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 has been established to supply these logo-imprinted items to advertising specialty distributors. These products are then sold to the end user.
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, which are sourced from Mexico or the Far East, will have various company logos imprinted before being shipped to distributors.
Elsewares joins the Advertising Specialties Institute trade association to gain print and electronic access. Elsewares is part of $7 billion-a-year industry, with 13,000 to 14,000 ASI listed advertising specialty distributors. In terms of advertising dollars spent, this ranks second only to television and newsprint. Elsewares won’t sell directly to end-users but will exclusively market their products 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.
Parallel to our campaign to market these packaging items, we will present our unique promotional products to the same distributors. We can offer three sales opportunities, including the sale or the purchase of promotional products from other suppliers, as well as the use of packaging products by distributors to complement promotional items purchased from them.
The Market
Advertising specialties have seen an almost 7% annual growth rate over the last decade. Last year, they sold more than $7 billion. This is an established industry with many suppliers and distributors. Within that industry, the three suppliers that offer only velour and leatherette drawstring bags did a combined $2,500,000 in sales. These three suppliers are located in the East Coast. However, the Midwest and West Coast companies are the biggest advertising specialty distributors in this industry. We believe that by focusing on marketing to West Coast distributors, which have many positive business relations with our personnel, we can gain significant market share for the packaging niche in the next three-years.
Financial Considerations
Part of our initial startup expenses will be used for inventory, office equipment and imprinting machines. The balance will be used to cover initial advertising costs and catalog costs. Additionally, we project the need for additional financial commitment to finance receivables and payroll expenses for the first 12 months of operation.
Elsewares plans to focus its sales force in the west United States to achieve a respectable sales level before the end of the year 2. Our per-month fixed cost estimate, and our anticipated monthly unit sales should allow us to reach running monthly breakeven by the fourth month.
Elsewares is seeking a financial package based on a note due in five years, but amortized over 15 years. The note will be personally guaranteed by the founder’s assets. The company will have the opportunity to build a solid track record that will allow it to secure alternative financing. Elsewares’ owners have no intention of taking any profits out the business, until long-term debt is satisfied. After paying off the above debt, any remaining profits will be used as financing for growth, primarily through the acquisition additional inventory.
1.1 Objectives
Currently, the East Coast has three major suppliers of imprinted bags to advertising specialty distributors. Together, they make $2,500,000 in sales of pouches. Elsewares plans to focus its sales force in the west United States to achieve a respectable level of sales by the end year 2. Elsewares intends to factor our growth by diversifying into unique promotional product offerings which will be attractive as advertising specialties in their own right, or packaged in a drawstring pouch which we can also provide.
1.2 Mission
Elsewares will develop a product line that includes unique products as well as drawstring packaging products. This will add value to the products. These products, which will come from Mexico, the Far East and other countries, will be printed in-house using various company logos before being shipped to distributors.
Elsewares joining the Advertising Specialties Institute trade organization will give them print and electronic acces to a network (13,000 to 14,000 ASI)-listed advertising specialty distributors. This is part a $7 billion industry. In terms of advertising dollars spent, this ranks second only to television and newsprint. Elsewares will only market its products through distributors. They will not sell directly the end users. Elsewares is planning to reach these distributors using advertisements in trade journals, an in house sales force, and network of commission-based and salaried sales reps.
1.3 Keys to Success
Elsewares management believes that it has the right products and the right people to attract a loyal customer base. Our business philosophy is what will make us successful. Advertising specialty industries demand that products are delivered on time and 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.