Promotional Products Maker Business Plan

A market exists in the advertising specialty industry for velour and leatherette drawstring bags, eyeglass bags, jewelry bags, and pen bags to hold promotional products and increase their perceived value. Elsewares Promotional Products & Packaging (EPPP) supplies these logo-imprinted products to advertising specialty distributors who market them to the end user.

The Products

Elsewares aims to develop a unique inventory of drawstring packaging products that add perceived value. These products, sourced from Mexico and the Far East, will be imprinted in-house with company logos before being shipped to distributors.

By joining the Advertising Specialties Institute trade association, Elsewares gains print and electronic access to a network of 13,000 to 14,000 ASI-listed advertising specialty distributors, part of a $7 billion industry. Elsewares exclusively markets its products through these distributors and does not sell directly to end users. They reach distributors through advertisements in trade publications, an in-house sales force, and a network of salaried and commission-based sales reps.

Concurrently, besides marketing packaging products, Elsewares showcases their unique promotional products to the same distributors, creating three sales opportunities: selling the promotional product alone, selling packaging products to be used with promotional items purchased from other suppliers, and selling the promotional product with packaging.

The Market

Sales in the advertising specialties industry have grown at 7% annually for the past decade, reaching over $7 billion last year. It is a mature industry crowded with suppliers and distributors. The three suppliers offering only velour and leatherette drawstring bags generated combined sales of $2,500,000. These suppliers are on the East Coast, while some of the largest advertising specialty distributors are Midwest and West Coast firms. Elsewares plans to target West Coast distributors, many of whom already have positive business relationships with their personnel, to gain significant market share in the packaging niche over the next three years.

Financial Considerations

A portion of the initial startup costs will be used to purchase inventory, office equipment, and imprinting machinery. The remaining funds will cover catalog costs and initial advertising expenses. Additional financial commitment is projected for funding receivables and payroll expenses during the first 12 months of operation.

Elsewares plans to concentrate its sales force in the western United States and achieve a respectable sales level by the end of Year 2. With estimated fixed costs per month and anticipated monthly unit sales, running monthly break-even should be reached after the fourth month.

Elsewares seeks a financial package based on a note due in five years, amortized over 15 years. The note will be personally guaranteed by the founder’s assets. By amortizing the note over 15 years, the company can establish a healthy track record and seek alternate financing for the remaining balance. It is important to note that the owners of Elsewares do not intend to take any profits out of the business until the long-term debt is paid off. Remaining profits will be used to finance growth, primarily through acquiring additional inventory.

1.1 Objectives: The three leading suppliers of imprinted pouches to advertising specialty distributors are located on the East Coast and do a combined $2,500,000 solely in pouch sales. Elsewares plans to concentrate its sales force in the western United States and achieve a respectable sales level by the end of Year 2. Elsewares plans to diversify into unique promotional products that will be attractive as advertising specialties, either on their own or packaged in a drawstring pouch that we can provide.

1.2 Mission: Elsewares plans to develop an inventory of unique products and drawstring packaging that adds perceived value. These products will be sourced from Mexico and the Far East, imprinted in-house with company logos, and then shipped to distributors.

By joining the Advertising Specialties Institute trade association, Elsewares will have access to a network of 13,000 to 14,000 ASI-listed advertising specialty distributors, part of a $7 billion industry. Elsewares will exclusively market through these distributors and not sell directly to end users. Marketing efforts include advertisements in trade publications, an in-house sales force, and a network of salaried and commission-based sales reps.

1.3 Keys to Success: Elsewares management believes it has the right products and people to attract loyal customers. However, our business philosophy is what will ensure success. The advertising specialty industry demands on-time delivery and high-quality imprinting. To meet these demands:

– Elsewares will maintain acceptable inventory levels and deliver on time.

– A quality control procedure will oversee the on-site imprinting facility.

– In addition to velour packaging products, Elsewares will offer a unique line of promotional products to become the first choice for distributors seeking original products.

Company Summary: Elsewares is a new company that will be established based on this plan.

2.1 Start-up Summary: Initial startup costs include inventory purchase, office equipment, imprinting machinery, catalog costs, and initial advertising expenses. Further financial commitment is projected to finance receivables and payroll expenses for the first 12 months of operation.

Start-up Funding:

– Start-up Expenses to Fund: $17,600

– Start-up Assets to Fund: $182,400

– Total Funding Required: $200,000

Assets:

– Non-cash Assets from Start-up: $65,000

– Cash Requirements from Start-up: $117,400

– Additional Cash Raised: $0

– Cash Balance on Starting Date: $117,400

– Total Assets: $182,400

Liabilities and Capital:

– Liabilities:

– Current Borrowing: $0

– Long-term Liabilities: $0

– Accounts Payable (Outstanding Bills): $0

– Other Current Liabilities (interest-free): $0

– Total Liabilities: $0

Capital:

– Planned Investment:

– Owner: $0

– Investor: $200,000

– Additional Investment Requirement: $0

– Total Planned Investment: $200,000

– Loss at Start-up (Start-up Expenses): ($17,600)

– Total Capital: $182,400

– Total Capital and Liabilities: $182,400

– Total Funding: $200,000

Start-up Requirements:

– Start-up Expenses

– Legal: $1,500

– Stationery etc.: $700

– Brochures: $4,000

– Consultants: $1,200

– Insurance: $600

– Rent: $9,000

– Accounting: $600

– Other: $0

– Total Start-up Expenses: $17,600

Start-up Assets:

– Cash Required: $117,400

– Start-up Inventory: $40,000

– Other Current Assets: $20,000

– Long-term Assets: $5,000

– Total Assets: $182,400

– Total Requirements: $200,000

Company Locations and Facilities:

> This is proprietary information, omitted on this sample plan, not relevant for the purpose of examples.

Company Ownership:

> This is proprietary information, omitted on this sample plan.

Products:

> The product and service description in this sample plan has been omitted because it contains proprietary and strategic information. In the original plan, products and services were described in detail.

Market Analysis Summary:

> By definition, the advertising specialties industry deals with the sale of promotional products. These products can be practical, informative, entertaining, and/or decorative products, most often imprinted with the sponsoring advertiser’s name, logo, slogan, or message, and almost always retained and appreciated by the end recipients who received them free of charge.

> Sales in the advertising specialties industry have been growing at a rate of almost 7% per year since 1988 and reached over $7 billion in sales last year. Within that industry, the three suppliers that offer only velour and leatherette drawstring bags did a combined $2,500,000 in sales. Those three suppliers are located on the East Coast while some of the largest advertising specialty distributors in the industry are Midwest and West Coast firms. 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.

> Concurrent with our campaign to market these packaging products, we will showcase our line of unique promotional products to the same distributors, thus giving ourselves three sales opportunities: the sale of the promotional product by itself; the sale of some packaging products that the distributor can use with promotional items that are purchased from other suppliers; and the sale of our promotional product coupled with our packaging.

Market Segmentation:

– Wearables [i.e. T-shirts, jackets, & caps]: 22.2%

– Writing Instruments [i.e. pens & pencils]: 13.1%

– Glassware & Ceramics [i.e. mugs]: 9.9%

– Recognition Awards [i.e. trophies, plaques, emblematic jewelry]: 9.8%

– Desk & Office Accessories: 9.2%

– Calendars: 7.8%

– Sporting Goods and Leisure Products: 6.9%

– Buttons, Badges, & Ribbons: 6.8%

– Auto Accessories [i.e. key fobs, sun screens]: 4.2%

There are presently some 2,800 suppliers listed by ASI that are selling over 390,000 different promotional products to over 13,000 advertising specialty distributors. This ASI listed distributor network serves as a large sales force for the suppliers by actively selling promotional products to the public and then directing that business to ASI listed suppliers with whom they are familiar. The ASI listed distributors offer the suppliers’ products to a multi-segmented end-user market. Below are the major segments of this market listed in order of size as measured by dollars spent:

– Clubs, Associations, & Civic Groups

– Financial [i.e. banks, investor groups, financial professionals]

– Schools and Colleges

– Service Businesses

– Insurance Agencies

– Retail Stores

– Industrial Products Companies

Market Analysis:

Year 1 Year 2 Year 3 Year 4 Year 5

Potential Customers Growth CAGR

Wearables 12% 12,000 13,440 15,053 16,859 18,882 12.00%

Writing Instruments 22% 21,000 25,620 31,256 38,132 46,521 22.00%

Recognition Awards 10% 10,000 11,000 12,100 13,310 14,641 10.00%

Desk/Office Accessories 9% 34,000 37,060 40,395 44,031 47,994 9.00%

Calendars 8% 18,000 19,440 20,995 22,675 24,489 8.00%

Sporting Goods 7% 45,000 48,150 51,521 55,127 58,986 7.00%

Button, Badge, Ribbon 7% 20,000 21,400 22,898 24,501 26,216 7.00%

Auto Accessories 4% 34,000 35,360 36,774 38,245 39,775 4.00%

Glassware & Ceramics 10% 23,000 25,300 27,830 30,613 33,674 10.00%

Other 0% 0 0 0 0 0 0.00%

Total 9.43% 217,000 236,770 258,822 283,493 311,178 9.43%

4.2 Industry Analysis:

We will be entering a mature industry with many suppliers and distributors. To maintain competitive pricing, continuous introduction of exclusive new products is necessary. When competitors source similar products, margins will adjust downward. Elsewares must stay ahead by always having new products ready. We aim to be the originators, not the imitators.

Service and support may be more important than price. On-time delivery and quality products are crucial to our success.

Strategy and Implementation Summary:

Our marketing strategy is to offer drawstring pouches as packaging products to Midwest and West Coast distributors. By focusing on quality, durability, and timely shipping, we aim to establish positive relationships and offer additional products to these distributors.

5.1 Marketing Strategy:

Our focus will be on Midwest and West Coast distributors who currently rely on the East Coast for their bag needs. We will emphasize quality and durability in our imprinting process, guaranteeing distributors that their message will endure.

5.1.1 Promotion Strategy:

Advertising will be disseminated through ASI publications, specifically targeting ASI listed distributors. The goal is to market our product successfully to distributors so they promote it to end users.

5.1.2 Distribution Strategy:

We will exclusively sell our products through ASI listed distributors. Direct inquiries will be referred to distributors we already have relationships with, as they invest time in finding and qualifying specialty advertising buyers.

5.1.3 Service and Support:

Offering exceptional customer service to our distributor network is crucial. The quality of logo imprints and meeting product shipping deadlines are top priorities. Resolving any conflicts between distributors and end users will be important in supporting our distributors.

5.1.4 Marketing Programs:

We will place our full line, full-color catalog in The Counselor, the industry’s leading trade magazine. Reprints with additional information about our company will be sent to distributors and our own sales reps, offering product and imprinting samples. We will also introduce new products through postcards bundled with other supplier cards in The Counselor magazine.

5.1.5 Pricing Strategy:

While we strive to be competitive in pricing, we will sell ourselves based on the quality, uniqueness, and reasonable pricing of our product line. Exceptional customer service will also contribute to our value proposition.

5.2 Sales Strategy:

As a new entity, we understand the need to earn the respect and business of distributors. We will promptly honor dealer requests for product and imprinting samples and provide dedicated customer service. Our in-house sales department will target larger West Coast distributors with the help of a consultant who has established relationships in the industry.

5.3 Strategic Alliances

Elsewares’ success relies on the performance of our distributors. We need to establish strong partnerships with credit-worthy distributors who actively sell products similar to ours. The Advertising Specialty Institute provides a market and credit service that can assist us in targeting our marketing efforts accordingly. This will help us build customer loyalty and achieve our business objectives.

5.4 Milestones

The milestones table and chart outline the specific program activities, their managers, start and end dates, and budgets. Throughout the year, we will track the implementation of these activities and report on their timely completion.

Management Summary

Elsewares is organized into three main functional areas: product sourcing, sales, and marketing; production and shipping; and finance and administration.

Edie Greenbaum: President and founder. Mrs. Greenbaum ran the financial department for a start-up retail operation whose sales rose to just under one million dollars in seven years. She has also spent the last year and a half heading up the sales department of an ASI listed advertising specialties supplier. Mrs. Greenbaum holds a B.A. from U.C.L.A., is married, and is the mother of one child.

Gary Greenbaum: Co-founder. Mr. Greenbaum ran the day-to-day operations of the previously mentioned retail operation as a partner with Mrs. Greenbaum. Mr. Greenbaum holds a B.A. from Franklin & Marshal College, is married, and is the father of one child.

Marvin Rosenbaum: Consultant. Mr. Rosenbaum has been associated with the Advertising Specialties industry for just under 25 years and holds the credentials of a C.A.S. or Certified Advertising Specialist. Over the years, Mr. Rosenbaum has been hired by both suppliers and distributors that are either starting a new company, as we are, or that are attempting to penetrate the advertising specialties market with products they are already distributing to other markets. Mr. Rosenbaum has been responsible for the successful entry of many companies into this industry and has maintained extensive business contacts with many of the industry leaders. Mr. Rosenbaum is married and is the father of two children.

6.1 Personnel Plan

The cornerstone of the personnel plan is to maximize production and minimize the labor burden on the company’s operating expenses. Pursuant to that goal, the initial payroll will consist of the following disbursements:

Until increases in sales can support additional salaries, Edie Greenbaum will oversee the operations of Elsewares in an unsalaried position. Mrs. Greenbaum will be responsible for the day-to-day operations including personnel company policies, as well as overseeing the sales and marketing departments.

The sales and marketing department will be headed by Marvin Rosenbaum who has been hired as an independent consultant. Mr. Rosenbaum will be responsible for initiating new leads with the ASI distributor network and for re-establishing existing contacts with distributors with whom he has had a previous business relationship. Mr. Rosenbaum will also oversee the network of commissions based sales reps who will call on distributors in their pre-assigned territories. The sales department will be supplemented by Edie Greenbaum, who will also be responsible for calling on distributors as directed by Mr. Rosenbaum.

Mr. Greenbaum will be responsible for running the customer service department, which will include handling phone orders and catalog requests. Additionally, Mr. Greenbaum will be responsible for running the company’s computer operations and is expected to play an important role in sourcing new products.

Until increases in sales justify the additional staffing of this department, Mr. Greenbaum will be responsible for assorted secretarial duties in addition to the previously mentioned duties. We are projecting the division of this department into two positions at approximately the fourteenth month of business. Mr. Greenbaum will then shift his duties to marketing and sourcing, and a new employee will take over the customer service department and its related duties.

Elsewares will rely on part-time help for its imprinting, warehousing, and shipping labor requirements. Naturally, as the need arises, this all-encompassing area will be split into two departments. A full-time production person will run the imprinting department, while a second person will be hired to handle both shipping and receiving. We are projecting the need for this additional labor burden at approximately the eleventh month of business.

Andrew Brooks

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