net worth by his early 30s.
He also happens to be a ClickFunnels user and is one of the winners of our Two Comma Club C award.
We give this award to entrepreneurs who earn between $25M and $100M in revenue within funnels built with our software!
In his best-selling book “100M Offers” Alex explains how to choose the right market using these four criteria:
- Pain – You want to target people who are dealing with a painful problem that they are eager to solve.
- Purchasing power – You want to target people who have a high purchasing power and are able to pay a premium price for your products and services.
- Easy to reach – You want to target people whom you can easily reach with your marketing campaigns.
- Growth potential – You want to make sure that this market is growing and is projected to continue to grow in the foreseeable future.
Think very carefully about all this because the market that you choose will be one of the major factors that will determine the profit potential of your business.
For Example:
Let’s say that you took stock of your skills and knowledge and realized that you have enough fitness experience to help other people lose weight and get in shape.
You then evaluated potential business models and decided to start selling a personal training service.
Pretty much everyone wants to be healthier, get fitter, and look better but you need to be strategic when choosing a market.
Say, you can sell the exact same personal training service to broke college students and to Silicon Valley tech workers who are making six figures a year.
Who do you think will pay you more, be more committed, and get better results?
Step #3: Do Customer Research
The most effective salespeople in the world are the ones who understand their dream customers the best.
That’s why we recommend doing customer research before you start working on your offer.
Here are the three best ways to learn more about your target audience:
- Talk to your dream customers – Nothing beats talking to potential customers one-on-one so seek out opportunities to do that. Simply ask them questions and listen to what they have to say. You can learn a lot by letting people talk.
- Follow online discussions that your dream customers are participating in – This can mean keeping an eye on Twitter hashtags, registering to online forums, following relevant subreddits, etc.
- Consume the content that your dream customers are consuming – This can mean reading blogs, listening to podcasts, watching YouTube videos, etc.
Finally, if you can afford text analytics software, consider investing in it.
You can use it to analyze vast quantities of textual data such as all tweets that feature a particular hashtag. This can help you uncover insights that you wouldn’t have been able to uncover otherwise.
Needless to say, the closer you are to your target demographic, the more context you will have and the less customer research you will need to do.
That’s why “scratch your own itch” is such a common business advice. It’s much easier to understand your target audience when you belong to that demographic yourself!
Step #4: Create an Offer
Your offer is how you package the product or service that you sell.
The basic formula for creating an irresistible offer is this:
High Value + Low Price = Irresistible Offer
As Alex Hormozi puts it, it all boils down to creating an offer that is so good that people would feel stupid saying no.
You can watch this presentation where he explains how to do that:
We also recommend reading Alex’s book “$100M Offers” which is a comprehensive guide to creating irresistible offers.
Step #5: Create a Lead Magnet
A lead magnet is a freebie that you offer to the potential customer in exchange for their email address.
But it’s not 2005 anymore. People don’t get excited about random digital junk. Giving away some low-effort PDFs won’t get you anywhere.
Your lead magnet needs to provide value if you want it to work. But what does that mean?
Alex Hormozi argues that a lead magnet should offer a complete solution to a narrowly defined problem.
That way, it will actually help the potential customer solve a concrete problem and therefore provide real value.
If you are selling a service then you can use that service itself as a lead magnet and then follow it up with a sales pitch for a package or a subscription.
Say, Hormozi gives an example of how a masseuse could use a $10 massage as a lead magnet and then sell $100 massage packages to those leads.
Meanwhile, if you are selling a digital product, you can create a lead magnet that provides a solution to a smaller problem that is part of a larger problem that your product addresses.
Say, if you sell a $7 ebook where you teach people how to have more success with online dating, you could give away a PDF with three tips for improving one’s dating profile.
If someone implements your tips and gets more matches, they will probably want to learn more and will buy your ebook.
We want to emphasize that your lead magnet is going to serve as the foundation of your entire sales funnel.
If you want your sales funnel to convert you need to make sure that your lead magnet exceeds all expectations!
Step #6: Build a Sales Funnel
Okay, so what’s a sales funnel?
A sales funnel is a system designed to convert visitors into leads, leads into customers, and customers into repeat customers. It can be either partially or completely automated.
Partially Automated Sales Funnels
With a partially automated sales funnel, you drive traffic to your funnel and:
- Automatically convert those visitors into leads by persuading them to give you their email addresses in exchange for your lead magnet.
- Manually reach out to them and schedule discovery calls with them.
- Close sales on those discovery calls.
Completely Automated Sales Funnels
With a completely automated sales funnel, you drive traffic to your funnel and:
- Automatically convert those visitors into leads by persuading them to give you their email addresses in exchange for your lead magnet.
- Automatically convert them into customers by pitching them your products and services via automated email sequences.
Should You Use a Partially or a Completely Automated Sales Funnel?
Typically, selling services requires a partially automated funnel because you need to talk to potential clients in order to close sales.
Meanwhile, both digital and physical products – with the exception of high-ticket items – can be sold through completely automated sales funnels.
The Most Effective Way to Sell Anything Online: The Value Ladder Sales Funnel
There are several popular sales funnel models out there but we believe that the most effective one is the Value Ladder sales funnel.
It was designed by our co-founder Russell Brunson who then used it to grow ClickFunnels to $100M+ in annual revenue.
Here’s how Russell explains it:
The Most Basic Variation of the Value Ladder Sales Funnel: The Squeeze Page Funnel
You can build a basic Value Ladder sales funnel with just your lead magnet and your main offer and then add more offers over time as your business grows.
We recommend using the squeeze page funnel for that because it’s extremely versatile and can work well for pretty much any business.
Step #7: Start Driving Traffic to Your Sales Funnel!
Once you have your sales funnel, it’s time to start driving traffic to it.
We recommend learning how to run social media ads because paid advertising allows you to put your lead magnet in front of your dream customers and get immediate market feedback.
Choose a Facebook ads course and go through it. Udemy has frequent sales where you can pick up courses for just $15-$20.
Once you learn the basics of running Facebook ads, create an ad campaign designed to promote your lead magnet and start running it with a small daily budget.
It probably won’t work right away so keep tweaking it until it does. If you can’t make it work, come up with a better lead magnet.
Be prepared to burn money on ads until you learn how to run them profitably. Consider it a tuition fee that you need to pay in order to master this invaluable online marketing skill!
Build and Launch Your First Sales Funnel In Just Five Days!
We understand that building a sales funnel from scratch may seem like a daunting task.
That’s why we created our Five Day Lead Challenge where our co-founder Russell Brunson and his special guests will walk you through the entire process step-by-step.
In this super practical, hands-on online workshop you will:
- Learn more about sales funnels
- Create your lead magnet
- Build your sales funnel
- Set up an automated email sequence
- Launch your funnel
…in just five days.
This challenge is completely free, we’ll even give you a free trial of our software. You won’t have to spend any money to build and launch your first sales funnel.
All Russell asks is that you commit to showing up every day, watching the main lesson, and completing the homework assignment. Can you do that?
If you make this commitment and follow through with it then in just five days you’ll have a fully functional sales funnel.
So what are you waiting for? 🧐