Introduction
There is a market for leatherette and velour drawstring bags. These bags can be used to carry eyeglass bags, jewelry bags, pen bags, and other promotional items to increase their perceived value. Elsewares Promotional Products & Packaging was established to supply these logo-imprinted products to advertising specialists distributors, who then market them to the end users.
The Products
Elsewares is developing a collection of unique products, as well as drawstring packaging products, that will increase the perceived value of these products. These products will be imported from Mexico and Far East. Before they reach distributors, they will be printed in-house with different company logos.
Elsewares can join the Advertising Specialties Institute trade group to have electronic and print access to a network 13,000-14,000 ASI-listed distributors of advertising specialty products, which is part of a $7.4 billion industry. This is second only to newsprint and television in terms of advertising dollars. Elsewares’ products will be sold only through these distributors. Elsewares intends to reach those distributors through advertisements in trade publications, through an in-house sales force, and a network of salaried and commission-based sales reps.
In conjunction with our marketing campaign for these packaging products we will display our unique line of promotional products to the exact same distributors. Thus, we have three sales opportunities.
The Market
The industry of advertising specialties has seen sales grow at an average rate of nearly 7% per annum over the past decade, reaching $7 billion in revenue last year. This is a mature market that is overcrowded with distributors and suppliers. In that industry, there were three suppliers offering only velour or leatherette drawstring bags. They combined to sell $2,500,000. These three suppliers are located along the East Coast. The Midwest and West Coast have the largest number of advertising specialty distributors. We feel that by concentrating our efforts on marketing to the West Coast distributors, many of which already have had positive business relationships with our personnel, we will acquire a significant market share of the packaging niche over the next three years.
Financial Considerations
We will use a portion of our initial startup cost to buy inventory, office equipment, as well as imprinting machine. The rest will be used to pay catalog costs and for advertising expenses. In the first twelve months of operation, we anticipate that there will be an additional financial commitment for financing receivables or payroll expenses.
Elsewares aims to increase its sales in the West United States, and achieve a respectable sales level by Year 2. Based on our monthly fixed cost estimate and the expected monthly unit sales, Elsewares should be able to achieve a running monthly break-even point after the fourth month.
Elsewares seeks a financial package that is based on a five-year note amortized over fifteen years. The note will be personally guaranteed by the founder’s assets. By amortizing the note over 15 years, the company will be afforded the opportunity to establish a healthy track record which will enable the company to seek alternate financing for the balance. It should be noted that the owners of Elsewares do not intend to take any profits out of the business until the long-term debt has been satisfied. Whatever profits remain after the above debt payments will be used to finance growth, mainly through the acquisition of additional inventory.
1.1 Objectives
The East Coast is home to the three largest suppliers of imprinted pouches for advertising specialty distributors. They are currently making a combined $2,000,000 in pouch sales. Elsewares aims to increase its sales in the west United States and reach a respectable sales level before the end of the year. Elsewares wants to factor our growth and diversify into unique promotional product offerings. These products will be attractive as advertising specialty items or packaged with a drawstring pouch. We can also provide these.
1.2 Mission
Elsewares intends to develop an inventory of unique products and drawstring packaging products that can add perceived value to those products. These products, which are sourced from Mexico or the Far East, will have various company logos imprinted before being shipped to distributors.
Elsewares can join the Advertising Specialties Institute trade group to have electronic and print access to a network 13,000-14,000 ASI-listed distributors of advertising specialty products, which is part of a $7.4 billion industry. This ranks only behind television and newsprint in terms of advertising dollars spent. Elsewares’ products will be sold only through these distributors. Elsewares plans to reach these distributors through advertising in trade publications, an in-house selling force, and a network if salaried and commission-based reps.
Success Keys 1.3
Elsewares management believes that it has the right products and the right people to attract a loyal customer base. Our business philosophy will be the key to our success. The advertising specialty industry expects products to arrive on time with high quality imprinting. Pursuant to these demands:
Elsewares can satisfy this demand through maintaining acceptable inventories that will be delivered on-time according to prearranged shipping schedules.
Elsewares will institute a quality control procedure for overseeing the on-site imprinting facility to ensure an acceptable imprint quality.
Elsewares, in addition to offering a complete line velour packaging materials, will also offer a unique range of promotional products. This will encourage advertising specialist distributors to think of Elsewares when searching for original products.
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