Replies to post #15839 on DNA Brands Inc (DNAX)

[Ed the Trader]

BECOMING A BEVERAGE DISTRIBUTOR

"You previously mentioned individuals becoming distributors. Alion says he/she has done that in a small way. I'll bet most of us can think of a place we would like to "pick up" DNA Energy drinks as that would benefit all shareholders. How would one go about that?"

The first thing you have to realize is that there is nothing special about forming a business, and a beverage distributor business is started like any other business. Individuals start new businesses everyday.

Rules vary in each state, but for most types of businesses, you don't need any sort of license or permit for a business that distributes non-alcoholic beverages. However, there is likely SOME interaction you will need to have with your state or county (and possibly local) governments.

Here are some resources to get educated:

http://www.nolo.com/legal-encyclopedia/start-own-business-50-things-30077.html

http://www.nolo.com/legal-encyclopedia/state-start-up-requirements-business-29698.html

Note that the information on the Nolo web pages are very comprehensive and cover ALL types of businesses, including all corporations. Although you can create one, you don't need a corporation to start a new small business.

Here is the bare minimum that one should do in the state of Texas to start a new business:

1) Reserve a domain name for your business using GoDaddy.com, Yahoo.com, or any of the other businesses that allow you to register an Internet domain name (ie: ABCdistribution.com). Even if you are not going to setup a web site right this minute, reserving a domain name that you can use later is a good idea.

2) Go to your county courthouse and file an Assumed Name Certificate to legally do business using a name that is not your own birth name. This is cheap (maybe $10) and easy to file. You just give the county the means to know that if someone wants to know who is running a business with your business name (ex: ABC Distribution), they can find out that it is you (ex: John Doe).

3) Use your domain name to configure an e-mail account for yourself. You will appear much more professional if customers can contact [e-mail] than if your e-mail address is [e-mail].

4) If you are going to sell product directly to end users (ie: people who will be drinking the product rather than reselling it), you will need to get a Sales Tax Permit (http://www.window.state.tx.us/taxpermit/). If you are only going to sell product to retail establishments that will sell the product to end users, you do NOT need a Sales Tax Permit. In Texas, you only collect sales tax on end users.

5) Go to a bank with your Assumed Name Certificate, and open a business checking account under your company name. Make sure you can an ATM/Debt card that is tied to your checking account. Things go much smoother for a lot of reasons if you keep business income and expenses separate from personal income and expenses. If nothing else, it is much easier to figure out tax deductions in April when all of your business income and expenses are in one separate account. Also, the IRS will allow your business MUCH more creditability if you have opened a separate bank account for your business.

6) Optionally, you can get a separate business phone number to put on your business card. Tying the phone number to either a landline or a cell phone is fine, although a cell phone may make more sense if you are going to spend a lot of your time out in the field talking to prospective customers. If you do get a separate business phone number, you can talk to your phone company to see if it is possible to run a second phone number into your existing phone. In that case, if you see if you can get a separate voicemail account for the second phone number.

7) Get some business cards printed. Prospective customers (ie: retail store managers) are going to want a business card so they know how to contact you.

8) Take sample product and business cards to prospective customers (ie: retail stores). Ask to talk to the store manager. For large chains, don't be surprised if a store manager cannot work with you because you have to work through their corporate office. However, many store managers of larger stores still have individual discretion to purchase and stock small amounts of product. If you walk into a small retail store, like a one-off, independent gas station/convenience store, and there is only one person behind the counter, ask if that person is the manager. If not, ask how you can contact the manager and leave a business card.

9) At the end of the year, file Schedule C with your Federal income tax paperwork. Texas does not have a state income tax.

Somewhere near the top of this, you should contact DNA Brands to ask what THEIR requirements are to become a distributor. It would be best if you already have a business name figured out. Don't be afraid to admit that your business is a new business. Just remember to state that you have tried DNA products (you have already sampled their products while purchasing at retail prices, or called DNA Brands as a shareholder to request some free samples, right?), and you are impressed enough with their products that you would like to carry their products in your distribution network. They may have a minimum purchase amount to qualify for wholesale/distribution pricing, but I don't know this.

Again, other states will have different requirements. Use Nolo.com to quickly educate yourself about the requirements in your state. Don't be afraid to contact your county courthouse and state Secretary of State. I have found people in these offices to be very friendly and eager to help new entrepreneurs any way that they can.

Note that because DNA Brands seems to be doing very little advertising, and this is THE major weakness of the brand (otherwise, they would be growing MUCH faster!), anything you can do as a distributor to add advertising to the equation will help the situation. Adding advertising to retail stores (ie: your customers) is an excellent way to get more product moving. Promotions to give away samples at places with high density of energy drink users (ex: college campuses or businesses that run 3 shifts around the clock) is another idea. Contact DNA to see if they can give you any branded material like stickers, posters. If you hire hot females to hand out free cans of DNA, first contact DNA to get some DNA branded hats and t-shirts for the women to wear. People who want to do this BIG might buy advertising on radio, TV, billboards, etc.

The sky is the limit here. Energy drinks are a $9 billion business sector, and it does not require a very big slice of that business sector to create a profitable business. All of the steps listed above should only require a couple hundred dollars in funding.