No matter what type of direct mail you send out, you'll need a mailing list. The basic way to build a mailing list is by capturing name and address information for everyone who buys or shows interest in your product. If you sell by mail, you'll already have this information. If not, you can get it off customers' checks. Hold a drawing and ask customers to fill out an entry card or drop their business cards in a bowl. Or simply put a mailing list book next to your cash registers where customers can sign up to receive mailers and advance notices of sales. You can also gather names by placing a classified or display ad in print, then compiling the names of people who respond to your ad.

The list you develop using your own customers' names is called your "house list." Of course, when you're first starting out, your house list is likely to be skimpy. To augment it, one way to go is rent a mailing list. There are two ways to rent a mailing list-approaching the company you want to rent from directly or using a list broker.

Any company that mails merchandise or information to its customers-magazine publishers, manufacturers, catalog companies, etc.-usually has a list manager, who handles inquiries and orders for the mailing list. If, for example, you know that subscribers to Modern Photographymagazine are likely to be good prospects for your product, then you can rent their subscriber list directly. Another good source is local newsletters or group membership lists. Many organizations will let you use their member lists; these can be very cost-effective.

If you aren't sure whose list you want, call a mailing list broker. List brokers know all the lists available and can advise you on what type of list would work best for your business. Many can also custom-create lists based on your requirements. You can find brokers in the Yellow Pages under "Mailing Lists" and "Mailing Services," and in the classified sections of mail order trade magazines. The DMA can also refer you to brokers. Another source is the bimonthly directory Standard Rate and Data Service Direct Marketing List Source, available in most public libraries.

Some list companies let you sample a list before making a purchase. Rental costs typically range from $50 to $80 per thousand names. This is for a one-time use only. (List owners typically "seed" their lists with their own names and addresses, so they can tell if you use the list more than once.) Lists will typically be shipped on computer disks so you can easily use them with your computer; others send pre-printed names on mailing labels.

Most experts agree renting fewer than 5,000 names isn't worthwhile, primarily because a larger mailing doesn't cost much more per piece than a smaller mailing, and the returns are higher. Start with about 5,000 names for your first mailing, and consider it a test. If your response is less than 1 percent or 2 percent, something is wrong. Either the market isn't right for your product, your mailer isn't attention-grabbing enough, or your prices are too high. If you get a response of 2 percent or higher, then you're on the right track.

Once you develop a complete mailer, continue to test your enclosures by adding or eliminating one important element at a time and keeping track of any upward or downward changes in response.

Excerpted from Start Your Own Business: The Only Start-Up Book You'll Ever Need, by Rieva Lesonsky and the Staff of Entrepreneur Magazine, © 1998 Entrepreneur Press