Business Start Up

I want to start my own direct selling organisation

What do I need
and
What do I need to do?

Your first and most important need is a product or a range of products.

In addition to being unique, the products should, desirably, require demonstration to achieve best outcomes. (For example skin care, cookware, home products, jewellery etc.) Supply of the products must be dependable to permit prompt and timely fulfilment of orders.

You will need to develop a contract for your independent salespeople (ISP's) to sign when they join your business. You must decide whether your ISP's are to be commission agents, selling the products on your behalf, or independent resellers who buy the products from you at wholesale price and resell to consumers at a higher retail price.

Before making this decision you should consult your professional advisor.

You must develop a compensation or reward plan (Plan) for your ISP's. This will set out in detail all the benefits to be paid or awarded to your ISP's for their sales performance. The DSAA can provide you with details of professional consultants who can assist in designing your Plan. They will assist you to decide what type of Plan will best suit your business. There are three main types of Plans - Single Level, Multi Level and Binary. Find out more.

You must decide how you want your business to operate.

The choices are:

  • Party Plan
  • Network Marketing
  • Door to Door or Catalogue Drop
  • A combination of two or all three

The method of operation will be largely determined by the nature of the product. Where the products require or lend themselves to personal demonstration, a Party Plan operation would be appropriate. For products requiring little or no demonstration or training, a Network Marketing, Door to Door or Catalogue Drop operation would be appropriate.

Pricing your product will be one of the first issues you must determine when planning to start your own DSO. You must carefully calculate the total costs of running your business, including the

  • Cost of product
  • Total benefits payable to ISP's under your Plan
  • Costs of distribution
  • Promotional costs
  • Overhead expenses

You must be sure that there is sufficient margin in the selling price of your product to recover all those costs and leave you with a profit.

When setting the selling price of your products you should be confident that they are priced competitively when compared with other products on the market.

Starting a DSO will require a capital investment and care should be taken to ensure that sufficient financial resources are available to take care of all the start up costs and an initial period of trading.

Your start up costs will include:

  • Product development
  • Initial stocks of product
  • Printing stationery and literature, including:

    • ISP Agreement
    • Product catalogue
    • Product price lists
    • Customer order form
    • ISP order form
    • Compensation/reward plan
    • Policies and procedures manual for ISP's
    • Website
    • For party plan operation:

      • Host reward leaflet
      • Party invitations
      • Host envelope
  • Staff and labour costs - office, warehouse
  • For therapeutic products - product registrations and licence fees.

Taxation issues (GST, ABN, PAYG etc) are important when considering the start up of a DSO and should be discussed with a professional advisor.

The information provided here for starting a DSO is nothing more than a broad general summary of the matters which need to be considered. Each situation will have its own particular requirements and issues and it is always recommended that when considering a DSO start up the proposal should be discussed with expert advisors and consultants.

The Direct Selling Association list of Supplier Members contains the names and contact details of expert advisors and consultants who can assist with these matters.

View details of DSAA Supplier members.

DSAA Members