A demo does not need to sound finished to tell you what a song can become. The useful question is usually simpler: is there a strong idea in the middle of it, and can a listener find that idea without being coached?
A rough vocal over a guitar or keyboard can be enough. So can a phone recording made after rehearsal. What matters at that stage is the shape of the song. Listen for the part that people remember on the drive home, the line that gives the chorus its lift, or the change in the arrangement that makes the second verse feel different from the first.
Start with the song, not the equipment
Good speakers and a tidy session can make a demo easier to hear, but they cannot supply a missing hook. Before changing plug-ins or adding layers, strip the track back. A voice, a single instrument and a steady tempo often make the next decision obvious.
That stripped-back listen also shows where the song is carrying too much. If the chorus only works once three backing parts arrive, the arrangement may be doing the heavy lifting. Keep the parts that give the song its character and question the rest.
Keep notes that someone else can use
A useful demo folder has more than one audio file. Add the tempo, tuning, lyric sheet and a short note about the intended feel. Name the versions by date or change, rather than leaving files called final-final-2 on a hard drive.
Those small notes save time when a band, producer or engineer comes back to the song weeks later. They also protect the first idea from getting lost while the recording grows around it.
Leave room for the next pass
A demo is a working document. It should make the next conversation easier, whether that means changing the key, cutting a verse or booking a proper session. If the central idea still works when the arrangement is quiet, it has earned another listen.