The first step to creating a passive income is to determine if the service and/or product you want to sell fits within your target market.

When we talk about ‘passive income’ in this and other articles in this series, we’re talking about the process you’re going to follow to create a sales funnel.

There are lots of other ways to create a passive income, and I touch on these in the overarching article to this one, however, I’m primarily focussing on creating sales funnels.

So this first step is pretty important, because let’s face it – there’s no point in having a service or product ready to go, a sales funnel created and launched, and then no one buys from you.

Understanding the pain points and needs of your target market is imperative to launching a sales funnel that works. This is because you need to know what is going to solve your target markets’ problems.

And, add to that, every other step within the process of creating your sales funnel, relies on having a group of willing and able buyers.

No buyers? No passive income.

Want the lowdown in a video rather than sift through the copy? Here’s the snippets:

Know these two things about your market

No amount of work or luck will help you build your automated sales funnel if you don’t have a willing and able market.

You need to ensure that there is a sustainable market for the services or products that you’re planning on offering. If not, then all the time and effort you invest in this project and building the automation will be wasted.

To confidently build some automation around a market you must determine two things:

  1. The market is big enough
  2. The market is monetizable

Determining these two things means doing some active online research. It doesn’t take much time and it is something that can set you up for a higher return on your investment.

Is your market big enough?

To find out if your target market is big enough to consume your product or service look for:

  • 1,000+ Google searches per month on your top three keywords or phrases (so you need to know what these are as well)
  • Active content on blogs, newsletters + magazines, Facebook pages
  • Active online discussions on forums
  • Active associations or bodies

You need to know if enough people are searching and talking about your product or service to ensure that it is viable and will give you an appropriate ROI.

Can your market be monetized?

To determine if the market is monetizable look for:

  • Any direct competition – they are doing exactly what you want to do. Don’t worry, this is a good thing! If you have direct competition, then the market is big enough!
  • Indirect competition – they are selling to the same market, but don’t sell exactly what you do. This is a good indication that there is a gap in the market that you can fill.
  • Advertisers – where there are well-known advertisers there is money, so your service/product could be popular.
  • Gurus or persons of influence – If there are very influential people or coaches and mentors associated with your market then there may be substantial interest for what you have to offer.
  • eCommerce sites – if there are many online sites that are selling products to your market then you could tap into this market as well.

Helpful keyword research tools

Undergoing keyword research is all well and good if you know where you’re looking.

For any newbies joining the sales funnel game then here are some tools that will get you on your way:

Always use the 80/20 rule

The things listed above are all just rules of thumb, for example if you don’t find an active forum about your market and your keywords don’t add up to exactly 1000+ that doesn’t mean you don’t have a viable market.

Of course, the more of the above criteria your market meets the more likely you are to succeed, but if you’re still unsure, always use the 80/20 rule and go for the maximum results you can.

Moving onto the next step in the series

Once you’ve done your research and fine-tuned your offering to suit your market, you’ll want to move onto the next step on your way to creating your passive income: sourcing your traffic.

All well and good that the market is out there and they’re large enough and they’re waiting with bated breath to buy from you (we wish, right!) – how are you going to help them find you? How are you going to source your traffic?

More on that next time.


Storm from Virtual Storm is a writer who likes to write by the rules. Finding and fixing errors makes her quite happy. So does chocolate, red wine and a good romcom. She also quite likes playing team sports. It brings out the best in her bossy nature. Read up on her here.


Creating a Passive Income – Step 1: Product-Market Fit
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Creating a Passive Income – Step 1: Product-Market Fit
Step one in creating a passive income is to do some research to determine your product-market fit. Here's how.
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Virtual Storm
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I find keyword research difficult. Do you have any tips?