Arrow Mail is a personalized direct mail business for financial services companies focusing on small businesses. What sets Arrow Mail apart from other target marketing companies is its commitment to quality, service, creativity, and knowledge.

In terms of quality, Arrow Mail ensures that its mailing file is clean and the address block is pristine. The company creates personalized pieces that look like personal correspondence, using high-resolution laser printers.

When it comes to service, Arrow Mail goes above and beyond by becoming an extension of its customers’ staff. The company provides superior customer service and attention to detail, ensuring that mailings go out correctly and on time.

Creativity is another key aspect of Arrow Mail’s approach. The company can design custom direct mail plans that fit customers’ tastes and budget, or modify its proven programs to meet specific needs. All designs and copy are customized to customer satisfaction.

What sets Arrow Mail apart from conventional printers and lettershops is its knowledge and expertise as a direct marketing agency. With over 20 years of experience, the company has valuable insights into prospect selection, database analysis, creative techniques, and financial industry customer files, products, and services.

Arrow Mail operates from a 5,000 sq. ft. building in Monroe, Oregon, located 22 miles northeast of Portland.

Todd Graham, the owner of Arrow Mail, is a recognized expert in the field. He has authored articles on direct mail that have been featured in industry trade publications. With over 20 years of experience, Todd has played a pivotal role in companies like Johnson Communication, Reilly Marketing, and Triumph Direct Mail.

In conclusion, Arrow Mail stands out in the direct mail business with its focus on quality, service, creativity, and knowledge. Todd Graham’s expertise and experience further add to the company’s reputation as a leader in the field.

Direct Mail Business Plan Example

Arrow Mail’s mission is to provide successful direct mail strategies for financial services companies that resonate with small businesses. The objectives of Arrow Mail are to acquire 50 customers by the end of the first year, achieve sales in excess of $260,000, increase the customer base by 25% by the end of the second year, and increase sales by 15% by the end of the second year.

Arrow Mail is a personalized direct mail business for financial services companies that focus on small businesses. The company office and production facility is a 5,000 sq. ft. building in Monroe, Oregon. Over the past twenty years, competition in the financial services industry has intensified, with a wide range of services and companies available. Arrow Mail has developed successful strategies to reach target market groups, especially in equipment loans and motor vehicle lease programs.

Arrow Mail is owned by Todd Graham and a silent partner, operating as a Limited Partnership. The start-up expense primarily focuses on production and assembly setup, with Todd investing $80,000 and the silent partner investing $125,000. Additionally, Todd secures a $125,000 long-term loan to cover start-up costs, including computers, laser printers, scanners, and mailing equipment.

Direct Mail Business Plan Example

Start-up

Requirements

Start-up Expenses

Legal – $1,000

Stationery etc. – $400

Brochures – $8,000

Insurance – $1,000

Rent – $3,000

Setup – $20,000

Expensed Equipment – $140,000

Total Start-up Expenses – $173,400

Start-up Assets

Cash Required – $152,600

Start-up Inventory – $4,000

Other Current Assets – $0

Long-term Assets – $0

Total Assets – $156,600

Total Requirements – $330,000

Start-up Funding

Start-up Expenses to Fund – $173,400

Start-up Assets to Fund – $156,600

Total Funding Required – $330,000

Assets

Non-cash Assets from Start-up – $4,000

Cash Requirements from Start-up – $152,600

Additional Cash Raised – $0

Cash Balance on Starting Date – $152,600

Total Assets – $156,600

Liabilities and Capital

Liabilities

Current Borrowing – $0

Long-term Liabilities – $125,000

Accounts Payable (Outstanding Bills) – $0

Other Current Liabilities (interest-free) – $0

Total Liabilities – $125,000

Capital

Planned Investment

Todd Graham – $80,000

Silent Partner – $125,000

Additional Investment Requirement – $0

Total Planned Investment – $205,000

Loss at Start-up (Start-up Expenses) – ($173,400)

Total Capital – $31,600

Total Capital and Liabilities – $156,600

Total Funding – $330,000

Company Locations and Facilities

The company office and production facility is a 3,000 sq. ft. building in Monroe, Oregon (22 miles northeast of Portland).

This site was chosen for the following reasons:

– Low production overhead.

– Facility is located two miles from the FedEx and US Mail regional processing centers.

Services

Arrow Mail services are as follows:

Marketing Campaign Development

– Develop exceptional creative themes to compel the recipient to read the copy.

– Demonstrate the prime consumer benefits and relate them to the creative concepts.

– Write clear, concise, and interesting lettercopy and response vehicle to achieve desired action.

– Design and develop collateral material.

Database Analysis & Management

– Analyze customer base to demonstrate product breakdown.

– Use modeling techniques to identify customers with a propensity to buy other products.

– Generate reports to analyze marketing information.

Market Analysis & Prospect List Selection

– Review the client’s positioning, product offer, and market area.

– Determine the best audience for the product based on demographics.

– Produce maps to assist in targeting specific geographic areas.

– Develop the best marketing approach and mailing package to fit the product and audience.

– Research and recommend appropriate prospect mailing lists including demographic & geographic selections.

– Obtain virtually any mailing list available in the country.

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Mailing List Hygiene & Preparation

– Enhance name/address data to achieve the highest quality address block possible.

– Merge/purge different mailing lists to reduce current customers and/or duplicates.

– Process mailing file with CASS certified pre-sorting software to increase deliverability and achieve the lowest postage rate (3 & 5 digit sort, BMC, SCF).

– Develop/modify programs to create complex variables (old/new account, potential borrowing power, etc.).

Offset Printing

– Typeset, layout and produce mechanicals for custom projects or existing stationery.

– Manage production of all stationery, postcards and/or collateral material needed for mailing.

Laser Personalization

– Produce high-quality, personalized letters/envelopes on laser equipment in resolutions up to 600 dpi.

– Incorporate variable text, data, and signatures as appropriate.

Market Analysis Summary

Over the past 20 years, the competition in the financial services industries has intensified. Currently, there are numerous financial products/services being offered by the financial community to a wide range of business customers.

Finance companies are an important source of funds for small businesses (less than 500 employees). The area where funds are sought is in leasing of motor vehicles and purchasing equipment. Arrow Mail notes these trends and has created unique strategies in marketing both equipment loans and motor vehicle lease programs to small businesses.

Market Segmentation

Arrow Mail will focus on two customer groups:

– Top 20 financial firms;

– 2nd tier financial firms.

Direct Mail Business Plan Example

Market Analysis

4.2 Target Market Segment Strategy

Finance companies provide loans and leases to consumers, as well as short- and intermediate-term loans and leases to business firms.

This segment of the industry sector is concentrated, with the 20 largest firms accounting for more than two-thirds of total industry receivables. There was essentially no change in concentration in the finance industry from 1996-2001.

Over the five years, the total assets of the 20 largest firms grew from $524.9 billion to $770.3 billion. Their share of total industry assets fell slightly, from 70.1% to 68.8%. An additional 1,200 2nd Tier firms have captured the remaining 31% of the market.

The receivables of finance companies grew by almost 50% over the past five years. In mid-2000, about 45% of the industry’s portfolio comprised business loans.

4.3 Service Business Analysis

Finance companies are a significant source of funds for small businesses, firms with less than 500 employees. Of the loans and leases to business firms in mid-2000, 57% were for business equipment other than motor vehicles.

At mid-2000, 21% of finance companies’ portfolios were invested in motor vehicle loans and leases, down from 26% five years earlier. The past five years marked a major shift by business firms towards the leasing of motor vehicles. Finance companies’ portfolios of business leases of motor vehicles grew at an annual rate of 23.6%.

Arrow Mail notes these trends and has created unique strategies in marketing both equipment loans and motor vehicle lease programs to small businesses. Arrow Mail will sell services to 2nd Tier Firms.

4.4 Competition and Buying Patterns

The competition between direct marketing firms is intense, yet many of these firms are not focused on marketing financial loan and leasing products to small businesses.

Traditionally, firms build a track record with specific products for a specific target customer group. Financial services are still an emerging product line for direct marketing firms, so there is no clear leader in the field.

The buying pattern for financial firms is similar to the selection process in a marketing campaign. Direct marketing firms present proposals, and the company selects the proposal that best fits their budget and overall marketing strategy. The duration of the marketing campaign is one to three years.

Building company loyalty is crucial in winning market share. Companies will stay with a company that has proven to be a valued partner.

Strategy and Implementation Summary

Arrow Mail’s owner, Todd Graham, has over 20 years of experience in the financial services field and extensive contacts throughout the country. He will lead the company’s sales campaign. Todd Graham will present the firm’s campaign proposals and follow up with potential customers.

5.1 Marketing Strategy

Arrow Mail will create a direct marketing campaign that fits within a client’s budget range and effectively targets the firm’s potential customers. Arrow Mail employs a matrix of direct marketing strategies that the customer can tailor to fit their desired brand imaging and product positioning, as well as focusing on specific customer characteristics.

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5.2 Competitive Edge

The competitive advantage of Arrow Mail is experience. We offer our customers time-tested strategies that have been successful in the market over the past 20 years. There have been many winners and losers in the growth of financial services. Todd Graham has a superior track record of satisfied customers.

5.3 Sales Forecast

Arrow Mail anticipates that sales will be slow for the first and second month of operation as the focus will be on presentations to firms. After that point, sales will increase.

The following is the sales forecast for three years.

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Direct Mail Business Plan Example

Sales Forecast

Sales Year 1 Year 2 Year 3

Marketing Campaigns $209,000 $242,000 $280,000

Market Analysis $130,000 $150,000 $170,000

Database Analysis $106,000 $135,000 $166,000

Mailing Production $93,000 $140,000 $195,000

Other $0 $0 $0

Total Sales $538,000 $667,000 $811,000

Direct Cost of Sales

Marketing Campaigns $0 $0 $0

Market Analysis $0 $26,000 $32,000

Database Analysis $0 $0 $0

Mailing Production $20,450 $33,000 $44,000

Other $0 $0 $0

Subtotal Direct Cost of Sales $20,450 $59,000 $76,000

5.4 Milestones

The accompanying table lists important program milestones, with dates, managers in charge, and budgets. The milestone schedule emphasizes planning for implementation.

The table doesn’t show the commitment behind it. Our business plan includes provisions for plan-vs.-actual analysis, and we will hold monthly follow-up meetings to discuss variance and course corrections.

Direct Mail Business Plan Example

Milestones:

Milestones
Milestone Start Date End Date Budget Manager Department
Office Set-up 4/1/2002 4/27/2002 $20,000 Office Mgr Marketing
Production Set-up 4/1/2002 4/27/2002 $120,000 Production Mgr Department
Marketing Program 2/1/2002 4/1/2002 $20,000 Todd Graham Web
Totals $160,000

Personnel Plan:

Arrow Mail’s owner, Todd Graham, has authored articles on direct mail that have appeared in industry trade publications. He has over 20 years of experience in the field. Working with Johnson Communication 20 years ago, Todd played a pivotal role in the company’s response to the deregulation of the banking industry, introducing new products that lent themselves well to target marketing. Since then, Todd has built his expertise as an account manager with Reilly Marketing and Triumph Direct Mail.

Arrow Mail personnel will be as follows:

– Todd Graham, creative/sales director

– Creative team (2)

– Production manager

– Production team (3)

– Sales team (2)

– Office manager

Personnel Plan
Year 1 Year 2 Year 3
Todd Graham $36,000 $40,000 $44,000
Sales Team (2) $72,000 $78,000 $84,000
Creative Team (2) $96,000 $100,000 $108,000
Production Manager $36,000 $40,000 $44,000
Production Team (3) $64,800 $95,000 $104,000
Office Manager $33,600 $35,000 $37,000
Creative Director $0 $0 $60,000
Other $0 $0 $0
Total People 10 12 12
Total Payroll $338,400 $388,000 $481,000

Financial Plan:

The financial plan for Arrow Mail is as follows:

Break-even Analysis:

The monthly break-even point is approximately $38,400.

Direct Mail Business Plan Example

Break-even Analysis

Monthly Revenue Break-even: $38,493

Assumptions:

– Average Percent Variable Cost: 4%

– Estimated Monthly Fixed Cost: $37,030

7.2 Projected Profit and Loss

The table and chart below illustrate the projected profit and loss for three years.

Direct Mail Business Plan Example

Pro Forma Profit and Loss

Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $538,000 $667,000 $811,000
Direct Cost of Sales $20,450 $59,000 $76,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $20,450 $59,000 $76,000
Gross Margin $517,550 $608,000 $735,000
Gross Margin % 96.20% 91.15% 90.63%
Expenses
Payroll $338,400 $388,000 $481,000
Sales and Marketing and Other Expenses $12,000 $8,000 $10,000
Depreciation $0 $0 $0
Leased Equipment $0 $0 $0
Utilities $7,200 $3,300 $3,300
Insurance $0 $0 $0
Rent $36,000 $18,000 $18,000
Payroll Taxes $50,760 $58,200 $72,150
Other $0 $0 $0
Total Operating Expenses $444,360 $475,500 $584,450
Profit Before Interest and Taxes $73,190 $132,500 $150,550
EBITDA $73,190 $132,500 $150,550
Interest Expense $11,460 $9,620 $7,700
Taxes Incurred $18,519 $36,864 $42,855
Net Profit $43,211 $86,016 $99,995
Net Profit/Sales 8.03% 12.90% 12.33%

Projected Cash Flow

7.3 Projected Cash Flow

The table and chart showcase the projected cash flow for three years.

Direct Mail Business Plan Example

Table: Pro Forma Cash Flow

Year 1 Year 2 Year 3

Cash Received

Cash from Operations

Cash Sales

Subtotal Cash from Operations

Additional Cash Received

Sales Tax, VAT, HST/GST Received

New Current Borrowing

New Other Liabilities (interest-free)

New Long-term Liabilities

Sales of Other Current Assets

Sales of Long-term Assets

New Investment Received

Subtotal Cash Received

Expenditures

Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending

Bill Payments

Subtotal Spent on Operations

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out

Principal Repayment of Current Borrowing

Other Liabilities Principal Repayment

Long-term Liabilities Principal Repayment

Purchase Other Current Assets

Purchase Long-term Assets

Dividends

Subtotal Cash Spent

Net Cash Flow

Cash Balance

Table: Pro Forma Balance Sheet

Year 1 Year 2 Year 3

Assets

Current Assets

Cash

Inventory

Other Current Assets

Total Current Assets

Long-term Assets

Long-term Assets

Accumulated Depreciation

Total Long-term Assets

Total Assets

Liabilities and Capital

Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable

Current Borrowing

Other Current Liabilities

Subtotal Current Liabilities

Long-term Liabilities

Total Liabilities

Paid-in Capital

Retained Earnings

Earnings

Total Capital

Total Liabilities and Capital

Net Worth

Table: Business Ratios

Year 1 Year 2 Year 3 Industry Profile

Ratio Analysis

Sales Growth

Percent of Total Assets

Inventory

Other Current Assets

Total Current Assets

Long-term Assets

Total Long-term Assets

Total Assets

Current Liabilities

Long-term Liabilities

Total Liabilities

Net Worth

Percent of Sales

Sales

Gross Margin

Selling, General & Administrative Expenses

Advertising Expenses

Profit Before Interest and Taxes

Main Ratios

Current

Quick

Total Debt to Total Assets

Pre-tax Return on Net Worth

Pre-tax Return on Assets

Additional Ratios

Net Profit Margin

Return on Equity

Activity Ratios

Inventory Turnover

Accounts Payable Turnover

Payment Days

Total Asset Turnover

Debt Ratios

Debt to Net Worth

Current Liab. to Liab.

Liquidity Ratios

Net Working Capital

Interest Coverage

Additional Ratios

Assets to Sales

Current Debt/Total Assets

Acid Test

Sales/Net Worth

Dividend Payout

Appendix

Table: Sales Forecast

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Sales

Marketing Campaigns

Market Analysis

Database Analysis

Mailing Production

Other

Total Sales

Direct Cost of Sales

Marketing Campaigns

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Market Analysis

Database Analysis

Mailing Production

Other

Subtotal Direct Cost of Sales

Personnel Plan
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Todd Graham 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Sales Team (2) 0% $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Creative Team (2) 0% $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000 $8,000
Production Manager 0% $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Production Team (3) 0% $5,400 $5,400 $5,400 $5,400 $5,400 $5,400 $5,400 $5,400 $5,400 $5,400 $5,400 $5,400
Office Manager 0% $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800
Creative Director 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other 0% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total People 10 10 10 10 10 10 10 10 10 10 10 10
Total Payroll $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200
General Assumptions
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Plan Month 1 2 3 4 5 6 7 8 9 10 11 12
Current Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00%
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Other 0 0 0 0 0 0 0 0 0 0 0 0

Pro Forma Cash Flow

Pro Forma Profit and Loss
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Sales $0 $0 $23,000 $30,000 $39,000 $46,000 $54,000 $63,000 $59,000 $68,000 $73,000 $83,000
Direct Cost of Sales $0 $0 $1,000 $1,500 $1,750 $2,000 $2,400 $2,400 $2,000 $2,200 $2,400 $2,800
Other Production Expenses $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Cost of Sales $0 $0 $1,000 $1,500 $1,750 $2,000 $2,400 $2,400 $2,000 $2,200 $2,400 $2,800
Gross Margin $0 $0 $22,000 $28,500 $37,250 $44,000 $51,600 $60,600 $57,000 $65,800 $70,600 $80,200
Gross Margin % 0.00% 0.00% 95.65% 95.00% 95.51% 95.65% 95.56%
Pro Forma Cash Flow
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Cash Received
Cash from Operations
Cash Sales $0 $0 $23,000 $30,000 $39,000 $46,000 $54,000 $63,000 $59,000 $68,000 $73,000 $83,000
Subtotal Cash from Operations $0 $0 $23,000 $30,000 $39,000 $46,000 $54,000 $63,000 $59,000 $68,000 $73,000 $83,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received 0.00% $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Long-term Liabilities $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sales of Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
New Investment Received $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Received $0 $0 $23,000 $30,000 $39,000 $46,000 $54,000 $63,000 $59,000 $68,000 $73,000 $83,000
Expenditures
Expenditures from Operations
Cash Spending $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200 $28,200
Bill Payments ($1,559) ($3,076) ($1,349) $5,120 $8,056 $10,857 $13,964 $16,780 $18,891 $17,143 $20,571 $22,264
Subtotal Spent on Operations $26,641 $25,124 $26,851 $33,320 $36,256 $39,057 $42,164 $44,980 $47,091 $45,343 $48,771 $50,464
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Long-term Liabilities Principal Repayment $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600 $1,600
Purchase Other Current Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Purchase Long-term Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dividends $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Cash Spent $28,241 $26,724 $28,451 $34,920 $37,856 $40,657 $43,764 $46,580 $48,691 $46,943 $50,371 $52,064
Net Cash Flow ($28,241) ($26,724) ($5,451) ($4,920) $1,144 $5,343 $10,236 $16,420 $10,309 $21,057 $22,629 $30,936
Cash Balance $124,359 $97,635 $92,184 $87,263 $88,408 $93,750 $103,987 $120,407 $130,716 $151,773 $174,402 $205,338

Pro Forma Balance Sheet

Pro Forma Balance Sheet
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
Assets

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