Table of Contents
Section Title
Page
1
Executive Summary . . . . . . . . . . . . . . . . . . . .
2
2
Description of the Business . . . . . . . . . . . . . .
4
3
Industry Analysis . . . . . . . . . . . . . . . . . . . . . .
7
4
Competitive Assessment . . . . . . . . . . . . . . . .
14
5
Marketing Plan . . . . . . . . . . . . . . . . . . . . . . . .
17
6
Management Plan . . . . . . . . . . . . . . . . . . . . .
24
7
Operations Plan . . . . . . . . . . . . . . . . . . . . . . .
28
8
Financial Plan . . . . . . . . . . . . . . . . . . . . . . . .
31
9
Risk Assessment and Contingency Plan . . . .
35
Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37
1. EXECUTIVE SUMMARY
Parrett Paper, an earned income venture within Rochester Rehabilitation Center,
manufactures, markets, packages, and distributes unique, die-cut greeting cards, gift
tags, and gift enclosure cards. This product line is sold to a national and international
customer base, including gift shops, zoos, aquariums, and museums. This venture,
however, is about more than cards. In accordance with the mission of Rochester
Rehabilitation Center, Parrett Paper provides meaningful work experiences for people
with disabilities.
Parrett Paper was founded in the 1980s and, after achieving $350,000 in annual
revenues, slipped into dormancy after the death of one of its owners. In 2001,
Rochester Rehabilitation Center spent $45,000 to acquire Parrett Paper, which included
$200,000 in product inventory and the rights to its custom designs, dies, and artwork.
The market for greeting cards is large, diverse, and stable; United States households
purchase an average of 35 cards a year. Parrett Paper does not seek to compete with
the two industry giants, Hallmark and American Greetings, which together dominate
84% of the $7+ billion industry. Instead, it views itself as a niche marketer of highquality greeting cards.
Since it produces a wide selection of animal cards that contain educational messages,
Parrett Paper targets gift shops within museums, aquariums, and zoos. This niche
made up 30% of Parrett Paper’s 2002 sales. Zoo gift shop customers include the
National Zoological Park (the Smithsonian Institution), as well as the Columbus, San
Diego, Phoenix, Oklahoma City, and San Francisco zoos. Small gift shops also find
Parrett Paper cards appealing, comprising about 52% of sales. The largest customer is
The Container Store, which purchases over $9,000 in gift tags each year.
Parrett Paper’s marketing strategy is to carefully cultivate the zoo, aquarium, and
museum niche markets. Initial sales indicate that Parrett Paper’s cards will sell
themselves once they reach the retail rack; therefore, the goal is to penetrate as many
retail outlets as possible. This will take a significant investment in sales and marketing.
In order to secure target customers, Parrett Paper will provide flexible service and
continue to leverage its acquired inventory to provide samples. Additionally, a new 16page color catalog will be sent to a mailing list of more than 15,000 niche card and gift
shop owners, including every zoo and aquarium, and will be distributed at key trade
shows. Parrett Paper is also researching new markets for the current cards and new
products to sell to existing customers.
There is not a comparable producer of die-cut animal-themed cards, but competition for
retail distribution is fierce. Parrett Paper will continue to grow and gain market share
because of its compelling product, personalized service, competitive price, strong
supplier relationships, and appealing social cause.
In 2002, its first full year of operation under Rochester Rehabilitation Center, Parrett
Paper generated $56,415 in revenues on a customer base of 255. Parrett Paper is
expected to break even in mid-2004, and by 2005 it will generate a profit of $66,585 on
Page 2
$258,000 in revenues with a projected customer base of 1,000. Since Parrett Paper
became a part of Rochester Rehabilitation Center, 95,000 cards have been assembled
and shipped to customers. From a mission perspective, this output not only has led to
meaningful employment for program participants, but has also raised awareness of the
skills of disabled individuals.
While there is a risk that the target customer acquisition and sales goals may not be
met, the talent of the management team, backed by the strength of Rochester
Rehabilitation Center, will lead to success. Parrett Paper management has the
appropriate blend of sales, marketing, operations, and production experience necessary
to be successful during this phase of the venture’s development. These individuals are
supported by an informal team of advisors with deep knowledge of and contacts within
the greeting card market.
Additionally, Parrett Paper benefits from the size and experience of Rochester
Rehabilitation Center. With 67% of its budget coming from earned income – and
millions of dollars in contracts with Kodak, Wal-Mart, and other corporate clients –
Rochester Rehabilitation Center understands what it takes to be successful in business.
More than any other of the organization’s ventures, Parrett Paper has elicited
excitement and passion from the staff and board, creating the commitment necessary to
develop a strong, profitable venture.
Parrett Paper will be successful because it has:
 A compelling and high-quality product with a reasonable price structure.
 A track record of success, more than 350 current loyal customers, a well-stocked
inventory, and the necessary equipment to succeed.
 A trained and experienced staff already in place, with strong management skills and
business experience.
 Established, efficient, and cooperative relationships with key suppliers.
 Passionate support from a strong parent organization.
 Marketing efforts focused on niche audiences likely to have interest in product
purchase.
Page 3
2. DESCRIPTION OF THE BUSINESS
Overview of Parrett Paper
Parrett Paper manufactures, markets, packages, and distributes unique, die-cut
greeting cards, gift tags and gift enclosure cards. This product line is sold to a national
and international customer base, including gift shops, zoos, aquariums and museums.
Parrett Paper, acquired in April 2001, is an income-generating program of The OutSource, a division of Rochester Rehabilitation Center, Inc. Rochester Rehabilitation
Center is a Rochester, NY based nonprofit with a budget of $12 million that serves over
5,500 individuals with a wide range of disabilities annually. The Out-Source division,
launched in 1978, provides job training and employment to people with disabilities as
well as providing over 20 area corporations with manufacturing and custodial
maintenance services. In 2002, 67% of Rochester Rehabilitation Center’s budget came
from fees for services, federal contracts, or other earned income, including over $3
million in sales from The Out-Source.
Christina Parrett founded Parrett Paper in the early 1980s. She ran the business until
1993, during which time card sales reached $350,000 per year. In 1993, Christina
decided to pursue interior design and sold Parrett Paper for $130,000 to Robert Whiting
and Fred Norter, principals in a Rochester-based advertising firm. Whiting, who was
responsible for all marketing of Parrett Paper, passed away in 1996, and the business
became dormant since no one was able to focus attention on marketing and growing
the business. In 2001, Norter and Whiting’s widow decided to sell Parrett Paper.
The Out-Source division had previously performed card stripping and assembly for
Parrett Paper, so there was familiarity with the product line as well as a previous
relationship between the two organizations. After discussions with the seller and an
assessment of the business’s potential, Rochester Rehabilitation Center acquired
Parrett Paper and approximately $200,000 of inventory in exchange for $45,000 in
cash. Because Parrett Paper provides job opportunities for the disabled program
participants of Rochester Rehabilitation Center, the venture operates under the
corporate 501(c)(3) umbrella. In addition to fitting with the work skills of program
participants, Parrett Paper will return profits to Rochester Rehabilitation Center to
support additional mission-related services.
The Parrett Paper product line consists primarily of all-occasion cards and gift tags
featuring zoo animals, pets, farm animals, wild animals, and prehistoric animals. The
all-occasion cards contain a brief, educational description of the depicted animal.
(Exhibit 23, Product Catalog Sheets)
In order to reach the card purchasing end-consumer, Parrett Paper has a marketing
strategy and sales personnel focused on reaching retail outlets such as zoos,
aquariums, museums, and gift shops. Parrett Paper keeps in close contact with these
primary customers in order to more fully understand their needs. Successful marketing
activities, such as trade shows, catalog distribution, and the use of independent sales
Page 4
representatives will continue. Additional marketing vehicles will be implemented to grow
its customer base.
In its first full year of operations under Rochester Rehabilitation Center, Parrett Paper
had revenues of $56,415, shipped 95,000 cards to customers, and employed six
program participants.
Parrett Paper Vision Statement



To provide greater levels of independence, economic self-sufficiency, and
confidence to people with a range of disabilities and socio-economic disadvantages
by giving them paid work;
To reduce reliance on public assistance by program participants;
To generate increased revenue for the parent organization so it can continue to
provide services to people with physical, psychiatric, and vocational disabilities.
Parrett Paper Mission
To produce the most unique, appealing, and successful greeting and gift cards for niche
retail markets.
Business Objectives




To generate $139,678 in revenue in the second full year of operation (2003), and to
generate revenue of $258,000 by the end of year four (2005).
To break even in year three (2004) and generate 20% net profit margins going
forward.
To employ 16 program participants by the conclusion of year four.
To develop and market three new product categories within our product line by the
conclusion of year three.
Core Competencies of The Out-Source




Twenty-five years of experience providing low-tech manual labor to both small and
Fortune 500 companies.
Significant experience in reducing operational costs to major customers.
Unique business partnerships, such as achieving Worldwide Supplier Status with
Eastman Kodak (with a quality rating of 94%).
Five years of experience with the previous owners of Parrett Paper in hand finishing
operations as well as packaging and general fulfillment operations.
Success Factors for Parrett Paper

A compelling and high-quality product with a reasonable price structure.
Page 5





A track record of success, more than 350 current loyal customers, a well-stocked
inventory, and the necessary equipment to succeed.
A trained and experienced staff already in place, with strong management skills and
business experience.
Established, efficient, and cooperative relationships with key suppliers.
Passionate support from a strong parent organization.
Marketing efforts focused on niche audiences likely to have interest in product
purchase.
Parrett Paper Management
Because of the size and experience of Rochester Rehabilitation Center, Parrett Paper is
able to hire and leverage the skills of highly talented professionals that the business
would not be able to afford on its own. Additionally, the multiple production units under
The Out-Source provide tremendous opportunity for synergy and flexibility of staff and
operations.
Mike Szpak, the Director of Operations at The Out-Source and Parrett Paper Manager,
oversees the strategy and operations of Parrett Paper. Mike has an MBA and 25 years
of experience in the private sector, working with leading manufacturing companies
including Eastman Kodak Company, Bausch & Lomb, Nu-Kote International, and
Alstom International.
Eileen George, Production Supervisor, manages the daily operations of Parrett Paper,
including marketing and customer service. Eileen has over 20 years of supervisory and
management experience in production, including owning and running her own business.
Jim Wemett, pro bono marketing consultant, has over 30 years experience in owning
his own business, marketing, operations, and retail management. His background
includes sports team ownership, patent licensing, and new product development. He is
also a member of the Rehab Enterprises, Inc. board.
The management team of Parrett Paper receives additional support from The OutSource in the areas of finance and accounting, human resources, information
technology, public relations, and development.
Page 6
3. INDUSTRY ANALYSIS
The Greeting Card
According to Packaged Facts 1998 report, The U.S. Greeting Card Market, “Greeting
cards typically contain a graphic design as well as a message, and are single-folded to
create four panels.” Parrett Paper produces colorful, die-cut, tri-fold greeting cards that
are of higher quality than a typical greeting card and are sold primarily to niche retail
outlets such as zoos, aquariums, museums, and small gift shops.
Market Size and Growth
The greeting card industry (sometimes referred to as the “social expression” industry) in
the United States generates over $7 billion in sales each year. It has grown from an
estimated 100 card publishers in 1941 to approximately 2,000, ranging from major
corporations to small family-run organizations.1 Unit sales of cards have stagnated in
the past five years, leading some industry experts to predict that the overall market is
mature. However, the Greeting Card Association predicts that the retail sales will
continue to grow at about 3% per year. This growth in revenue despite a stagnation of
unit sales is due primarily to higher card prices. Overall demand remains strong.2
U.S. Retail Sales of Greeting Cards, 1993-2002
(in billions of dollars)
$9.0
$8.5
$8.0
$7.5
$7.3
$7.0
$7.7
$7.9
$8.3
$6.8
$6.5
$6.3
$6.0
$5.5
$7.5
$8.1
$5.9
$5.6
$5.0
1993
1994
1995
1996
1997
1998*
1999*
2000*
2001*
2002*
Year
Source: Packaged Facts, The U.S. Greeting Card Market, July 1998.
* Predicted sales from the Greeting Card Association
Customer Demographics
1
Greeting Card Association website
Unity Marketing, Greeting Card and Stationery, 2002 – Greeting Card and Stationery Report: The Market, The Industry, The
Trends
2
Page 7
Over 90% of households in the U.S. purchase at least one greeting card per year. Of
this group, 87% of households purchase at least one card per year for everyday
occasions (birthday, anniversary, etc.) The average U.S. household purchases 35
individual cards per year. Seventy percent purchase at least one seasonal (holiday)
card per year.3
People of all ages and types exchange greeting cards. However, a key demographic
factor is that over eighty percent of all cards are purchased by women. Although that
percentage has dropped five percent in the past two years, it is still a formidable
percentage.4 Until children reach a certain age, their mother often makes their
purchasing decisions. Informal data gleaned from Parrett Paper’s primary customers
confirms that our secondary customers are primarily women who are buying for
themselves and their children.
Younger adults and men are the most frequent users of the Internet and, therefore,
electronic card services. These groups are not typical greeting card users. There is
some evidence to indicate a correlation between “wired” consumers and increased
community involvement, and more interaction with friends and relatives. Email and
other electronic forms of communication may get people back into the habit of writing.
The greeting card industry regards electronic greetings as a complement to paper
greeting cards, not a replacement.5
Factors Affecting Sales
Factors affecting sales within the industry include price, quality, differentiation,
convenience, and seasonality.

Price – The average wholesale cost for a greeting card is $1.50, with prices ranging
from $.38 to $10.00 per card, with an average card retailing for $1.50-4.00. At the
bottom end, industry leader Hallmark has successfully introduced the 99-cent “Warm
Wishes” greeting card. Cards featuring special techniques, intricate designs, and
new technologies are at the top of the price scale.

Quality – While consumers like a low-cost product, they also demand high quality.
Cards sold through niche retail outlets such as bookstores, cafes, and museums are
often printed on heavier card stock, use brighter colors, and involve die-cutting.

Differentiation – When giving cards, consumers want to give a card that the recipient
has not seen or received before. Therefore, the major card marketers are forced to
continually re-invent their product lines. Smaller retail outlets develop this
diversification by carrying the product lines of many smaller card marketers.

Convenience – Women are the primary purchaser of greeting cards, and more
women work now than ever before. As with other products, consumers are
increasingly looking to purchase greeting cards at the same time that they purchase
3
Greeting Card Association website, State of the Industry Report
Greeting Card Association website, State of the Industry Report
5
Greeting Card Association website, State of the Industry Report
4
Page 8
a gift or when they are doing other shopping. This increase in one-stop shopping
has led to a growth in the mass merchandising market.

Seasonality – The Greeting Card Association estimates that seasonal greeting cards
account for more than half of all greeting card sales. The other half represents
special occasions such as birthdays, anniversaries, get well, thank you, and
sympathy cards. Because over half of all card sales are seasonal, card marketers
must produce and showcase cards that will fit with the coming season.
Industry Trends
The Greeting Card Association identifies several trends that it sees in the current
greeting card market, including6:
 A 6% growth in the number of households buying greeting cards since 1993.
 Retail growth from cards for everyday situations versus holiday cards, and by the
sale of individual cards rather than packaged cards.
 The growth in electronic communication is a significant factor in the growth of the
greeting card industry. Electronic greeting card use is growing, however whether
this trend will continue to grow remains to be seen. There continues to be an appeal
in the ink-on-paper-cards mode of communication.
 Growth in discounting has given price-conscious consumers greater access to
affordable ink-on-paper greeting cards.
Hallmark, the industry leader, has noted some directions for its greeting card business,
including7:
 Focus on specialized customer needs rather than raising price to generate income
 Keep in touch with changing consumer interests
 Consumers are looking for simple language, fresh designs, and broader price
ranges
 Focus on ethnic and youth markets for new customers
 Seek ways to build on, or learn from, electronic greeting products
Distribution
The vast majority of greeting cards are sold through distribution channels including card
and gift stores, mass merchandisers, drugstores, supermarkets, bookstores, museums,
cafes, and other retail outlets.
Producer
Greeting Card
Companies
Distributor
Retailers
(primary customer)
Consumer
Individuals
(secondary customer)
While mass merchandisers, drugstores, and supermarkets are desirable distribution
channels because of their size and reach, they often command terms from card
6
7
Greeting Card Association website, State of the Industry Report
Hallmark website
Page 9
producers that only large companies can meet. Hallmark and American Greetings,
which together account for approximately 84% of the greeting card market, are able to
dominate these major channels through forward contracting – essentially seller
financing of large card purchases to guarantee sales volume.
Parrett Paper does not intend to compete with Hallmark or American Greetings.
Instead, Parrett Paper will seek to carve out a market niche within the 16%, or over $1
billion, in sales that are not accounted for by the “Big Two”.
Unit Share of Everyday Card Sales by Retail Channel, 1997
Card and Gift Stores
34%
22%
Mass Merchandisers
Drugstores
18%
Supermarkets
15%
Other
11%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Source: Unity Marketing, Greeting Card and Stationery, 2002 – Greeting Card and Stationery Report: The Market, The Industry, The
Trends
Niche Retail Market
Accessing the niche 16% of the greeting card market demands distribution through
retail channels such as card and gift shops, bookstores, museums, cafes, and other
smaller retail outlets, which together account for nearly half of all greeting card sales.
These retail outlets are the primary customers for niche card producers and marketers
such as Parrett Paper. Experience and research indicates that this is a large, and often
fragmented, marketplace. Estimates for the number of potential smaller retail outlets in
the U.S. are8:
 73,250 gift stores
 7,973 card shops
 21,049 bookstores
Unity Marketing estimates that the average store sales for gift and card shops (i.e. –
social expression retailers) were approximately $1 million in 2000. These retailers
report a median sales change from 1999 to 2000 of 0%. The average retailer selling
social expression products has been in business 30 years and has only one shop,
8 Estimates from Unity Marketing, Greeting Card and Stationery, 2002 – Greeting Card and Stationery Report: The Market, The
Industry, The Trends.
Page 10
typically 3,000 square feet in size. Trade show experience indicates that the majority of
gift shop owners are women.
Zoo, Aquarium, Museum, Botanical Garden Market
The majority of all zoos, aquariums, botanical gardens, and museums have gift shops.
Because these gift shops are looking to offer their patrons quality products that are
matched to their exhibits, they provide a logical niche for Parrett Paper. The American
Zoo and Aquarium Association has 149 zoos and 33 aquariums as members. The
Museum Store Association estimates that there are over 1,800 museum gift stores in
the United States. While the overall number of gift shops in this niche is relatively small,
every year more people visit zoos and aquariums than attend the NFL, NBA and major
league baseball games combined – approximately 134 million people.9 These visitors
often purchase a souvenir to remember their visit.
As profitable ventures within larger nonprofit institutions, these gift stores are social
enterprises and are more likely to stock items that are socially conscious. Additionally,
these gift shops are alert to the unrelated business income tax, and strive to sell items
that are educational and directly linked to the mission of the larger nonprofit.
Unlike the buyers for most gift shops, which tend to be the owners, the buyers for gift
stores within these institutions are not the owners and are often more willing to take a
risk on an innovative product such as Parrett Paper’s cards. Perhaps more importantly,
these gift shops have larger sales figures and can charge higher retail prices than other,
single owner gift shops. Gift shops within zoos or museums are also more likely to
computerize their inventory process and are more consistent with re-orders.
Sales and Marketing
Small retailers typically get their product information from trade shows, trade
publications, and visits from sales representatives. Because the key success factor for
the niche greeting card industry is hearing and heeding the customer, presence at trade
shows and sales representative visits are critical.
9 American Zoo and Aquarium Association website
Page 11
Source of Product Information for Retailers
89%
Trade Shows
86%
Trade Publications
82%
Sales Rep Visits
Vendor Direct Mail
52%
Store Owner Recs
44%
Consumer Mags
24%
Internet
19%
18%
Conventions
3%
Other
0%
20%
40%
60%
80%
100%
Source: Unity Marketing, Greeting Card and Stationery, 2002 – Greeting Card and Stationery Report: The Market, The Industry, The
Trends
Trade shows offer an opportunity to talk to the customer face-to-face. Parrett Paper has
learned in its presence at trade shows that, because many niche card marketers are
small and unstable, retailers like to see marketers repeatedly at trade shows and other
industry gatherings. This consistent presence seems to give customers greater trust
and confidence in doing business with a marketer, and a retailer will often wait for this
consistent presence before making an order.
A few gift shops join networks or are large enough to hire a buyer to stock their shops.
Because these buyers are responsible for multiple gift shops, they are very attractive
customers to greeting card marketers. However, these buyers are few in number and
require a sustained sales effort to penetrate.
Social Cause
According to Noreen Halvey, a retail consultant to zoos, aquariums, and botanical
garden gift shops, “The social cause is not the number one reason a retailer would
purchase… cards. It is because of quality and pricing.” That being said, the secondary
customers for greetings cards are overwhelmingly women. Women are more likely than
men to be supportive of cause-related shopping, with 64% indicating that they planned
to purchase a product in which a percentage of the price is donated to a cause during
the 2002 holiday season.10 These end consumer preferences will lead to stronger sell
through of greeting cards associated with a social cause. Consumer attitudes also help
to explain the huge success that organizations such as UNICEF and The Guide Dog
Foundation for the Blind have had in selling cards.
Market Share
10
The 2002 Cone Holiday Trend Tracker
Page 12
By 2005, Parrett Paper aims to obtain at least .00025% of the $1 billion in greeting card
sales not accounted for by the “Big Two”. Because the market for greeting cards is so
large, Parrett Paper focuses on customer acquisition targets more than market share.
In its first full year of operations, Parrett Paper had 255 customers and $56,415 in sales.
Based on 1,000 customers in year four, Parrett Paper estimates total sales will reach
$258,000. The Marketing Plan will explain how it intends to secure this position in the
market.
Page 13
4. COMPETITIVE ASSESSMENT
As stated in the description of the market, industry leaders Hallmark Cards and
American Greetings (which recently purchased #3 player Gibson Greetings) together
command approximately 84% of the market share. The remaining 16% of the greeting
card market is made up of much smaller niche marketers.
Marketer Shares, 1997
Other
15%
Recycled Paper
Greetings
1%
Hallmark
42%
American Greetings
42%
Source: Packaged Facts, The U.S. Greeting Card Market, July 1998
Both Hallmark and American Greetings have concentrated on pushing their cards into
mass-market retailers, often neglecting the small retail outlets that Parrett Paper and the
remaining 16% of the industry target.
Based on the product lines of various niche marketers, observations at trade shows,
surveys, and conversations with customers, Parrett Paper has identified its major niche
market competitors below.
Key
Competitors
Profile
Parrett Paper
Retail
Price of
Card
$1.50-$4
Product/
Product Style
Stylized die-cut
animal cards
Current
Annual
Market/ Market Strategy Revenue
Museum/zoo gift shops,
$56,415
specialty gift shops. Uses
sales staff and network
marketing, no minimum
order, may order any item
in any quantity.
Page 14
Stillpoint
Similar to
Parrett
Adam Gibson
Similar to
Parrett
Peaceable
Kingdom
Similar to
Parrett
ZooTREK
Similar to
Parrett
Nature
photographs on
card stock,
including
animals
Drawings/
designs printed
on card stock
Children’s
cards, including
die-cut and trifold
Photos of zoo
animals on card
stock, % of
sales go to
American Zoo
and Aquarium
Association
Smaller gift shops,
owner-marketed, $75
minimum order
$1 million
Gift shops, ownermarketed
$70,000
Small gift shops
NA
Gift shops in zoos,
discounts for AZA
members
NA
Observations at trade shows and conversations with customers lead us to believe that
no other greeting card company specializes in the animal die-cut cards that are the core
product line of Parrett Paper. The table below examines these competitors based on
the core attributes of Parrett Paper:
Competitor
Parrett Paper
ZooTREK
Stillpoint
Adam Gibson
Peaceable
Kingdom
Die-Cut
Cards
X
AnimalThemed
X
X
X
Social
Cause
X
X
X
X
Zoo/Museum
Market
X
X
Flexible
Service
X
X
X
While those listed above are believed to be the closest current competitors for Parrett
Paper, the industry has no real barriers to entry. A competitor who wanted to imitate the
look and feel of the Parrett Paper product line could easily outsource the printing and
cutting of the cards, and bring a similar line to market through independent sales
representatives.
Competitive Advantage
However, Parrett Paper believes that it has a number of significant competitive
advantages over its current and potential competitors that will allow it to continue to
succeed and grow.
Page 15

Compelling product – Parrett Paper cards are unique in design, colorful, and high
quality. They are suited to an educational sales environment, such as museums,
zoos, and aquariums. The classic designs are less subject to being “out-dated” than
most. They are pre-packaged with custom die-cut envelopes, wafer seals, and are
displayed in clear, resealable cellophane sleeves. Additionally, the all-occasion
cards contain an educational message, which is appealing in several market niches.

Flexible service – Parrett Paper is willing to do what is necessary to meet the needs
of its customers. In the short term, this includes offering no minimum purchase,
custom text, individually pre-packaged service, and the ability to shift staff to fill large
orders on short notice.

Established nonprofit parent – Because of its position within Rochester
Rehabilitation Center, Parrett Paper can benefit from both its resources and taxexempt status. Despite being dormant for four years, Parrett Paper under Rochester
Rehabilitation Center automatically had access to operations support, technology
infrastructure, strategic guidance, and credibility by association. Additionally, Parrett
Paper is able to receive donated goods and services, such as pro bono graphics
assistance, rent, marketing consultation, and equipment.

A well-stocked inventory – The purchase of Parrett Paper included an inventory of
over 800,000 cards, worth approximately $200,000. While this inventory is only a
short-term advantage, Parrett Paper is able to gain a foothold in the market by using
this inventory to fulfill orders and to provide marketing samples.

Supplier relationships – Parrett Paper has developed relationships with its suppliers
that ensure strong, consistent, and fairly priced service for its printing and cutting
needs. Additionally, Parrett Paper receives consulting, artwork, graphics services,
and computer time from its suppliers as a donation. We estimate that these services
would have cost Parrett Paper over $2,000 in 2002.

Social cause – While price and quality are the top reasons that our customers buy
our cards, they also know that every purchase of a Parrett Paper card provides
needed work for Rochester Rehabilitation Center’s program participants as well as
revenue for mission-related programs. This social cause is especially attractive to
public museums, aquariums, and zoos.

Database of hundreds of images and dies – The purchase of Parrett Paper included
transfer of ownership and copyright of over 600 unique images and die cuts.
Page 16
5.
MARKETING PLAN
Product
Parrett Paper manufactures, markets, packages, and distributes unique, die-cut
greeting cards, gift tags and gift enclosure cards. Our greeting cards are tri-fold,
colorful, and printed on heavy stock paper. To remain clean and fresh, even after
handling, Parrett Paper cards are packaged with an envelope in a resealable
cellophane sleeve. While Parrett Paper has a database of over 600 images and diecuts, our current line consists of 150 card designs, of which 89 are animal designs and
21 are holiday designs.
Parrett Paper’s cards are available in four sizes:
 Large cards (5”x7”) – 66 designs
 Medium cards (3”x5”) – 12 designs
 Gift enclosures (2”x4”) – 32 designs
 Gift tags (2”x4” with no fold and a string) – 40 designs
Pricing
The cost to Parrett Paper of producing a card for sale includes the paper, ink, and
printing costs; the cost of the envelope, wafer seal, and cellophane sleeve; and the cost
to punch, fold, and package each card. Since gift tags do not have envelopes, are not
packaged in a cellophane sleeve, and require no punching, folding, or packaging, they
are significantly cheaper to produce. Based on these costs, and the wholesale prices of
comparable cards, Parrett Paper's current wholesale price per greeting card is
$.25-$1.33. The customer (shop owner) usually determines the retail price based on
their necessary margins and the need to stay competitive in their business environment,
usually about a 100% markup. As a result, our greeting cards are usually priced within
the average retail greeting card price range of $1.50 to $4.00 per card.
Retail Price
Wholesale Price
Cost of Card
Large Cards
Medium Cards
$2.50-$4.00
$1.33
$0.51
$2.00-$2.50
$1.00
$0.51
Small Cards/Gift
Enclosures
$1.50-$1.75
$0.80
$0.49
Gift Tags
$0.50
$0.25
$0.12
Based on shop owner and buyer feedback, pricing is NOT the primary marketing issue
for Parrett Paper. It is the unique appeal of the cards themselves. As one gift shop
owner said, “If I like them, my customers will like them.”
Value Proposition
Our cards are a new sort of product for many stores and gift shops. They are unique in
both subject matter and design; our die-cut images give more reality to the animal
figures and the cards include an educational message. Since Parrett Paper cards are
simply designed and very colorful, they are appealing to both adults and children.
Because of our unique, quality cards and our first-rate customer service, Parrett Paper
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is attractive to a wide range of retail outlets. However, our animal cards are especially
attractive to zoos, aquariums, museums, and other specialty retail shops.
Current Customers
Parrett Paper has a proven business model with established customer relationships.
Gift shops within a museum or zoo complex make up about thirty percent of Parrett
Paper sales. Zoo gift shop customers include the National Zoological Park (the
Smithsonian Institution) as well as the San Diego, Columbus, Phoenix, Oklahoma City,
and San Francisco Zoos. Parrett Paper’s museum customers include the Baltimore
Museum of Arts, the American Craft and Folk Art Museum in Los Angeles, and the
National Tropical Botanical Gardens in Hawaii.
Small gift shops comprise 52% of sales. Caterers and party planners (2%) use Parrett
Paper cards for invitations and also for place cards or table favors at an event. Party
planners for zoo or museum events have been a growing segment. For example, in the
Rosamund Gifford Zoo in Syracuse, NY a capital campaign for a new penguin facility at
a zoo required 2,500 penguin cards for a fundraising solicitation (Exhibit 22, Penguin
Solicitation Piece). The event raised over $45,000 in funds for the zoo.
Breakdown of Parrett Paper Sales, 2002
Large Retailers
16%
Party Planners
2%
Card and Gift Stores
52%
Zoos & Museums
30%
The large retailer category consists of one customer, The Container Store Company,
which makes one large order a year for Christmas gift tags. No other customer
accounted for more than 5% of sales in 2002. While Parrett Paper recognizes the risk
of having one customer that accounts for a large percentage of sales, this relationship
has been constant for the past 10 years and Parrett Paper maintains a strong
relationship with The Container Store.
Page 18
Current Parrett Paper customers are from all over the U.S., with international customers
in Canada, England, Ireland, and China. Less than five percent of customers are
international and less than five percent are in our local Rochester area.
Marketing Strategy
Initial sales results indicate that our cards will sell themselves once they reach the retail
rack. Retailers want product sell-through, and we know that our cards will sell.
Therefore, our marketing goal is to get our cards into as many card and gift shops as
possible where they will have the chance to succeed. This initial success will lead to
more and larger re-orders.
Because of the nature of Parrett Paper’s cards, our primary marketing strategy for the
near future is to increase our penetration into the gift shops at zoos, aquariums,
botanical gardens, and museums. Our secondary marketing goals are to reach small,
“mom & pop” gift shops, companies with animals in their names, pet stores, and
universities with animal mascots.
As an example of this secondary marketing strategy, a name search of a business
directory identified a business named ”Silver Puffin.” This company has ordered 100
puffin cards twice as a sales promotion. Similarly, Gatorland of America orders alligator
gift enclosure cards to promote its theme-based park. Recently, the University of
Auburn ordered 200 tiger cards (the tiger is their mascot) to sell in the college’s gift
shop.
Current marketing avenues that Parrett Paper is pursuing to reach its targeted
customers include:

Cultivate current customers – Parrett Paper is able to give its customers the
individualized attention that will lead to increased re-order rates and customer
referrals. We believe there is no more valuable future customer than a satisfied
current customer. (Exhibit 18 - Letters of Support)

Samples – Parrett Paper’s current large inventory, acquired at a fraction of its worth,
provides an opportunity to mail or distribute samples to potential customers. The
quality and distinctiveness of the cards can only be seen first hand, and these
samples are a key avenue for enticing new customers.

Catalog – Parrett Paper recently produced 30,000 copies of a new full color, 16page brochure that displays the entire line of Parrett Paper products for the first time
in one place. Having a catalog indicates a new level of professionalism for the
company and will allow Parrett Paper to remain top of mind for customers, even
outside of trade shows.

Mailing lists – Parrett Paper recently acquired a 15,000 name targeted mailing list of
gift shops, including zoos and museums. Within the next two months, Parrett Paper
will send a mailing- including the new catalog and samples- to key potential
customers. Additionally, Parrett Paper has negotiated the use of a 3,000 piece
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customer mailing list sourced from a ten-year-old local greeting card company with a
complementary product line.

Trade shows and conferences – Because trade shows are the number one way that
retailers uncover new product information, Parrett Paper has made a commitment to
having a presence at the major shows. In 2002, Parrett Paper participated in trade
shows in New York, Boston, Rochester, Seattle, Los Angeles, and San Francisco.
These shows produced nearly 200 new clients and the majority of Parrett Paper’s
sales. In 2003, Parrett Paper will attend those trade shows that provided the
strongest leads last year, as well as additional targeted conferences such as the
American Zoo and Aquarium Association annual conferences. We have already
attended trade shows in Atlanta, Dallas, and Boston in the first quarter of 2003.

Cold calls – Parrett Paper’s marketing consultant has constantly mined association
membership lists, phone books, business directories, competitor websites, and the
internet to locate contact information for potential customers. Promising leads are
contacted with a phone call and/or a direct mail packet.

Sales representatives – Parrett Paper currently has relationships with a dozen
independent sales representatives across the country. These individuals work
consistently to get Parrett Paper products accepted into retail outlets in specific
geographies, in exchange for a 15% commission.

Advertisements - Advertising has been placed in “Greetings Etc.”, the official
publication of the Greeting Card Association. While this ad led to a few sales, more
importantly it sparked an interest in the magazine’s editor, who did a feature story,
“Cards for a Cause,” in the December 2002 issue (Exhibit 21 - “Cards for a Cause”
Article). This experience led Parrett Paper to redefine its public relations strategy to
focus on feature stories that educate the prospective customer. Not only does this
avoid the “hard sell” but also it is much more cost effective and impartial than an ad.

Website and toll-free number – While the Parrett Paper website acts only as an
online brochure currently, along with the “800” order line (1-866-PARRETT), it helps
to facilitate customer purchases. All Parrett Paper print communication will note the
website address, www.parrettpaper.com, in order to drive traffic to the site. Within
the next two years, Parrett Paper hopes to launch an e-commerce website to allow
both retailers and end-consumers to purchase cards online.

Special offers – Parrett Paper has wooed customers from larger competitors at
national stationery and card shows because of discontent with minimum order
requirements and the inability to provide small and mixed quantities of cards. “No
minimum orders” is a marketing tool that may be inefficient in the short term, but
works in the long run. It reduces a customer’s risk in sampling an unfamiliar card
line. By not requiring a minimum order, we are gaining access to more customers –
customers that might not take a risk on our cards with a large minimum order. Once
the cards sell out, the customer places larger re-orders.
Page 20

Shelf cards and wafer seals – Parrett Paper provides a Parrett Paper logo “wafer”
(seal) for each greeting card envelope. This wafer not only seals the envelope, but
also gives Parrett Paper an opportunity for visibility (Exhibit 24, Sample Card
(Turtle)). Additionally, Parrett Paper has developed a shelf card (Exhibit 25, Shelf
Card) that describes the connection to and mission of Rochester Rehabilitation
Center for retailers to display along with the cards.

Marketing partnerships – Memberships in business and trade associations have
brought exposure for our cards and may provide opportunities for future sales. For
example, National Industries for the Severely Handicapped (NISH) is a $33 million
national agency designed to identify “set aside” work opportunities for member
organizations serving people with disabilities. Through its relationship with NISH,
Parrett Paper may identify opportunities to sell cards in Federal gift shops at military
bases, prisons, or national parks. Similarly, long-standing relationships with New
York State Industries for the Disabled (NYSID) and Association for Rehabilitation
Marketing may lead to sales contracts.

Card branding – Every new card that is printed includes the Parrett Paper website
and a reference to Rochester Rehabilitation Center on the back. (See back of
Exhibit 22, Custom Penguin Solicitation Piece).
Sales Process
To initiate an order, the customer completes a Parrett Paper sales order. This order is
processed and sent to the customer within 48 hours if the cards are in inventory and
within two weeks if the order needs to be printed. Customers are given 30 days from the
shipping date to pay the invoice. If for any reason a customer is not satisfied, the order
may be returned for a refund minus a 15% re-stocking fee.
Sales Staff
Eileen George, the Parrett Paper Production Supervisor, and Jim Wemett, the
Marketing Consultant, are responsible for all sales and marketing for Parrett Paper.
Both Eileen and Jim attend the trade shows, conduct market research, and develop new
product lines. Jim handles the majority of the cold calls, direct mail, sales
representative transactions, catalog development, and marketing partnerships. Eileen
is primarily responsible for the order taking, fulfillment, and customer service.
Research and Development Opportunities
Parrett Paper recognizes that its core niche will be zoos, aquariums, and museums in
the near term. Our goal has been to focus on this niche and proactively build our
customer base before pursuing additional customer niches. As part of this sales
strategy, however, Parrett Paper attends trade shows and is exposed to customers
outside of this niche, primarily independent gift stores.
As our penetration into the zoo, aquarium and museum gift shops has grown, we have
considered additional marketing strategies. Through participation in trade shows,
Page 21
review of industry publications, and customer feedback, Parrett Paper continuously
scans for new directions and trends, and how those trends will affect its niche business.
Conversations with current and potential customers are invaluable market research.
This kind of one-to-one feedback from our primary customers about our secondary (end
user) customers gives us very useful information for what works with current products,
as well as what future products could be successful. Talking with customers at trade
shows is like having an informal, “free” focus group with customers in different parts of
the country. We also monitor our card sales carefully to watch for trends in purchasing.
As a result of this customer feedback, Parrett Paper is currently developing three new
lines of cards: sports, dogs, and horses. The first will be introduced at the New York
City Stationery Trade Show in May.
This product research and development follows two primary paths:
 Selling our current products to new market niches
 Selling additional products to our current niche
We believe that there are several additional outlets that would be interested in our
current product line. These outlets include:
 State and national park systems
 SeaWorld and other theme parks
 Animal-themed organizations such as Discovery, National Geographic, and the
World Wildlife Fund
 Kid themed retail outlets such as Toys R Us, FAO Schwartz, and Zainy Brainy
 Affinity groups and other nonprofit organizations including Special Olympics, The
Humane Society, and ARCs (Association for Retarded Citizens) across the U.S.
 Bookstores and cafés
Additionally, we believe our relationships with current customers provide opportunities
to sell additional, related products, including:
 Holiday cards
 Refrigerator magnets
 Puzzles and other games
 Dry marker message boards
 Decorator stencils
 Gift wrap
 Lower-cost, non-die-cut cards on lighter weight paper stock
Parrett Paper will stay in the paper “niche”, but we will listen carefully to our customers
and develop related products to meet their needs. For example, a die-cut giraffe card
can lead to children’s measuring charts for home, school, and doctors’ offices. Turtle
die-cuts could be used to create a dry marker message board.
In addition to product research and development, we are constantly examining ways to
improve our business and reduce our costs. Current initiatives under consideration
include:
Page 22



The purchase of small (2,000 lb.) die-presses to make small runs of our own cards
Development of die-cuts of specific breeds of dogs and horses (frequent customer
requests)
Acquisition of in-house graphics and printing capabilities to enable the production of
customized greetings
Performance Milestones
Parrett Paper believes that there are a few critical levers that will lead to our success.
As stated before, our initial goal is to get into as many niche gift shops as possible; we
will focus specifically on zoo, aquarium, and museum gift shops because we believe our
cards will achieve high sell through rates in these outlets. We are aggressively pursuing
trade shows, our catalog, direct mail, sales reps, and cold calls to increase the number
of outlets carrying our cards. Parrett Paper anticipates that our new catalog and direct
mail efforts will lead to a 100% increase in our customer base in 2003. This
penetration, combined with high sell-through rates, will lead to more orders per year,
higher re-order rates, and a growing median order size.
A combination of these factors will drive sales, allowing us to employ more program
participants full-time. Lastly, we understand that the sell-through rates of our products
will depend on their ability to stay fresh in the eyes of the end consumer. Therefore, we
will continue to conduct research and development to identify new trends, and have set
a goal to introduce at least three new product lines by 2004.
Our 2002 benchmarks and three-year goals are outlined below:
2002
Total # active zoo/museum clients
Total # active other clients
Customer retention rate
Total # zoo orders
Total # other orders
Median order size -- zoos
Median order size -- others
# of new lines
Sales
Sales growth
# program participants
39
216
20%
45
226
$348
$180
0
$56,415
405%
6
Page 23
Goals for year end,
2003
2004
2005
80
100
120
420
650
880
50%
55%
60%
125
145
165
500
730
960
$375
$385
$400
$185
$195
$200
1
2
1
$139,678 $198,899 $258,000
148%
42%
30%
12
14
16
6. MANAGEMENT PLAN
Management Staff
Because of the size and experience of Rochester Rehabilitation Center, Parrett Paper is
able to hire and leverage the skills of highly talented professionals that the business
would not be able to afford on its own. Additionally, the multiple production units under
The Out-Source provide tremendous opportunity for synergy and flexibility of staff and
operations. (Exhibit 8 - Resumes)
Thomas Gibbons, Vice President for Vocational Services, holds a Masters Degree in
Education and has over twenty years of experience in the field of vocational
rehabilitation including over ten years in management positions. He oversees all
Rochester Rehabilitation Center vocational services including Information Technology
Training, Employment and Counseling Services, and The Out-Source. Thomas
oversees the selection and development of all The Out-Source business ventures.
Mike Szpak, the Director of Operations at The Out-Source and Parrett Paper Manager,
oversees the strategy and operations of Parrett Paper. He has brought a fresh
approach and new ideas for growing The Out-Source and Parrett Paper business. Mike
is leading the efforts in pursuing MRP II and ISO 9000 systems. His educational
background is electrical engineering, manufacturing management, and an MBA. Mike
has 25 years of experience in the private sector, and has worked with leading
manufacturing companies including Eastman Kodak Company, Bausch & Lomb, NuKote International, and Alstom International, giving him excellent credentials for any
manufacturing environment.
Eileen George, Production Supervisor, manages the daily operations of Parrett Paper,
including marketing and customer service. Eileen has over 20 years of supervisory and
management experience in production, including owning and running her own business.
Jim Wemett, pro bono marketing consultant, has over 30 years experience in owning
his own business, marketing, operations, and retail management. His background
includes sports team ownership, patent licensing and new product development. He is
also a member of the Rehab Enterprises, Inc. board.
The management team of Parrett Paper receives additional support from The OutSource in the areas of finance and accounting, human resources, information
technology, public relations, and development.
While the current management team has extensive sales, marketing, operations, and
production experience, it does not have specific expertise in the greeting card market.
However, due to the assistance of an informal group of advisors, we have been able to
avoid many of the pitfalls faced by marketers in the greeting card business. These
relationships allow us to “trial test” ideas, share successes, and discuss problems with
people who know the card business well. These individuals include:
 Noreen Halvey, a retail consultant to zoo gift shops (Exhibit 18 – Letter of support)
 Kathleen Cunningham, Director of Marketing for Stillpoint, Minot, ND
Page 24



Lori Voskuil-Dutter, owner of Creative Design Studio Inc., Cedar Grove, WI.
Suzy Spafford, owner of Little Suzy’s Zoo Studios, San Diego, CA.
Alex Farnsley, Development Director for Little Suzy’s Zoo Studios
While our current relationship with these individuals is informal, we plan to form a
Parrett Paper Advisory Board to give periodic advice and counsel on issues such as
marketing strategies, new product development, and promotional tactics. Those listed
above are ready and willing to serve on the board.
Coordination with Parent Organization
Rochester Rehabilitation Center, Parrett Paper’s parent organization, has been in
operation since 1919. It is a 501(c)(3) nonprofit organization serving people with
disabilities. Initially, Rochester Rehabilitation Center provided occupational therapy to
tuberculosis and other chronically ill individuals. Today, Rochester Rehabilitation Center
has grown to become a $12 million agency serving over 5,500 people each year.
Rochester Rehabilitation Center provides clinical services, counseling, assessment and
training, as well as job placement and retention. The agency’s mission has always
focused on helping individuals with disabilities to attain their highest level of functioning,
whether at daily living tasks, driving, recreation, or work. The agency has a varied and
consistent base of financial support, 67% of which is from fee-for-service revenues. It
has contracts with local and state mental health and vocational rehabilitation agencies
to serve people with disabilities. In addition, the Center receives support from the local
United Way of Greater Rochester. Program areas are comprehensive. Services are
integrated so that a consumer coming in for one service can benefit from a variety of
related services. Financially and programmatically, the agency is stable.
Rochester Rehabilitation Center
501 (c)(3)
145 Employees
$12 Million Budget - $4.3 Million in Assets
Vocational & Educational
Services
The Out-Source
32 Employees
144 Clients
$3.7 Million Budget
Counseling
&
Employment
Services
Information
&
Technology
Services
Rehabilition
Support
Services
Parrett Paper
In 1926, an industrial therapy division was added to Rochester Rehabilitation Center’s
service array. Originally providing light industrial bench work and serving a limited
number of participants, it has grown and developed through the years. In 2003 this
Page 25
division, now known as The Out-Source, has a $3.7 million annual budget. This
represents approximately 32% of the Rehabilitation Center's overall budget. The OutSource is unique within the Center. While it is part of the 501(c)(3) status of Rochester
Rehabilitation Center, it operates as a business center, conducting its business with
private sector corporations including local companies, Fortune 500 corporations, and
the federal and state government. It is designed to operate as a business, and it
consistently generates over 10% profit on sales activity. Parrett Paper was purchased
and became a venture within The Out-Source.
Parrett Paper expands and diversifies Out-Source business product lines. For twentyfive years, The Out-Source has operated as an employment, training, and work
experience business operation. Utilizing business skills and pursuing an
entrepreneurial approach, it has sought out and secured new and diverse contract
opportunities offering work to people with disabilities. Parrett Paper has become a
source of pride for people with disabilities who are producing a product that is their own.
Parrett Paper has growth potential to provide increased transitional and long-term
employment for many individuals who are disabled and disadvantaged.
Beyond adding to the diversity of current Out-Source contract work, Parrett Paper
enables The Out-Source to gain valuable marketing and product fulfillment experience.
It is also helping to establish The Out-Source identity with a national audience, possibly
generating additional business contracts. The central focus of all Out-Source activity is
to provide skill building, confidence building, and income-generating opportunities for
people with disabilities. This supports their interest in becoming more financially
independent and experiencing the self-esteem associated with productive work.
The Parrett Paper business line fits Rochester Rehabilitation Center’s mission of putting
people to work and fostering active living. In our society, having a job is a key part of an
individual’s identity and self-worth. A job allows individuals to live more fully and
independently, develop social contacts, volunteer, and contribute to the local economy
by being consumers and taxpayers.
Rochester Rehabilitation Center, Inc. is governed by a policy-making board with all
fiduciary responsibility for the agency, including Parrett Paper. The board reflects a
number of professional disciplines, disability constituencies, ethnic and community
groups, and is strong in its financial management.
Program Participant Staffing Plan
Rochester Rehabilitation Center’s program participants assist in the low-skilled, manual
labor portions of Parrett Paper’s business. This involves batching orders, folding cards,
packaging cards, and assembling mailings.
All program participants receive individualized training to perform their specific jobs.
Because the workforce has varied disabilities, it is necessary to tailor training to best
meet each person’s individual learning style. Some individuals will benefit from a
pictorial description of tasks to be performed. Others will benefit from actually seeing the
task performed, or some combination of both methods. Employees who have more
Page 26
complex job responsibilities will have a process manual to follow, as well as training
specific to a particular shipment. Parrett Paper workers also participate in in-service
trainings provided by The Out-Source and the Rochester Rehabilitation Center as
appropriate.
Wages for program participants are based on a prevailing wage rate of $6.85 per hour.
These positions are piece rated jobs based on a rates master listing of all operations,
meaning that workers are paid based on their individually established productivity rate
as compared to a 100% FTE (full time employee). For example, if a disabled individual
is only half as productive, on a piece rate basis, as a non-disabled worker, they will
receive approximately $3.43 per hour. These wages fluctuate based on the productivity
of a worker on any given job. This policy is in accordance with the U.S. Department of
Labor under the Special Minimum Wage Rates section 14 (C) of the Fair Labor
Standards Act. For our program participants, a full-time work week is 37.5 hours.
We anticipate Parrett Paper will employ over 16 program participants by 2005. Due to
productivity rates, this should translate into eight full-time equivalent employees.
Because of the flexibility of The Out-Source’s large contracts with Eastman Kodak and
Caldwell Manufacturing, we are able shift both staff and space to meet the peaks and
lulls of Parrett Paper’s initial business. Currently, up to 20 program participants are
available to fill large or quick turnaround customer orders. While we do not believe that
our staffing costs are a competitive advantage, we do believe that our staff flexibility and
well-matched skills will contribute to our success.
Page 27
7. OPERATIONS PLAN
Production Processes
The production process begins with the customer’s requirement for a product. Through
gathering information from the customer, Parrett Paper is able to develop trade show,
advertising, direct mail, and cold call strategies to reach the customer and present
Parrett Paper products as the solution. This activity results in orders received by fax,
phone, or in person (Exhibit 12 - Current sales process flow charts). Next steps include:



Creating or choosing a design from the current inventory of over 600 images to meet
the customer’s requirements
Deciding what items need to be produced to fill the customer’s need
Deciding who will print, die-cut, and/or finish the product
Close to 75% of current orders are filled through the existing inventory, with program
participants folding, batching, and packaging the cards for delivery within 48 hours of
the order. Parrett Paper recognizes that this will not be sustainable, and has a goal of
three turns of inventory per year, resulting in an inventory stock of approximately onethird of projected sales.
For all jobs that require new printing and die-cutting, Parrett Paper relies on its vendors
for contract services. A further explanation of these relationships is provided in the
discussion of the supply chain. Once printed, the cards arrive at Parrett Paper in flat
die-cut sheets, where program participants punch, fold, batch, and package the cards
for delivery. A job that requires printing and die-cutting takes an average of two weeks
from order to ship.
Parrett Paper offers many unique services, such as customized card mix, packaging,
labeling, and text. Parrett Paper can complete large jobs or more specialized
customization depending on a customer’s needs.
The Out-Source has flexible warehousing and staffing to meet peak or non-peak
workforce demands. While all labor can be moved off of Parrett Paper when no work is
needed, there are other periods (typically following trade shows) where as many as
twenty workers and 2,700 square feet of production area are utilized. These changes
can be accomplished with a twenty-four hour notice.
Inventory management combines the use of the Access 2000 data entry process and an
active Excel spreadsheet to produce a book inventory. A kanban style warehouse
system is utilized. This system is an inexpensive method that enables Parrett Paper’s
workforce to maintain an ongoing visual of all products inventoried. The product in the
kanban is kept in three stages: flat die-cut cards, folded cards, and cards folded and
placed in cellophane with an envelope and wafer seal. These three stages enable
Parrett Paper to fill orders efficiently. This process also results in a double check of our
perpetual inventory record and order system. (Exhibit 13 - Current Inventory Process
Flowchart).
Page 28
Vendor supplied materials originate from local and national sources depending on the
item (Exhibit 14 - Product Ordering Flowchart). Quality and pricing are the main factors
when choosing a vendor.
Quality control is naturally built into the system because of the nature of the product line
and the fulfillment process. During the final packaging of an order, each item is
checked for completeness and accuracy. (Exhibit 15 - Quality control process flow
chart).
Supply Chain
When it acquired Parrett Paper, Rochester Rehabilitation Center maintained
relationships with the original free-lance artists, die-cutters, and printers. Because
Parrett Paper is part of a well-respected local nonprofit agency, these vendors helped
educate Parrett Paper’s new management team about the business operations and
continue to provide favorable terms on contracts.
Rochester Offset Press does card printing and provides volunteer assistance for prepress support such as card design. Rochester Die-Cutting provides individualized
service, small runs, and customized projects. Impact Images, supplier of the resealable
cellophane sleeves for Parrett Paper greeting cards, is a national supplier, but one that
has fulfilled our needs and even provided 24-hour turnaround. Consult-A-Graphics
enabled Parrett Paper to contract for goods and services within its pricing model. The
owner also worked with Parrett Paper to design its own envelope line. (Exhibit 16 Parrett Paper Supply Chain)
Because our business is still in its early stages, and we have established relationships
with our suppliers, we do not do our own printing or die-cutting. We will continue to reevaluate the costs of bringing these operations in-house, but as long as we receive
favorable terms from our vendors, we will continue with our current operations.
Additionally, Parrett Paper has a UPS station at its facility and can send an order to
customers overnight when necessary. The implementation of an auto re-order point in
the current inventory management system will also facilitate orders. It will also help
Parrett Paper in performing inventory turnover analysis.
Facility
At the time of its purchase, Parrett Paper was moved into a 1,188 square foot open
production space. Most product remained in cartons and on skids, but some was moved
to pre-existing shelves and racks. After a successful display at a national trade show,
customer orders increased significantly, requiring changes in the workspace. Parrett
Paper purchased more shelves and racks, thus improving the work process and
creating better access to our inventory.
Through our partnership with Eastman Kodak Co., we were given industrial engineering
assistance in August of 2002 that produced warehouse analysis, production time
Page 29
studies, and ergonomic analysis of the work process. Eastman Kodak will continue to
offer these services to Parrett Paper and The Out-Source.
Due to its location at The Out-Source facility, where operations are flexible, Parrett
Paper can expand its available floor space to create more warehouse or production
space, or to develop a retail store project and design studio (Exhibit 17 - Production
Area Layout). The expansion project will also free up 992 square fee of space for
warehousing.
Equipment/Furniture/Fixtures
After purchasing Parrett Paper, it was determined that more shelving units, a shrinkwrap tunnel, and “L” sealer were needed to improve our packaging process. Although
the equipment we purchased was used, it is projected to have a usable life of five or
more years. The Out-Source has provided PC’s for Parrett Paper’s use. New supplies
to support trade show activity will be required, such as display racks and tables. Most
required fixed assets are already in place. In the next two years, Parrett Paper will need
to purchase new equipment and software at a cost of $7,500-$9,000, including:




Mac G4 with drawing board
Laser printer, color plotters and software
Small die-cut press
Foil printer
This equipment would enable us to create artwork in house to better serve our primary
customers’ needs.
Management Information Systems (MIS)
Currently, Parrett Paper’s MIS needs are provided by Center Information Systems
(CIS), a company that partners with The Out-Source and Rochester Rehabilitation
Center. This relationship has been successful, is economical, and will continue.
The Out-Source is now assessing a new MRP II system, and Parrett Paper will become
part of that system—including operations, inventory, reporting, forecasting, and billing.
With this system in place, Parrett Paper will be better able to quickly and accurately
compare forecasted sales and profits to actual information, giving Parrett Paper the
ability to make faster and more cost effective business decisions.
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8. FINANCIAL PLAN
In planning for future performance, Parrett Paper has the advantage of a full year of
experience and financial tracking. The business was acquired in mid-2001 through an
asset purchase. While the 2001 income statement shows a profit, this is not wholly
accurate, as shared expenses were not yet allocated for Parrett Paper.
In 2002, Parrett Paper was institutionalized as a business within Rochester
Rehabilitation Center and far exceeded initial projections. Based on promising
revenues in February and March, Parrett Paper began to invest more heavily in sales
and marketing in April in an attempt to grow the business more quickly. In the second
half of 2002, sales grew significantly due to attendance at key trade shows and cold
calls. While November and December were relatively weak months, sales have already
rebounded in January and February and bode well for a successful 2003.
Income Statements
The Income Statements (Exhibit 3 - Actual/Proforma 2001-2005 Income Statements)
show our 2001 and 2002 actuals, as well as projections through 2005. We are on track
to grow the business almost 2,200% over a five-year period.
A description of the key line items and the assumptions underlying our estimates
follows:

Revenue – As stated in the marketing plan, the key drivers of Parrett Paper’s
revenue are the number of orders and the average order size. Because the average
order size of our zoo and museum clients is almost double the order size of our
overall gift shop clients, we calculate these sales separately in reaching our revenue
forecast. In 2002, Parrett Paper received 45 orders from museums at an average
order size of $348 and 226 orders from gift shops at an average order size of $180.
Over the next three years, Parrett Paper will aggressively grow its base of zoo and
museum clients to 120 and its base of other gift shop clients to 880 through high repurchase rates and new customer outreach. Between January 1, 2003 and April 1,
2003, Parrett added 14 zoo and museum clients and 120 other gift shop clients.
While our revenue growth targets are aggressive, they are in line with the past
performance of Parrett Paper. We anticipate that revenue will continue to be very
seasonal based on trade show attendance and, in 2003, the release of our catalog.

Cost of Goods Sold (COGS) – Card purchases are filled from inventory. Inventory
acquired in the original purchase is valued at fair market price, while all new
inventory is valued at cost. Based on 2002 results, and estimates of future sales of
old and new inventory, we predict that COGS will run at about 13% of sales for the
next three years.

Wages – Management, Sales & Marketing – Parrett Paper has yearly fixed costs for
the percentage of salaries and benefits that it covers of the production supervisor,
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director of operations, and administrative support. These percentages are estimated
to remain fixed for the next three years, and salaries are estimated to rise by 3% per
year.

Wages – Direct Labor – For batching orders, folding cards, packaging cards, and
assembling mailings, Parrett Paper employs the services of the program participants
of Rochester Rehabilitation Center. These individuals are paid the prevailing wage
(currently $6.85/hour). Because Parrett Paper has the flexibility to draw on these
services as needed from The Out-Source for a large order, the number of
participants employed at Parrett fluctuates each month based on the revenue. In
2002, an average of six individuals were employed. By 2005, with continued growth
in revenue, Parrett expects to employ an average of 16 or more program
participants.

Manufacturing – Costs for equipment rental and maintenance, production and shop
supplies, printing and photograph expense, insurance, bank fees, and other
miscellaneous costs are expected to remain relatively constant on a monthly basis.
In 2002, manufacturing costs were abnormally high because Parrett Paper
expensed envelopes, seals, and shipping supplies. These items are now included
as part of a billable unit and included in inventory and COGS. From 2003 on,
manufacturing expenses are expected to grow in magnitude, but decrease as a
percentage of overall sales.

Sales and Marketing – In 2003, Parrett will continue to make large investments in
sales and marketing, paying for training and conferences, contract fees and
payments (sales reps), supplies, telephone, promotion and sales expenses, product
development, and advertisement expenses. We anticipate that these expenses will
level out in 2004 and 2005 as we reach a target saturation of trade shows and
institutionalize our catalog and website.

Depreciation – Parrett Paper’s depreciation costs for 2001 through 2003 are based
on actual or budgeted amounts derived from the asset register using straight-line
depreciation and a useful life of 3-10 years depending on the asset. The
depreciation costs for 2004 and 2005 are estimated amounts based on new
equipment purchases in the next three years.
Parrett Paper receives a number of donated services from individuals and organizations
that a traditional card producer would have to pay for. These “in-kind” expenses
include:
 Rent – Parrett Paper receives free rent and utilities from Rochester Rehabilitation
Center, which owns the facility in which Parrett Paper operates. We estimate that
the monthly value of this benefit is approximately $500 based on square footage.
 Inventory – With the purchase of Parrett Paper, Rochester Rehabilitation Center
received inventory valued at $200,000 for a fraction of the price.
 Marketing Assistance – Jim Wemett, the marketing consultant to Parrett Paper, is a
board member of Rehab Enterprises, Inc. and commits his time pro bono because
he believes in the organization and the product.
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
Graphics Services – Parrett Paper receives consulting, artwork, graphics services,
and computer time from its suppliers as a donation. We estimate that these services
would have cost Parrett Paper over $2,000 in 2002.
Based on the assumptions above, Parrett Paper predicts that it will reach breakeven in
2003 (Exhibit 6 - Breakeven Analysis Chart).
Cash Flow Statements
Parrett Paper’s Cash Flow statements (Exhibit 5 - Actual/Proforma 2002-2005 Monthly
Cashflow Statements) illustrate the variability of sales from month to month and the
subsequent bottom line impact. Without non-cash expenses for depreciation and cost
of goods sold, the Cash Flow Statement for Parrett Paper is more attractive than the
Income Statement. This is primarily due to the large inventory that was acquired with
the business.
For projections of accounts receivable, Parrett Paper estimates that approximately twothirds of all customers will take 30 days to pay their invoice. This is consistent with
current operations in which about one-third of orders are paid by credit card. Parrett
Paper has minimal payables and estimates that going forward about half of the
operating expenses will be paid in 30 days.
Additional capital outflows for inventory purchases and capital equipment are
anticipated to be minimal in the next three years. Inventory purchases coincide with the
large order from The Container Store, custom orders, and miscellaneous restocking of
inventory at the end of the year. Parrett Paper receives excellent services from its
supply chain, and its capital budget currently includes small purchases of a Mac G4, a
laser printer, a foil printer, a die cut press, and other small equipment. To reduce the
cost of producing cards, Parrett Paper is currently investigating lasers as a substitute for
dies.
Initial negative cash flows have been funded from the pooled resources of Rochester
Rehabilitation Center, which currently has over $4 million in net assets. Rochester
Rehabilitation Center is committed to seeing Parrett Paper succeed, and has agreed to
fund the projected negative cash flows in 2003. Parrett Paper is projected to make a
consistent positive cash flow in late 2004. By 2005, Parrett Paper will generate over
$90,000 in cash.
Balance Sheet
Parrett Paper’s assets consist of miscellaneous supplies, equipment, and inventory. As
stated above, the negative cash balance of Parrett Paper is funded through the pooled
resources of Rochester Rehabilitation Center. (Exhibit 4, Actual/Proforma 2002-2005
Balance Sheets)
Parrett Paper has no liabilities. Paid-in capital reflects the cash purchase price for
Parrett Paper, and the Rochester Rehabilitation Center goodwill line captures the value
acquired in addition to this cash price.
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Sources and Uses of Capital
Based on its Cash Flow statement, Parrett Paper will reach its largest cash deficit of
close to $60,000 in July of 2003. This deficit is due primarily to additional expenditures
for equipment and for sales and marketing, such as the website, conferences, product
development and catalogs. Parrett Paper believes that it could grow its revenue more
quickly if additional capital is secured to invest in a full-time operations manager, freeing
Eileen George up to focus her time on sales and marketing for Parrett Paper. (Exhibit 7,
Sources and Uses of Capital Table)
Social Return on Investment
While Parrett Paper is expected to become a profitable business, it also achieves social
goals through its operations. Program participants that work at Parrett Paper would not
be able to secure steady jobs elsewhere because of their disabilities. However,
because of Parrett Paper they hold real jobs, are productive citizens, and have
improved self-esteem.
While it is difficult to put a value on these achievements, each program participant
employed at Parrett Paper saves an estimated $13,800 through unneeded outpatient
mental health services.11 Instead of receiving these services, program participants
prosper in a supportive and productive work environment and receive market rate
wages. This social return, as summarized below, is $815,570 over the first four years of
operation.
Year
2002
2003
2004
2005
Program
Participants
6
12
14
16
MH Services Savings
(@ $13,800 each)
$82,800
$165,600
$193,200
$220,800
Total
Wages
$13,644
$39,398
$46,368
$53,760
Social Return
$96,444
$204,998
$239,568
$274,560
Additionally, each greeting card customer that learns of Parrett Paper through
marketing, shelf cards, or conversations will acquire a better understanding of and
respect for individuals with disabilities. Hopefully, Parrett Paper can make a small
difference in advocating the abilities of people with disabilities.
11
Estimate from Deborah Burke, Director of Employment Counseling and Placement at Rochester Rehabilitation Center
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9. RISK ASSESSMENT AND CONTINGENCY PLAN
Risk Analysis
While Parrett Paper believes that it is well positioned to succeed in the market, it
understands that, like any business, there are risks involved. We have identified the
four risks factors below as those that have the greatest potential to hurt our business.

Lower than expected sales – Whether due to increased competition, changing
consumer attitudes, or product obsolescence, we may not reach our sales targets.
This will have an adverse affect on the profitability and sustainability of Parrett
Paper. Below is a sensitivity analysis on revenues, which examines the bottom line
impact of beating or missing revenue targets in the next three years.
Revenue Case
20% over projections
10% over projections
5% over projections
Base case
5% below projections
10% below projections
20% below projections
2003 Profit
($9,163)
($12,915)
($14,791)
($16,666)
($18,542)
($20,418)
($24,168)
2004 Profit
$41,442
$33,289
$29,212
$25,136
$21,059
$16,982
$8,829
2005 Profit
$91,466
$79,026
$72,805
$66,585
$60,365
$54,145
$41,704
Parrett Paper’s contingency: In order to guard against this decline in revenue,
Parrett Paper will continue to attend trade shows and listen to our customer’s
changing needs. We will be flexible in meeting these needs and diligent in
maintaining customer satisfaction. To the extent that revenue shortfalls happen, we
are flexible with our staffing costs, cost of goods sold, and sales and marketing
expenses. Additionally, we are researching ways to diversify our revenue streams,
both to new customers segments and with new product lines, in order to avoid
dependence on any one source of revenue.

Higher than expected raw material or printing costs – Raw material and printing
costs make up a large portion of our expenses. Both paper and ink are
commodities, with their prices fluctuating on a daily basis. If either of these
expenses exceeds our projections dramatically, it will adversely affect our bottom
line.
Parrett Paper’s contingency: Although paper and inks are commodity products, we
have developed agreements on costs as much as possible. We will continue to
shop our suppliers to determine benchmarks and use this information to establish
the best value added supplier agreements. Additionally, where possible we will
leverage our nonprofit status to receive favorable terms on contracts.

Inventory catastrophe – Parrett Paper currently has close to $200,000 in inventory
on our shelves in the form of nearly 800,000 cards. A fire, flood, or other disaster
could destroy this inventory and damage our ability to meet customer demands in a
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timely manner. This would impact our sales as well as our inventory, cost of goods,
and sales and marketing expenses.
Parrett Paper’s contingency: We have placed our product in open metal shelves in a
fully sprinkled room. In case of fire, we have the electronic images of our product in
a remote location and on two different computers.

Loss of Key Managers – Parrett Paper relies on the considerable talents of its
management staff. If one or multiple managers were to leave the operation, our
business and operations would suffer.
Parrett Paper’s contingency: Multiple individuals are responsible for various aspects
of the business, and we are encouraging each manager to gain a more thorough
understanding of the entire business, both for contingency and improved operations.
Additionally, we are attempting to document every aspect of the business, so that a
new manager would be able to get up to speed quickly.
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Exhibit Table of Contents
Number Title
1
Asset Purchase Document
2
Fixed Assets at Acquisition
3
Actual/Proforma 2001-2005 Income Statements
4
Actual/Proforma 2001-2005 Balance Sheets
5
Actual/Proforma 2002-2005 Monthly Cashflow Statements
6
Breakeven Analysis Chart
7
Sources and Uses of Capital Table
8
Resumes of Key Parrett Paper Management
9
Rochester Rehabilitation Center Organizational Chart
10
Rochester Rehabilitation Center Board Roster
11
Rochester Rehabilitation Center Tax Exempt Documentation
12
Current Sales Process Flowchart
13
Current Inventory Process Flowchart
14
Product Ordering Flowchart
15
Quality Control Process Flowchart
16
Parrett Paper Supply Chain
17
Production Area Layout
18
Letters of Support
19
2002-2003 Trade show Schedules
20
Rochester Business Journal Clipping
21
"Cards for a Cause" Article
22
Custom Penguin Solicitation Piece
23
Product Catalog Sheets
24
Sample Card (Turtle)
25
Shelf Card
26
Parrett Article -- Al Sigl Center Newsletter
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