Going entrepreneurial sans a startup capital

CEBU, Philippines - Having a startup capital is what usually comes first to mind when venturing into business and most often having none to start with is also what discourages most individuals to embrace entrepreneurship.

But going into direct selling could be the solution to the “startup capital” problem faced by most would-be entrepreneurs as this type of business does not require a huge amount of money to be able to start. Registration cost is often minimal and affordable to many.

Generally, direct sales companies only require interested product dealers their photo, any valid I.D. and proof of billing for them to be part of the sales force.

Direct selling means selling a wide variety of products ranging from cosmetics, clothes, footwear, kitchenware, and jewelry among others, directly to the customers instead of them going to retail stores.

In fact, even those who are employed have found direct selling as a good part-time job to complement their day job income while jobless ones may see this as their break to become the boss of their own business.

“Ako nisud ko sa direct selling tungod kay gusto kong makapangita og regular income unya tiggamit man sab ko ug akong pamilya sa products,” (I ventured into direct selling to have a regular source of income, and besides me and my family also patronize these products) said 59-year-old Genoveva Ramirez, who has been a dealer of a famous international cosmetic company for more than 20 years now.

Ramirez, a resident of barangay Guadalupe, Cebu City, said a person may become a sales representative of a group either by recruitment or intentionally applying to the company.

“In my case, gidani man ko kaniadto sa akong amiga unya kay nangita sab ta og kwarta maong gisudlan ni nakong direct selling (A friend of mine encouraged me and because I was looking for money so I joined direct selling),” Ramirez  shared to The Freeman.

Credit Limit System

Direct sellers are not employees of the company but are independent contractors who market the products of the company for a commission.

Dealers usually start with a credit limit (the maximum amount that a customer can owe on credit) of more or less P2,000 but it varies depending on the company.

The good thing, she said, is that a dealer can actually increase his or her credit limit by paying dues religiously and on time adding that, “mas maayo pa gani gyod kung advance ka mobayad kay maganahan man ang company ana (It is even better if you pay in advance because the company likes that).”

Direct sales distributors like Ramirez gain profit through the multi-level marketing system, which gives financial gains to sales people who productively recruit more individuals to join the selling system.

Although recruiting more members to join the organization is an important factor in the success of the business, industry players caution would-be dealers to recruit the right people.

 â€œMagbantay gyod ko sa akong i-recruit kay kung gahi na sila mamayad, affected man imong record ug commission,” (I am cautious when it comes to recruiting the right people because if your recruit does not pay well, it will also affect your record with the company and worst, your commission) stressed Ramirez, adding that she personally asked her daughters to be her recruits to expand their direct relationship with customers in her barangay.

Before she established selling cosmetic products in the barangay level, she used to get orders from students living in dorms, parlors and different establishments.

Sales Commission

In direct selling, product distributors do not receive a salary from the company they are working with. They are rather compensated based on their product sales as well as the sales made by their recruits.

For instance, although she is just new in the industry, 57-year-old Elaine P. Metante of barangay Guadalupe is now franchise associate manager of another personal direct selling company because of her many recruits who are called franchise builders.

“Kung daghan ka og recruits pasabot nga mas dako imong commission sa sales,” (If you have many recruits, it means bigger commissions on sales) Metante explained. “Unya kung ang mga recruits gusto motaas ilang position kinahanglang mangdani sab sila og daghang tawo.” (And for the recruits to level up, they also need to recruit more for their downline.)

She revealed that at first, her intention of becoming a dealer was only to buy her favorite products in the company for her own consumption.

Later on, she realized she could actually supplement her “Sari-Sari” store income by investing her time and effort into another form of selling, saying it also surely requires a constant hard work to earn serious money through direct sales.

She also noted her increasing credit limit that amounts to not less than P10,000 can be attributed to her good record in the company she earned through on-time and even early payments.

Product dealers get as much as 25% discount from each item they buy and this markdown is where their commission comes from.

Metante and Ramirez said promo discounts and sales give them extra earnings as they can still sell their products at its original price.

Aside from promos, they added, companies also give awards to loyal sales people through bonuses, recruitment gifts and holiday gifts.

Admitting that the business does not really guarantee big returns, both are thankful their membership in the industry has improved their lives and allowed them to use good products for their family.  (FREEMAN)