Getting catalogs to sell your product

Question: I’m developing a product that I would like to market through direct mail. How can I get catalog distributors to include my product?

Answer: There are several things that catalog distributors look for when choosing new items. Jim Tilberry, president of Tilberry Direct Marketing, has identified several criteria. “Although it’s not necessary to meet all of these criteria, the more your product meets, the greater the likelihood it will be successful in mail order,” Tilberry said.

The first crucial point: The usefulness of your product needs to be immediately obvious and easy to explain in a capsule description. The next thing is that your product should be novel and unique. “Ideally the product should be fairly new with limited or no exposure at trade shows or in stores,” Tilberry said.

Your product should solve an everyday problem that’s never been addressed before, or it should solve it in a different or less expensive way. An attractive catalog product needs to look good, photograph beautifully and be durable and easy to ship. Being lightweight is a plus because it would cost less to send.

It also needs to have widespread appeal and be safe and easy to supply. “You’ll need to have an adequate inventory with a short lead time -- less than four weeks -- on production. Plus, you’ll need to have backup suppliers lined up, just in case,” Tilberry said.

Finally, price is a huge consideration. “It should be priced between $5 and $100,” Tilberry said. “Ideally the perceived value should be over $5, unless the product can be sold in sets. Although there is no upper-limit price, generally products selling for over $100 have slower sales through catalogs.”

Don’t forget to patent your product. “With a patent, you can ward off knockoffs. The catalogs will also feel better about advertising your product if they know you are the rightful owner of the idea,” Tilberry said.

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Commercial mortgage should be separate

Q: My wife and I want to purchase a commercial building where we will run a retail business. We’re looking for financing for the cost of the building, not for the start of the business. Is there a simple loan process for this, or do we have to go through a whole business plan process?

A: There is a simple loan process available for obtaining a commercial mortgage. However, you should own the commercial property through a separate legal entity from the one you create to operate the retail business, said John Logan, a real estate attorney with Denver law firm Minor & Brown.

“For asset protection purposes, you’ll definitely want to keep the retail operation and the real estate ownership separate. That way, you won’t lose the building if the business goes under or if there’s a successful lawsuit against your business,” Logan said.

You and your wife should form a corporation or limited-liability company to purchase the building and a second entity to run the company. Apply to a financial institution for a commercial real estate loan through the first entity.

“The lender will be looking at your personal net worth -- and that of your partners if you have any -- as well as how much equity you’re willing to put into the purchase,” Logan said. “For a start-up business, they will definitely want personal guarantees and a significant portion of equity as a down payment.”

Figure on putting up 30% of the purchase price at closing, he said.

If you’re not going to apply for an operating loan to help with start-up and inventory purchasing, you don’t absolutely have to write a business plan. But experts recommend that you take the time to create at least a simple plan that outlines your financial and operating goals for the first couple of years. Without that kind of blueprint, it would be difficult for you to evaluate your firm’s success and keep it focused.

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Got a question about running or starting a small enterprise? E-mail it to karen.e.klein@latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012