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Milla by Mail Direct, Inc. Business Plan

alternative shopping solutions for busy women1


Milla by Mail Direct, Inc.

Business Plan DraftConfidential

Inside:Executive SummaryBusiness Description

Management and EmployeesOperations and Suppliers

Marketing PlanPhilanthropyCompetition

Financing RequestBusiness Financial Statements

Financial RatiosBreak-Even Analysis

Growth and Exit StrategiesAppendix: Financial Assumptions



Jamila Payne2450 State StreetPhiladelphia, PA(215) 659-7544

John Christopher250 East 11th StreetNew York, NY 10009

April 20, 2006Re: Financing Request

Dear John:I am so glad Sarah introduced us when you were in Philadelphia and that you expressed an interest in seeing my business plan. We are currently seeking to raise an additional $50,000 in capital to expand our mail-order business with a catalog campaign.

Milla by Mail Direct, Inc. (MBM) is a mail-order retailer founded with the purpose of providing a shopping environment that is ideal for women on the go. Milla by Mail makes shopping easy and convenient by offering a multimedia approach to purchasing, including catalog, Internet, and telephone. Our mission is to become the destination fashion resource for style-conscious women by providing quality merchandise, up-to-the-minute fashion information, and a shopping experience that peeks into the customer’s lifestyle.

Our target customer is an active, affluent woman age 25 to 45. She is busy with her career, her community, and her family. She wants her wardrobe to reflect her sense of style and compliment her active lifestyle without the shopping process becoming a task. Our brand offers women image, distinct styling in a broad range of brands and sizes, fashion and trend information, and a memorable shopping experience through a multichannel platform designed to make her relationship with Milla by Mail easy and convenient.

The Milla by Mail Direct competitors are Girlshop.com, Ravin Style, Anthropologie, and Shop Bop. Milla by Mail’s distinctive competencies are the merchandise, the personal expertise of the founder, Jamila Payne, and the shopping experience that is offered to customers. Milla by Mail sets itself apart from the competition by carrying a variety of merchandise that includes well-known brands, up-and-coming designers, and our private-label brand “Milla”—distributed exclusively via the website and, soon, the catalog. MBM is very strategic about the items we carry. All items can be purchased as separates or merchandised back to other items.

My business plan is attached. If you have any questions, please contact me at (215) 659-7544.

Sincerely,

Jamila Payne



Contents

1. Executive Summary

2. Business Description

3. Management and Employees

4. Operations and Suppliers

5. Marketing Plan

6. Philanthropy

7. Competition

8. Financing Request

9. Business Financial Statements

10. Financial Ratios

11. Break-Even Analysis

12. Growth and Exit Strategies

13. Appendix: Financial Assumptions



Executive Summary

Business Description

Realizing a void in clothing for contemporary women, Jamila Payne founded Milla by Mail, a specialty mail-order retail business. Milla means “I got it” in Hindi, the Indian National Language. Milla by Mail is dedicated to providing a quality fashion experience for the style-conscious consumer. The website represents a combination of in-house design and manufactures lines fusing modern sophistication and urban attitude. The company will grow by distributing catalogs in major metropolitan cities throughout the United States, becoming an established resource for fashion information and lifestyle events.

On the MBM website the presentation of clothing is complimented by lifestyle images that represent the Milla by Mail shopper. We take shopping online to a new level by developing marketing campaigns that focus on the lifestyle of the customer. Milla by Mail becomes not just another place to shop. We reach into our customers’ lives and make them a part of the experience.

The catalog and Internet will represent a lifestyle-shopping environment. Women can purchase everything from work to weekend looks. The Milla by Mail clients, contemporary women ages 25–45, will find clothing for their lifestyle through our product line.

Business Contact Information

Milla by Mail Direct, Inc. (MBM)The Laurence A. Baiada Center for Entrepreneurship in Technology3225 Arch Street, Ground Floor Philadelphia, PA 19104

Phone: (215) 659-7544 Fax: (215) 659-7203Website: www.millabymail.comEmail: [email protected]

Owner

Jamila Payne2450 State StreetPhiladelphia, PA Phone: (215) 659-7544 Social Security Number: XXX-XX-XXXX

Jamila Payne, founder of Milla by Mail, has been a fashion stylist and trend expert for many years. She has dressed celebrity artists and entertainers for everything from the stage to the red carpet.



Jamila has been featured in In Style, Entrepreneur Magazine, the San Jose Mercury News, as well as in many other local and national newspapers. She has been honored by the Philadelphia Tribune as “One of Philadelphia’s most Influential under 40.” Jamlia can be seen on shows such as the NBC morning show “10!” presenting the latest fashions or discussing lifestyle trends.

Jamila is high-energy, fun, delightful, and has a great sense of style. She is very humble about her success as an entrepreneur and enjoys sharing her fashion knowledge with people through her traveling fashion workshop “Can You See My Style?”

When Jamila saw the expecting Kelly Ripa wearing one of her own Mimi Maternity designs on television, she knew she had a true talent for knowing what works. As her work responsibilities became more time-consuming, however, Jamila didn’t have the ability to visit all her favorite boutiques. “Shopping has always been special and exciting to me,” she says. “I really enjoy developing my personal style.”

“Many of my coworkers and friends had the same problem. And I realized that busy women need a place to shop that will do two things: It must represent the perfect compilation of all of their favorite stores, and shoppers need to have the ability to get there regardless of their schedule.”

Prior to her career as a fashion entrepreneur, Jamila worked for top fashion names including Anthropologie, Mimi Maternity, Fubu, and Nylon Magazine. Jamila graduated from Drexel University as a Design and Merchandising Major, currently resides in Philadelphia, and is working on a book entitled “Shopping for the New Me” scheduled to be released in the fall of 2004.

Professional Relationships

Accountant: Don DeMarco, JLB & Associates, (215) 674-5322

Banker: Sarah Breekman, Bank of America, (215) 674-5200 X 12

Insurance agent: Lionel Hardness, State Farm, (215) 892-2100

Attorney: Richard Gabel, Esq., DSLMH, (212) 259-3208

Board of Advisors

Alice Chamberlain: Co-chairman Step UP Women’s Network. Alice and Jamila meet for lunch once a month to discuss growing the business and involving it in philanthropy related to women’s issues, such as domestic violence, which is Step UP’s primary mission.

Charles Payne: Jamila’s grandfather, a retired Philadelphia investment banker who advises Jamila on financing and operations.

Steve Mariotti: founder of the National Foundation for Teaching Entrepreneurship, Inc., available by phone to Jamila for consultations on networking, business organization, and reaching out to potential investors.



Legal Status: Milla by Mail Direct, Inc. is a Sub-S Corporation incorporated in Delaware.

Purpose: Milla by Mail is a mail-order retailer founded with the purpose of providing a shopping environment that is ideal for women on the go.

Mission: The company mission is to become the destination fashion resource for style-conscious women by providing quality merchandise, up-to-the-minute fashion information, and a shopping experience that peeks into the customer’s lifestyle.

Status: Milla by Mail is an ongoing business that plans to expand to become the go-to destination for style-conscious women by providing quality merchandise and up-to-the-minute fashion information.

Business Type: Non-store retail. The corporate office operates Monday—Friday 9:00am to 5:30pm.

Products/Services: Milla by Mail makes shopping easy and convenient by offering a multimedia approach to purchasing, including catalog, Internet, and telephone. The company brings the elements of boutique shopping to a larger arena. Our goal is to promote the proliferation of individual style by providing an atmosphere where customers can be creative in their shopping experience and develop their own look. We don’t tell our customers how they should look; we just present some great choices, and they take it from there.

Reasoning: Milla by Mail sells women’s apparel and accessories. The company targets women ages 25–45 young professionals and college women. These individuals spend or influence the spending of $200 billion per year.

Women’s roles have shifted in society; not only are they mothers and wives, but they are also moving up the corporate ladder. This shift brings about increased responsibilities and decreased time. Although women do not have the time they once had, they are still expected to dress the part of their new executive role. Women still want access to quality merchandise and fashion information but need to be able to obtain that access quickly and from the convenience of their homes and offices.

Goals

The company plans to achieve the following short- term goals:

Add 3–4 team members (March) MBM will add team members for the following positions: Marketing/Pr (part-time), Sales/Customer Service (part-time), and Affiliate Marketing Coordinator (Contractor).

Develop the advisory board (March) The MBM advisory board will provide real-time feedback to the company about its product line and services. The group will consist of the 3 professionals currently involved plus 3 more with professional experience in a variety of industries.

Launch look book (August)



The Milla by Mail look book is the company’s take on the traditional catalog. The book will feature some special items that are not available on the web. It will also introduce “Milla”—the Company’s private-label brand.



Expand private-label brand “Milla” (August) The Company plans to broaden the assortment by manufacturing more garments under the “Milla” label. Products manufactured under the private-label brand have the highest profit margin.

Grow membership base to 10,000 (December) MBM will grow the membership base by hosting various contests on the web. The increased membership base will give the company the opportunity to sell advertising space in the e-mails that go out to members.

Industry Trends/Outlook Non-store retailing is a retail channel that has experienced double-digit growth for close to a decade. The channel consists of catalogs, online retailing, and TV home shopping. Retail Forward projects that non-store retailing will grow at an average annual compound rate of 7.9 percent over the next five years. The e-commerce subset of this channel will grow at an average annual compound rate of 26.5% in the same time period.

E-commerce will grow at a still-powerful 26 percent compounded annual growth rate (CAGR) over the next five years. Barring unforeseen events, e-commerce will grow to $217.8 billion, representing 8 percent of total retail sales by 2007. By 2007, another 26.4 million U.S. households will join the 36.5 million households already shopping online—for a total of nearly 63 million or two-thirds of all U.S. households. Online shopping still makes up a fraction of all retail sales at 4.5 percent; it’s the fastest growing category, according to the National Retail Federation.

CatalogingIn the United States, 7,000 major retail catalog producers are responsible for the average American Family’s receipt of approximately 75 catalogs per year. With so much growth, many retailers are beginning to publish catalogs and many catalog operations have decided to open retail outlets. Nationally, mail-order sales account for 4 percent of the total retail dollars spent.

Catalog sales growth has been outpacing that of the overall industry thanks in large part to the natural synergy between catalog and Internet operations. The mail-order industry has matured, creating a highly competitive environment. Three out of ten start-up catalogs survive after five years. The phenomenal acceptance and growth of the Internet as a complementary channel of marketing for cataloging has opened new vistas for traditional paper catalogs and retailing. The Internet is rejuvenating the catalog industry. New non-traditional mail-order buyers are shopping on the web and, in many cases, have been driven to the Internet by a printed catalog. The two media are interconnected. The paper catalog is unlikely to be replaced by electronic commerce in the next decade because the two channels are quite complementary. Together they will promote growth in direct selling while enhancing the creditability and authority of each marketing channel.

Customers expect to shop when and where they want. And, if you have a multichannel buyer shopping in the store, catalog, and online, retailers have a better customer, as she typically buy more and more often. A few years ago it was predicted that the catalog would become extinct, mainly because the Internet was emerging. However, according to the Direct Marketing Association, Americans are expected to spend nearly $133 billion shopping through catalogs in 2004, up from $126 billion spent last year.

Catalog shoppers are generally more upscale than non-catalog shoppers and are willing to pay higher price points to get what they want. Catalog shoppers might be won over because they indicated that they



had “no preference” when asked to name a “first-choice” department store. Those who shop the catalogs also tend to be familiar with the regular use of modern technology. They are also more likely to own a pet. Catalog shoppers lead more active lives. They like to read more, preferring the editorial, lifestyle, and business/finance pages of the newspaper. Catalogers like to eat in full-service restaurants and go to movies, concerts, and live theater performances.

Online shoppers’ greatest concerns about shopping, in order of importance, are convenience, security, customer service, and price. A study performed by Bruskin–Goldring has determined that 52 percent of women who shop online prefer to do it after 5pm, while 20 percent shop after 8pm. Another finding pegs women as seekers, who begin with a to-do-list, find products and services quickly, and log off. Saving time is the major reason women are turning away from the mall and to the Internet, according to Andrea Claster, president of Claster and Co. Consulting Company.

Online retail sales continue to grow along with the size of the Internet population. While it appears to be a function of economic weakness, the drop in spending per customer is occurring because e-commerce shoppers are starting to look more like the average overall consumer.

One of the more apparent trends in recent years has been the marketing focus of the apparel companies on the Generation Y and Generation X demographic. It comprises 75 million individuals, or 25 percent of the U.S. population, and spends (or influences the spending of) approximately $200 billion a year.

These individuals have been instrumental in changing the rules of corporate and casual dress, demanding stylish clothing that can transition from the office to evening looks. Apparel, and related fashion items, account for a significant portion of adults’ discretionary spending, according to a study conducted by Harris Interactive, a market research firm in Rochester, New York. The study found that, on average, young women ages 18–34 spend 75 percent of their earnings from work on clothing and related accessories.

Technology Several online retailers have sparked e-commerce growth by making online shopping easy. Future success hinges on similar improvements. MBM will regularly implement new technology features that will enhance the customer shopping experience. Upcoming features include:

adding an account management function that will allow customers to manage their purchase history

a gift registry and a real-time customer service feature that would allow customers to click a button called customer service which will launch a new window where the customer could type in questions and a customer service rep would respond.



Management and Employees

Milla by Mail Direct, Inc.Sole proprietorship (non-store retail)

Management

Owner: Jamila Payne will manage the Milla by Mail operations and handle day-to-day operations. System maintenance and printing will be outsourced. The owner’s salary will be minimal in the early stages of the business to allow for the business to grow and sustain cash flow.

Jamila Payne, founder of Milla by Mail, has been a fashion stylist and trend expert for many years. She has dressed celebrity artists and entertainers for everything from the stage to the red carpet. Jamila has been featured in In Style, Entrepreneur Magazine, the San Jose Mercury News, as wellas many other local and national newspapers. She has been honored by the Philadelphia Tribune as “One of Philadelphia’s Most Influential under 40.” Jamila can sometimes be seen on shows, such as the NBC morning show 10!, presenting the latest fashions or discussing lifestyle trends.

Prior to her career as a fashion entrepreneur, Jamila worked for top fashion names including Anthropologie, Mimi Maternity, Fubu, and Nylon Magazine. Jamila graduated from Drexel University as a Design and Merchandising Major. She currently resides in Philadelphia and is working on a book entitled “Shopping for the New Me,” scheduled to release in the fall of 2004.

The order management and accounting systems produce all the reports that management needs to run the business, including but not limited to:

inventory reports merchandise sold source frequency fulfillment ratio sales reports

Employees

Milla by Mail plans to hire two part-time employees in March/April. We will also bring in three interns for additional support staff. As business increases, staff will be added to the corporate management team. The staff will include, but not limited to, business managers, merchants, customer service, and administrative professionals. The company plans to use four primary methods of recruiting employees:

(1) scouting other retailers (2) receiving referrals from retail skills centers (3) recruiting from colleges (4) advertising and posting on the Milla by Mail website

The company will seek out employees who have retail experience or who are pursuing fashion design, Merchandising, or retail careers. Prospective employees will fill out an application and undergo two interviews and a telephone service test. This will give management the opportunity to accurately evaluate customer interaction, selling ability, and natural service skills. Once hired, all employees will attend



training classes, as will the managers. Topics to be covered include position expectations, company history, mission, operations, customer service, and sales.



Milla by Mail’s employment philosophy is to hire “ordinary people to do extraordinary things.”The company believes that with proper training the Milla by Mail employee will have the ability toexceed performance expectations. Salaries will reflect fair market value. Some of the available positionswill include:

Sales/Customer Service Setup Corporate Affiliate programsCoordinate out-of-office repsDevelop package inserts and special offersCreate new promotionsDevelop contests Sales analysisPacking and shipping ordersCustomer followup and returns

Marketing/PR AssistantPut together press kitsDevelop releases and announcementsEvent planningPromotion executionRelationship-building with pressPitching stories and ideas to TV shows and magazines

Assistant Buyer Competitive shoppingInventory projectionsOpen to buyAttend trade shows and market weeks Product developmentTrend analysisAssist with managing Get the Look programWeb product updatesPhoto shoot productionRecaps and analysis



Operations and Suppliers

Product

Clothing for the Milla by Mail catalog and millabymail.com website will be purchased from showrooms primarily in New York, Los Angeles, and London. The Milla by Mail merchant’s first job is to develop and source great product. The Milla by Mail Internet and catalog concept-development process is a highly proactive process that requires tenacious observation and tracking of the competition, active attendance at trade shows, aggressive vendor pursuit, talking with and soliciting ideas from customers, and brainstorming.

The Milla by Mail catalog will launch as a 21-page book with 2–3 items per page; approximately 44 to 66 items will be selected. The web-site and the catalog will work off of a concept or theme each season. Once items have been selected, data on each product needs to be collected on a specification sheet that is included in the product folder. A product folder contains everything pertinent to the product: vendor tear sheets and information, terms, product photographs, samples, and so forth. The specification sheet known as the “Product Information form” is submitted to each vendor at the time the purchase order is issued, along with the vendor manual. Ultimately, the folder is handed over to the production team, where it becomes the copywriter’s source for sell copy. The art director will also review the information to place products in the page layouts.

The information in the product folder and specification sheet will be entered in a simple, off-line merchandising database. Maintaining a product vendor database makes it easier to gather all the products from one vendor in order to negotiate the entire purchase, or to see quickly how many products are in acertain category or at a certain price point. An organized database also makes it easier to track open purchase orders and to transmit payment information to the accounting department.

Creating the Product Forecast and Buy PlanOnce the marketing group estimates how many catalogs will be printed and mailed, the merchandisers and inventory planner can create a buy plan that forecasts how many of each item are planned to be sold in the catalog and online. Pricing will be finalized at this time so that margin or costs of goods sold can be determined and checked against the financial benchmarks. Milla by Mail will maintain its markup between 50 and 60 points. After seeing the creative layouts, preferably with copy and photography in place, the buy plan will be reviewed again.

The Internet buy plan will be determined based on the sales projections. Once management has established the yearly sales goal for millabymail.com, the merchant and planner project how much inventory is needed to make the sales goals. Millabymail.com had a $98.00 average order value (AOV) in year one. Because a great photograph or full-page presentation will always influence sales, the buy plan sometimes needs a final adjustment before purchase orders are issued to make sure larger orders are placed for products given a generous presentation.

Milla by Mail plans to mail 500 catalogs, have an order response rate of 40 percent, and receive 200 orders with an average of 2 line items per order, or 400 items ordered. The AOV is expected to be $100.00 with a 1 percent cancellation rate and 2 percent return rate.



Placing Purchase OrdersOnce products have been selected, vendors investigated, and the catalog’s forecast and buy plan developed, purchase orders are placed. This happens in sufficient time so that the product will arrive in the warehouse one to two weeks before the catalog mail date. This will allow time for the inventory control analyst to receive, inspect, perform quality checks, apply bar codes or item numbers, and place goods in stock. All orders are in writing and confirmed.

Receipt of Product and Quality ControlThe merchandise is pre-retailed1 so that the retail prices can be marked onto the price tags when it is received. The Milla inventory control analyst verifies

(1) the shipment was ordered (2) the completeness of the shipment (3) the actual contents of the shipment match the description on the purchase order(4) the rate charges are comparable to the total weight rate schedule (5) goods are not damaged

Accounting receives verification of this completed process before invoices are paid.

RebuyingOnce merchandise has started selling, the re-buying or control buying will take place. Item product forecasts are revised, and products are repurchased throughout the cycle or life span. The catalog’s forecasting report, in conjunction with a response curve by week, will help to track seasonality within the catalog’s selling season. Millabymail.com merchandise is reordered based on the response to the goods. It’s ideal to have a quick turnover on merchandise by maintaining minimum stock and allowing for a minimum amount of back=ordered items. Items that have a back order log will be removed and re-posted on the site once a new in-house date has been confirmed with the vendor.

Disposing of Excess InventoryThe final phase in inventory management is disposing of poor-selling merchandise. During the selling season, up-selling and in-the-box shipment package insert sales have been most effective. The Internet sale page has also been an effective method of liquidating overstocked or poor-selling merchandise. Milla by Mail direct also plans to hold private sale events in local markets for customers. Advisory board members will also be given the opportunity to purchase sale merchandise.

Merchandise Post AnalysisAfter order activity runs its course, the catalog and online campaign will be analyzed, including reports on returns, cancellations, and excess inventory. The Milla by Mail order management system also provides real-time reporting on Internet sales and inventory data.

Facilities

Office SpaceMilla by Mail is currently headquartered in the Laurence A. Baiada Center for entrepreneurship in technology. There is no cost associated with using the space, which is reflected in the cash flow statement. We are projecting that this space will be available until May of 2007. Milla by Mail will then relocate to a new office space in the city of Philadelphia.

1 The buying process of deciding the selling price of merchandise before it is purchased and recording that price on the stores copy of the purchase order



WarehousingAn efficient warehousing function will ensure that orders are picked, packed, and shipped promptly. Extra workers will be hired during peak seasons to ensure order turnaround. Total fulfillment operating cost should fall between 15 and 18 percent of net sales.



Product/Distribution Channel

The Business Model


CompletelySatisfied Customer

Invitation to ReturnCirculation to Customers

and Prospects

Customer Places Order

Acknowledgementof Order

Order Processing & Fulfillment

Cycleof

Service

Shipment Notification

Shipment Tracking

Order Receipt

Returns & Exchanges


Step 1: Customer Places an OrderCustomers can place orders online, over the phone, by fax, by mail, or at an event. Phone orders are taken down on an order form, and then keyed directly into the order management system and sent for processing. When an order is mailed into the home office, it is batched into a group and keyed in the system. Internet orders are downloaded electronically into the order management system, and all pending orders are printed for processing on a daily basis (Monday–Friday). Online shoppers also have the option of printing out the order form and faxing it in. All orders are verified for completeness and accuracy. Name, mailing address, shipping address, phone number, credit card information, item number, and color and size information will be checked. Once an online order has been placed, the customer receives an auto response e-mail confirming her order summary.

Step 2: Order Processing All pick tickets are hung for processing in the order in which they were received. Orders are packed and shipped as merchandise becomes available. If an order is placed that contains three items, and all items are in stock, then the order is shipped immediately. If one or more items are missing from an order, the available item is packed and held until the additional items arrive. If the out-of-stock item has an expected delay that exceeds the maximum shipping time (8 business days), the customer is sent a postcard that makes them aware of the anticipated ship date. At each stage of the pick, pack process the order is checked for completeness. Most orders will be shipped via the United States Postal Service (USPS), and expedited shipments are sent via Airborne Express.

Inventory ManagementMBM maintains low quantities of inventory so that we are able to ship to our customers immediately after receiving the order. In most cases when there is no item in stock, MBM is able to obtain the merchandise from the vendor within 5–7 business days, which still allows us to make our 8-business-day shipping window. Going forward we are planning to take on more consigned merchandise. This will allow MBM to change the assortment of product on the website without committing huge dollars to different vendors. By decreasing the budget allocated for market buys, we will be able to increase our private label assortment.

Step 3: Credit Card Billing and BankingCredit cards are processed electronically using a third-party clearinghouse. Authorizations are submitted prior to shipment, and deposits are made into the MBM company bank account. Orders paid by check or money order are deposited in the bank and cleared before the order is shipped. In most cases, MBM does not accept payments by check. Very large orders paid by a check ($100.00 or more) will be held until the check is verified by the bank.

Step 4: Fulfillment & ShippingOnce an order is packed and verified for completeness, then it is prepared for shipment. Every package mailed to a customer includes an order summary, a merchandise return and exchange form, and a promotion or offer to return. When the order is prepared to ship, the customer ship-to information is keyed into the MBM postage printing software. The software generates a tracking number for the package, which is manually keyed into the web administration system. The system then generates an automatic e-mail to the customer with the order detail and shipment tracking information.

Step 5: Order ReceiptWhen the customer receives the order, one of three things can happen:

(1) The customer keeps the product(2) The customer calls customer service with questions about the product.



(3) The customer returns part or all of the shipment, and the return is processed by the warehousing function and re-entered into the system for a credit or refund to the customer.

It will take 24 hours or less to respond to any customer service inquiry via phone, mail, or e-mail. The goal is to process all returns within 24 hours and to ship low cost orders (under $100) in one day and all other orders in two days for credit card verified orders and check orders over $100 after check pre-approval.

Step 6: Returns and ExchangesMilla by Mail will be happy to exchange or give a credit or refund for the merchandise price of an item within fourteen (14) days of the ship date. All returned items must be unworn and accompanied by proof of purchase such as a receipt or packing slip. Sale items are for merchandise exchange or store credit only. Once a return item is received, it is put in wait for processing. MBM guarantees a ten (10)-day turnaround for processing returns and exchanges.

ReturnsCustomer returns tend to be a challenge in the mail order business. MBM is working to overcome this barrier by developing tools that will help track, access, and correct the issues that cause returns. On the MBM merchandise return and exchange form there is a section where customers select a reason for return based on 12 choices that are listed. There will always be customers that change there minds or who orders merchandise in sizes that may not fit but we really want to correct the issues of customers that return for other reasons like dissatisfaction with the quality of the garment.

MBM is implementing a customer satisfaction survey that will be sent to every customer that returns merchandise. This survey will include questions that speak to the reason for return, how we could have prevented the return and how we can maintain their business. Customers that complete and return the survey will receive a gift certificate to purchase.

Step 7: Invitation to ReturnMilla by Mail operates at a high service level. The clients are the number one priority. Our service features will include:(1) contacting the customer when new merchandise arrives(2) reminding the clients of special occasions for which they may need gifts (3) sending thank-you notes to customers that purchase (4) following up with sales calls (5) providing discounts to unsatisfied customers (6) providing an online suggestion box (7) offering season preview and private sale events for preferred customersThe Milla customer service representative (CSR) is the most important element of service. Our number one objective is service. If the company does what is right for the customer, the sales will follow. The development of a loyal customer base will ultimately result in an increase in sales. Providing quality service will also help prevent losses from theft. The company would eventually like to offer a private-label credit card2, which will be convenient for customers as well as increase catalog sales.

800 Customer Service CallsThe Milla by Mail customer expects phones to be picked up promptly. Eighty percent of all calls should be answered within twenty seconds. Ninety percent of customer-service calls should be handled

2A credit system that allows retailers to offer credit cards under their store name, but a bank operates and manages the service



completely while the customer is on the phone. MBM currently manages its call center in-house. We hold training sessions and plan to mail sample garments to our telephone representatives so they are familiar with the products.

Order Fill RateThe initial fill rate determines how many orders can be filled from the first inventory orders placed before triggering a reorder or backorder. Milla by Mail anticipates filling 90 to 95 percent of orders on the initial order. The goal is to have a final fill rate of 95 to 98 percent.

Net Return RateWhile product returns are a cost of doing business, they need to be maintained at a reasonable level. The mail-order industry standard is 15% to 30% of orders.



Plans to Add Customer Service Functions to the WebsiteIn the category of retailers with store-front sites, the sites usually frequently update the variety of merchandise and have special user functions. MBM plans to expand our website to include features that create more of a lifestyle community environment and allow customers to be involved in fashion, style, and the Milla by Mail brand.

Customer ServiceMilla by Mail is planning to expand the functionality of the website to include a real-time-response customer-service feature. Customers will be able to click a button on the website, and a customer-service question box will pop up, where they can type in their questions, and a representative will respond to their questions right away.

Account ManagementCustomers will soon have the ability to manage their accounts online. Milla by Mail will track information such as purchase history, contact information (with users having the ability to update the data), order status, and a customer gift registry.

User InteractionMBM plans to add two features to the website that will assist with creating a community environment. First, we will send a monthly newsletter that will include trend information, Milla by Mail featured items, and light advertisements from other companies. Second, MBM will implement a feature called “Get the Look.” On the “Get the Look” page of the website users will receive instructions for sending in photos of a designer or celebrity look that they would like MBM to recreate for them at an affordable price. MBM will put the looks together for our clients and post them on the website. MBM will offer gift certificates to the customers whose look is chosen.

Suppliers

Below is a short list of apparel vendors that MBM has met with and with whom we have placed orders. All vendors receive The Vendor Shipping Manual, which outlines the details for shipping product.

Apparel Vendors: Rebecca Taylor HMB BCBG To the MAX! Devan Apparel Single Anja Flint Megan Noland Derek Green Corey Lynn Calter Leroy’s Girl Joe’s Jeans

Inventory purchases will be negotiated with net-30-payment agreements. Some vendors may request that the initial order is paid C.O.D. After year one all inventory will be purchased with a net-30-payment agreement for the betterment of cash flow. The amount of inventory purchased varies from month to



month. A $5,000 purchase of inventory would be considered full stock for the web-site. Smaller purchases will be made for inventory fill-in and to update the styles that are shown on-line. Inventory will also be stocked according to peak seasons, i.e., April, August, September, and December

Call CenterMilla by Mail will also eventually outsource its call center to maintain the in-house (800) phone number. During business hours customers can call in to place orders or receive customer service assistance. There will be one to two people responsible for answering phones. As the call volume increases, Milla by Mail will begin to outsource the call center. The third-party service will take customers’ orders and electronically transfer the data to the Milla by Mail home office.



Marketing Plan

Buyer Profile:

Milla by Mail Direct targets college students and professional women aged 25–45. Our customer type breaks into three groups:

Super ShopaholicSarah Rosenthal, 38High-level executive or self-employed LawyerDoesn’t have time to hit the malls regularly; however, she is very fashion-conscious, wears designer suits with fashionable blouses, attends happy hours or social events 2–3 times a month, reads all the latest fashion magazines, and quite often makes purchases based on the editors’ recommendations.Takes yogaSingle or newly wedIncome $70,000 +

Sexy, StylishAmy Bleaker, 26Works in fashion or entertainmentShops for rare items and discounted merchandise; will pay more for something different. Visits shoppers havens (shopping districts). Goes to the mall only if looking for something particular, but will definitely attend a sample sale. Daily dress is fashion forward but with some casual classics. Must have a few of the hottest trends in her wardrobe.Exercises occasionally, depending on work scheduleSingle, but actively datingIncome $35,000 +

Town TrendsetterSong Han, 22Student, Ivy League UniversityShops for the item(s) that will make her the talk of the town and discount merchandise that looks designer. Frequents the malls, websites, and sample sales. Exercises regularlyActively dating or has a steady boyfriendIncome $18,000 + - summer jobs, student loans, and daddy’s credit card

Product: Stylish Apparel for Women 25–45

Our current assortment is a mix of well-known boutique brands like BCBG, French Connection, and Rebecca Taylor, as well as up-and-coming designers and our own private label brand “Milla.” We are currently building relationships with manufactures that have brands that are in high demand. Our goal is



to purchase some of these key brands (primarily denim, i.e., Seven Jeans) at a discount by offering to take overstock or the prior season’s merchandise.

We believe that this type of partnership will be effective for both parties. MBM will be able to offer key brands at a lower price point, so we can capture a good portion of the business. The manufacturer will benefit because it can sell merchandise at a better per-dollar cost to MBM than the normal discount outlets they use like TJ Maxx, Ross, and Daffy’s. The manufacturer will maintain the image of a high-end brand by not having its merchandise marked down. This will work well with denim lines because the styles only change slightly from season to season.

In fall 2004 customers will see an increase of “Milla” private-label merchandise in the collection. It’s important for the company to expand our house brand because the average profit margin is 60 to 70 percent of the total retail price versus 50 to 55 percent on market buys.

Benefits: Our customers get the convenience of shopping online, plus access to their favorite clothing brands, at better prices than they would find at stores.

Differentiation: Our merchandise offerings are characterized by fun, feminine, and novel items

that can transition from work to casual wear. We use an energetic color palette in our assortment and visual presentation. Our visuals always represent a fun, quirky, and energetic display of pop colors and clean lines that distinguish our brands from the competition. The Milla by Mail brand is about more than our assortment; it’s also about the lifestyle image we offer our customer and the escape from her busy schedule that she can experience through our website, catalog, and events.

Price Selling price per unit: $98.00 (average) Cost of goods sold: $45.00 (average) Gross profit (contribution margin) per unit: $53.00

PlaceMilla by Mail is currently headquartered in the Laurence A. Baiada Center for Entrepreneurship in Technology in Philadelphia. This business incubator provides the company with free office space, as well as computers and other equipment and mentoring. We are projecting that this space will be available until May of 2007.

Promotion

Launching Milla by MailOur launch marketing strategy was to test the market and build a customer base by launching online (millabymail.com) in the spring of 2005 and then launch a printed catalog in the fall of 2006.

First, we built a mailing list by advertising the launch of the website on postcards at the Alpha Kappa Alpha sorority, Inc. (a national service organization) regional conference and had attendees sign-up on the MBM splash page to be notified of the official launch. Since the launch, MBM has reached new customers through our “Trunk Show tour,” an event where MBM showcases a fashion show at different venues in different cities, including Dylan’s Candy in New York; after the show customers place orders



on merchandise, which is later mailed to their homes. Utilizing this web-launching strategy, Milla by Mail will grow almost twice as fast as its catalog competitors. In fiscal year 2005, we have begun to focus our marketing efforts on partnerships with other companyies that will generate leads. Through commission-based programs and revenue shares, we will be able to market to prospects via other companies’ subscribers. MBM will build our affiliate program by setting up representatives on campuses to promote the brand.

Advertising: The Circulation PlanA circulation plan is built for every mailing. MBM sends out monthly promotions to its existing membership base. All e-mails that are circulated to the list are tracked and produce statics on conversion rate, open rate, and bounce rate. The company’s goal is to circulate information or promotions to as many market segments as possible per month. Once rented mailing lists are selected, a unique source code (numeric identifier) will be assigned to each list. The circulation plan will be used to forecast percentage response, average order value (AOV), and sales per look book anticipated from each list. The look book will be distributed twice in year one and will increase to three books in year two. Milla by Mail has achieved 10,000 unique hits per month on millabymail.com by the end of 2003.

Purchasing Mailing Lists: The Millard GroupPurchasing mailing lists has been a successful strategy for building a customer base in the mail order industry. Milla by Mail plans to use the Millard Group to purchase customer lists. The company is leader in the direct response industry with over 25 years experience in list brokerage, list management, alternative media, customized marketing services, and Internet services. The Millard group works with blue chip clients who are the top catalog and magazine titles in the country, such as Lands End, L.L. Bean, Chadwick’s of Boston, Newport News, and Brookstone.

Milla by Mail has chosen this company particularly because it represents Lucky magazine. Filled with the latest fashions, accessories, beauty products, and more, Lucky delivers today’s hottest finds with on-the-spot buying information from website addresses, to retail store locations, to catalog toll-free numbers. The Lucky reader base is a perfect place to find potential Milla by Mail customers. We are anticipating a 2 percent or higher response from this list. The cost to purchase the list is $79–$89 per thousand with a 5,000 minimum purchase quantity.

MBM employs the following strategies to maintain a relationship with our current members and purchasers:

sending product-driven e-mails with special offers on a bi-weekly basis to encourage members to purchase

launching an e-newsletter that offers up-to-the minute fashion information, tips, and trends sending a birthday cards to members every month that has a special offer for them to treat

themselves to a birthday gift

Partnerships MBM will develop partnerships with websites like styleforfree.com and stylebakery.com, which are fashion websites that give retailers the opportunity to showcase special offers, promotions, or merchandise for a minimal fee. There is also an opportunity to develop relationships with other boutiques, fashion information sites, or other industry sites for list exchanges.



Secondly, MBM will develop relationships with companies that our customers identify with and perceive as valuable to their lifestyle. These companies include, but are not limited to, Maybeline, Lancôme, Sephora, and Hard Candy. The registered partners will provide products or information surrounding their brand to MBM for customers in exchange for inserts in our packages every time an order ships.

PublicityBuilding a good relationship with the media has been essential to the growth of the company. Milla by Mail has been featured in the following media:

NBC television Entrepreneur magazine In Style magazine Lucky magazine the San Jose Mercury News and other local publications.

We are developing our national public relations campaign. In November of 2005, Milla by Mail was mentioned in In Style magazine in the article “68 Fab Web Sites.” From the 22-word mention, Milla by Mail generated over 100 orders and 500 new members. National press has definitely been an effective method of promotion, and we are planning to build more relationships in this arena.

Product PlacementWe will notify stylists, costumers, and product-placement professional about Milla by Mail. These individuals are constantly looking for new merchandise for their clients, who often appear on TV or in magazines or other media. Loaning merchandise to such individuals in exchange for credit will help build awareness about the company.

Philanthropy

Cause-Related MarketingMilla by Mail plans to host or partner on events that will develop cause-related marketing. One campaign that we have developed is called “Pink Chocolate.” This campaign will encourage customers to shop Milla by Mail in support of Breast Cancer Awareness Month.

MBM will also partner with women’s organizations, non-profit organizations, and other professional organizations by having them participate in events, attend events, or participate in special programs. We will offer group members special discounts to purchase from Milla by Mail.



Competition

The Milla by Mail Direct competitors are Girlshop.com, Ravin Style, Anthropologie, and Shop Bop.

Girlshop Girlshop was started in 1998 by Laura Eisman; offers clothing and accessories from up-and-coming fashion designers—some handmade, some limited editions, and some exclusive to Girlshop. Within Girlshop, each designer has a “boutique” where you can browse and read about each item. Girlshop also has additional features, including messenger service for local New York customers, tell a friend, trend alert e-mail, Top 10, as seen in magazines, and a registry. In 2003, Girlshop introduced two additional brands, Guyshop and Totshop.

Ravin StyleThe majority of the products are created by emerging designers. Ravin Style is centered on three characters: Ravin, Jackie and Lela. Each character has her style and distributes advice accordingly. The entire site is hand-picked by the girls, with commentary about trends, new ideas, and what flatters different body types. Features include stories about how to wear the outfits, as seen in magazines, new items list, and a newsletter.

Anthropologie Anthropologie began as a retailer in 1992 by Urban Outfitters, Inc. The idea was to offer an experience full of uniqueness that would appeal to the customer that was tired of the traditional retail operations. The first Anthropologie store opened in Wayne, Pennsylvania on October 31, 1992. The company began an expansion program in 1994 and opened several more stores across the country. The Anthropologie Catalog and website was introduced in 1998. Anthropologie’s president is Glen Shenk.

Shop BopShop Bop carries well-known designers. Features include wish list, what’s new this week, and what’s hot. The owners describe Shopbop.com as a place where boutique edge meets department store selection. It’s where fashion’s taken seriously but without being over-the-top serious about fashion. It’s where the season’s must-have products sit alongside the latest must-know designers. It’s where thousands of women come every month for that one perfect item, for a complete season’s wardrobe, and for everything in between. Shop Bop’s president is Bob Lamey.


FeaturesMessenger serviceTell a friendRegistryMembershipTrend alertsAs seen in mags

FeaturesShop by body typeNew items listNewsletter As seen in mags

FeaturesCatalog Brick & Mortar Tell a friend Wish list

FeaturesTell a friend Wish list

http://www.girlshop.com/shop/girls/registry/myregistry.asp


Milla by Mail Girlshop Ravin Style Anthropologie Shop BopReturns 14 days 14 days 14 days anytime 21 daysCustomer Service phone/e-mail phone/e-mail phone/e-mail phone/e-mail phone/e-mailDistribution web web web web/catalog/brick & mortar web

Price Point Comparison

Milla by Mail Girlshop Ravin Style Anthropologie Shop BopJackets 68–238 26–518 117–350 78–218 88-599

Career Pants 130 50–180 78–198 Skirts 49–140 51–319 40–196 68–298 49-360

Dresses 58–94 38–455 80–270 159–298 36-448Knit Tops 40–65 46–196 34-98 44-291

Casual Pants 70–98 24–248 80-297Sweaters 180–218 88–311 88–198 44.95-198 73-297

Tops/Blouses 46–140 31–288

Mill by Mail’s Competitive AdvantageMilla by Mail sets itself apart from the competition by carrying a variety of merchandise that includes well-known brands, up-and-coming designers, and our private label brand “Milla”—distributed exclusively via the website and catalog. All items can be purchased as separates or merchandised back to other items.

Milla by Mail’s distinctive competencies are: the merchandise the personal expertise of the company founder, Jamila Payne the shopping experience that is offered to customers

Our buying philosophy is to bring together the best of what’s available in fashion every season. Our merchandise is separates-driven so that our customers can put together looks that represent their personal style. Our merchandise transcends geographic looks. We attract women from as far west as Washington and as far east as Spain. It is more important for us to provide a narrower selection of specialized items than to provide a wide assortment. Many online retailers sell designer merchandise that is discounted. MBM sells high-quality boutique merchandise that is from a combination of sources including well-known designer brands, up-and-coming designers.

Milla by Mail brings Jamila Payne’s fashion experience to the customers by providing trend information, tips, and fashion articles through a monthly newsletter. The MBM customer is looking not only for stylish clothing and valuable fashion information but also for a memorable fashion experience.

We are creating a user environment on the website where customers can manage their own accounts and share shopping experiences with other customers via our “get the look” feature. On the “get the look” page customers can ask questions about their fashion problems, and their answers will be posted on the site. There also will be a section on the page to post a photo of a customer in merchandise that they purchased.



When a customer shops Milla by Mail, she embarks on a journey of self-discovery, and she leaves with a different look every time. Milla by Mail creates a special place for customers by focusing on the lifestyle of busy women. We complement the presentation of clothing with lifestyle images that represent the Milla by Mail shopper.

MBM plans to use the following short-term (in progress) and long-term (future implementation) tactics to acquire new customers:

Short-Term TacticsRegistering with search engines and directoriesMilla by Mail will be registered with search engines so that if a potential customer is looking for the website the search engine makes us easy to find. Although it is not in the marketing budget to pay the fees associated with being at the top of a search list, we still feel that it is valuable to register (free) and be included in the search database.

Sending monthly e-mails to MBM members Customers who are registered with Milla by Mail (there are currently over 400 people registered as members) have opted into monthly e-mails. This marketing media will capture the attention of prospects who have signed up but not yet purchased and drive them to the website. Customers will soon be able to request a copy of the Milla by Mail catalog on the website. This will assist in building an in-house database for the initial mailing.

Corporate sales In the corporate program, partnerships with companies will allow their employees to receive discounts on merchandise. The Milla by Mail team will send e-mails or postcards to inform employees about the program. MBM will target companies’ new-hire employees. Milla by Mail will offer the employee the opportunity to purchase a $300.00 gift certificate worth $370.00 or $500.00 gift certificate with a purchase value of $600.00 called the Work Starter Kit.

Long-Term TacticsPartnership events with magazinesMilla by Mail plans to have a sweepstakes contest with a magazine. Potential partners are currently being investigated. These contests have proven to be successful for competitors such as girlshop.com and bluefly.com. There is also an opportunity to do revenue-share programs with magazines—MBM will receive free ad space in exchange for a percentage of the revenues that are generated from the ad. All ads will have a promotion code attached that readers will use at checkout. The promotion code will offer a gift or special discount to encourage readers to use it. The promotion code will also allow MBM to track the sales that are being generated due to the ads.



Financing Request: Capital to Launch National Catalog

Amount Requested: $50,000

The most important factor in the launch of Milla by Mail was the ability to secure financing. The startup capital was provided through the owner’s contribution of $3,000 and a $15,000 low-interest loan from a family member. Start-up capital was used for:

design and development of the website inventory office supplies travel expenses professional fees cash for operations

The primary source of revenue for the company has been sales from the website. The company seeks $50,000 in capital to support the launch of a national catalog in fall 2006.

It is anticipated that sales from the catalog will exceed revenues from the website once the catalog launches. Milla by Mail Direct had revenues of $20,000 in year one (May–Dec) and is projecting revenues of $100,000 in year two.

Revenue ModelCurrently MBM revenue is driven primarily from online sales, the “Trunk Show Tour” events, and in-office sales. We anticipate several new revenue opportunities for Milla by Mail. First, we have decided to create a new event entitled “The Fashion Trunk Show.” The format of our original trunk show events has been guests partaking in complimentary hors d’ouevres and cocktails for an hour, followed by a fashion show of MBM-only merchandise, and, after the show, guests place orders on merchandise that is later shipped to them.

Going forward we will host three of the new events, which are on a larger scale. In the new format we open up the merchandise presentation to 38 plus designers and a larger number of guests. We will also change the event title from “The Milla by Mail Trunk Show Tour” to “Milla by Mail presents ‘The Fashion Trunk Show.’ Revenue will come from tables rented by the designers, a ticket price for the customers, and corporate sponsorships. Below is a chart that illustrates the increased number of revenue streams created by the new event format.

Trunk Show ComparisonEvent Features

(with ability to generate revenue)

MBM-Only Trunk Show

MBM Fashion Trunk Show

Past PotentialRevenue

Current Potential Revenue

Featured Designers or Boutiques

1 40+ 0 $8000

Guest Attendance 50–100 500–800 $0–$300 $6000–$9600

Companies that Give Sponsorship

1–3 5–10 Product/Food Donation

$7500–15,000



Secondly, MBM will introduce a newsletter and sell advertising space primarily to fashion and beauty companies or vendors that would like access to the MBM membership base. The newsletter will help with establishing the company as a resource for fashion information. Milla by Mail can send the newsletter to its current membership base that has opted into monthly e-mails along with attendees of the trunk show events. We are anticipating the launch of the newsletter in August 2004.



Business Financial Statements

Please see attached financial statements (Excel files): Income statements Cash flow statements Balance sheet

Financial Ratios

Year 1 Year 2 Year 3Debt Ratio .41 .05 .10Debt-to-Equity Ratio .68 .06 .01Return on Investment –135% 573% 943%Return on Sales –119% 31% 35%Quick Ratio 2.47 18.53 89.19Current Ratio 2.47 18.53 89.19Working Capital $22,000 $173,478 $390,315

Break-Even AnalysisAverage unit of sale = $98.00

Break-Even, Year 1: 1,040 units per year, 87 units per month

Year 1 Total Revenue = $20,398Average units sold in Year 1 = $20,398/$98 = 208 unitsYear 1 Gross Profit = $5,338Year 1 Gross Profit per Unit = $25.66

Break-Even, Year 2: $170,508 (fixed costs)/$69.58 (gross profit per unit) = 2,450 units per year, 204 units per month

Year 2 Total Revenue = $326,482Average units sold in Year 2 = 3,331Year 2 Gross Profit = $231,782Year 2 Gross Profit per Unit = $69.58

Break-Even, Year 3: $142,408 (fixed costs)/$64.38 (gross profit per unit) = 2,211 units per year, 184 units per month

Year 3 Total Revenue = $487,600Average units sold in Year 3 = 4,975Year 3 Gross Profit = $320,300Year 3 Gross Profit per Unit = $64.38



Growth and Exit Strategies

(1) Expand marketing and catalog circulation internationally in spring 2004(2) Open retail store in 2005(3) Open four additional stores by 2008(4) Employee stock offering(5) Sell to a national or international company



Appendix: Financial Assumptions

Credit Card ProcessingThe expenses in this category are directly related to the costs associated with the monthly cost of accepting credit cards. This cost includes a lease purchase fee for the merchant license ($24.95 per month) and a monthly statement fee ($10.00). Visa, MasterCard, and Discover all charge 2.3 percent discount rate and $.30 per transaction to have the ability to accept funds from their cards. All credit cards require a $25.00 monthly minimum in purchases. If the sum of a month of purchases is less than $25.00, the credit card company will charge Milla by Mail $25.00. The $25.00 expense includes all the credit cards and is not a per credit card fee. American Express will not be accepted.Credit Card Calculation: The company expects 99 percent of the year one online orders to be purchased via credit card. The other 1 percent of the orders will be mailed in with a money order.

LoanThe most important factor in the launch of Milla by Mail was the ability to secure financing. In year one the company acquired $15,000 in debt to support the launch of the website and catalog. The catalog will only print twice a year in year two.

Shipping and Handling IncomeThis is the income that is obtained from the customers to ship their orders. Every customer pays a shipping and handling fee based on the total dollar amount of the order. Customers are required to pay an extra shipping charge for expedited delivery.

Shipping and handling income is calculated based on the AOV x shipping price for the total order value x the number of orders, i.e., Internet AOV in year one is $75.00 x shipping for a $75.00 order is $11.00 x 600 projected orders in year one = $6,600 in shipping and handling income. The cost of expedited shipping is passed directly to the customer, so it is not included in the income calculation.

List Rental IncomeThis is income that is received in exchange for customers’ information. Customers must approve the name rental before it is handed over to the broker.

MarketingThe expenses that are accounted for in this category are directly related to the costs associated with promotions, publicity, or marketing campaigns. Milla by Mail does not plan to purchase any paid advertisements. (please see marketing timeline for detailed information.)

Internet The expenses that are accounted or in this category are directly related to the cost of maintaining the website. That includes web, hosting, upgrades, domain name, web design, and development.

FulfillmentThis cost is directly related to any expenses that are incurred to get the customer her merchandise, i.e., shipping and mailing supplies. Fulfillment also includes the cost to ship the merchandise to the customer. It is expected that the cost to ship the garment will usually cost $2.00 less than the shipping charged to the customer. The cost of expedited shipping is passed directly to the customer, so it is not included as an expense.



Travel The expenses that are accounted for in this category are directly related to the costs associated with traveling to trade shows for market weeks or other business meetings and industry conferences. These costs will include, but are not limited to, gas, tolls, airfare, cab fare, hotel, train, and car rental.

ProductionProduction shoots for the website occur every other month. The assortment of merchandise on the website will change every four to six weeks. There are months were no production activity occurs and those months have been left blank.

Printing and MailingMilla by Mail is anticipating the initial catalog mailing in August of 2003. There will be 30,000 catalogs mailed in year one. In years two and three circulation will increase and catalogs will be mailed three times a year. Milla by Mail will obtain a bulk mail permit. The cost of mailing catalogs and postcard campaigns are based on bulk mail rates.

Office SuppliesThe expenses that are accounted for in this category are directly related to the costs associated with administrative supplies needed for the office. These costs also include the purchase of business cards.

Professional Fees Professional fees include the cost of industry subscriptions and consultations with legal and other professionals. These fees also include licensing, public notice, and incorporation cost.

InsuranceThe company insurance policy will protect the inventory in case of fire or other emergency.

InterestThe expenses that are accounted for in this category are directly related to the costs associated with the interest that is paid on the $15,000 loan amount.

TaxesTaxes are estimated as 20 percent of revenues.

PPE PurchasesThe expenses that are accounted for in this category are directly related to the costs associated with purchasing plant, property, or equipment that can potentially be depreciated. The cost of leasing computers on a monthly basis is also included in this category. The lease per computer is projected at $35.00 per month.

Break EvenOur break-even point is the close with sales on 85 units per month (one item is a unit) for a total of 1010 units per year across channels. This is equivalent to 55 customers purchasing per month.


Documents

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