There is a market in the advertising specialty sector for velour & leatherette drawstring bags, eyeglass bag, jewelry bags, pen bags and pen bags that can hold promotional products to increase their perceived worth. Elsewares Promotional Products & Packaging was established to supply these logo-imprinted products to advertising specialists distributors, who then market them to the end users.
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 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, this is only behind newsprint and TV. Elsewares will only market its products through distributors. They will not sell directly the end users. Elsewares aims to reach distributors by placing advertisements in trade publications and using an in-house marketing team and a network with salaried, commission-based sales representatives.
We will also be promoting these unique packaging products concurrently with our marketing campaign. This gives us three sales opportunities: The sale of the promotional item by itself, the sale to distributors of other packaging products, and the combination of our promotional product with packaging.
Sales in the advertising specialties industry have been growing at a rate of almost 7% per year for the past decade and reached over $7 billion in sales last year. This is an established industry with many suppliers and distributors. The combined sales of the three suppliers selling only velour- and leatherette drawstring bags was $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 believe that by focusing our marketing efforts on the West Coast distributors (many of whom already have positive business relationships with our personnel), we will be able to capture a substantial market share in the packaging niche over three years.
Considerations for Financial Planning
A portion of our initial startup budget will be used to purchase inventory and office equipment. The balance will be used for catalog costs and initial advertising expenses. We project that additional financing will be required to finance the initial 12 months of operation.
Elsewares aims to increase its sales in the West United States, and achieve a respectable sales level by Year 2. With our per month fixed cost estimate and anticipated monthly unit sales we should hit running monthly break-even after the fourth month.
Elsewares wants a financial package built on a 5-year-old note that will be amortized over 15 year. The founder will personally guarantee this note. The company will be allowed to amortize the note over 15-years, which will provide the opportunity for it to build a strong track record, which will allow it to seek alternative financing. Elsewares’ owners have no intention of taking any profits out the business, until long-term debt is satisfied. Whatever profits remain after the above debt payments will be used to finance growth, mainly through the acquisition of additional inventory.
Presently, the East Coast is home of three leading suppliers for imprinted pouches to distributors of advertising specialty products. They do a combined $2,000,000 in sales of pouches. Elsewares will concentrate its sales efforts in the West and aim to have a solid sales volume by the end. Elsewares is planning to factor in our growth by diversifying its product offering into unique promotional products which will be attractive in their own right or packaged within a drawstring pouch, which we also can provide.
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 will be sourced from Mexico and the Far East, will be imprinted in-house with various company logos before they are shipped to the 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. This puts it behind newsprint and TV in terms spent on advertising. 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.
1.3 Keys to Success
Management at Elsewares believes that the company has the right products and people to draw loyal customers. It is our business philosophy, however, that will ensure our success. Advertising specialty requires that products be delivered on-time and with high quality imprinting. These demands are being met
Elsewares will satisfy this demand by maintaining acceptable inventory levels that will be delivered on time according to pre-arranged shipping schedules.
Elsewares is going to establish a quality assurance procedure to control the imprinting process on-site. This will ensure that imprint quality is acceptable.
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.