Company Startup

Start your own direct selling organisation

So, you’ve made the decision to start your own direct selling organisation—congratulations!

Before starting a direct selling organisation it’s vital to have answers to these questions:

Product

The first thing you need is a product. It needs to be aligned with the relational and experiential selling strengths of the direct selling channel.

Pricing

Pricing is vitally important. You must be sure that there is sufficient margin to recover all costs and leave you with a profit; your product needs to be competitively priced against other products. You need to carefully calculate the cost of running your business, including:

  • Product cost
  • Benefits payable to salespeople
  • Distribution costs
  • Promotional costs
  • Overheads
Supply

You must also have a dependable product supply to allow timely fulfilment of orders.

Salespeople

You must develop a compensation or reward plan for your salesforce detailing the benefits to be paid for sales performance. Single level, multi-level and binary plans are common in the Australian market. For more information, see the FAQs page. The DSA can provide details of professional consultants to help design your plan.

Compensation Plan

You must develop a compensation or reward plan for your salesforce detailing the benefits to be paid for sales performance. There are three main types of Plans: single level, multi-level and binary. For more information, see the FAQs page. The DSAA can provide details of professional consultants who can help design your plan.

Operational Structure

You must decide how you want your business to operate: as a party plan, network marketing, door-to-door, or combination model. The method of operation will be largely determined by the nature of the product and whether it requires demonstration.

Start-up Costs

Starting a DSO will require a significant capital investment. Care should be taken to ensure that sufficient financial resources are available to cover start-up costs and an initial trading period.

Start-up costs will include, but may not be limited to:

  • Product development
  • Inventory
  • Stationery and Literature, including:
    • Staff Agreement
    • Catalogue
    • Price Lists
    • Customer Order Form
    • Staff Order Form
    • Compensation Plan
    • Policies and Procedures Manual
    • Host Reward Leaflet
    • Party Invitations
    • Host Envelope
  • Website Development and Hosting
  • Staffing and Labour Costs
  • Product Registrations and Licence Fees
  • Taxation issues are also important when considering the establishment of a DSO and should be discussed with a professional advisor.

NOTE: The information provided on these pages about starting a DSO is a general summary only. It is always recommended that the proposal should be discussed with expert advisors; the DSA can provide the names and contact details of consultants to provide guidance and counsel.

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