The difference between bottom-up and top-down financial analysis, 2011’s hot new colors, and more.

[h3]Plan Finances from the Bottom Up[/h3]

[dropcap cap=Q.][h4][b]As I start my financial planning for 2011, do you recommend a bottom-up or top-down approach?[/b][/h4][/dropcap]

[dropcap cap=A.]It’s a new year, a new beginning … start at the bottom. “Top down is quicker but invariably leads to existing costs being left in rather than being properly evaluated,” says David Brown, CEO of the Edge Retail Academy. Brown says that when he takes on a new client, he asks them to set the financial goals they want to achieve and then works backwards to determine the sales and earnings they are going to need to meet those targets. “This results in a complete budgeting process,” he says. “If an owner has planned a retirement nest egg in 10 years and they know they need to put $50,000 into a retirement plan each year to reach the goal, it provides them with the incentive to hit the sales target each year.”[/dropcap]

[componentheading]COLOR [/componentheading]

[h4][b]What are 2011’s hot new colors for displays going to be?[/b][/h4]

We hate to pour cold water on anyone’s wish for flair but when it comes to jewelry displays, tried, true and tame are nearly always the way to go. “We find neutral colors best for most applications. Use bolder colors to accent. Avoid this season’s ‘hot’ colors unless you are prepared to toss them out next season,” says Larry Johnson, senior VP of Pacific Northern and the author of The Complete Guide to Effective Jewelry Display.

[componentheading]ALLOYS [/componentheading]

[h4][b]To solve an argument, what is the best platinum alloy for fine jewelry?[/b][/h4]

Generally it’s 95/5 Platinum/Ruthenium. It’s the best choice for universal needs, including casting and fabricating, says Jurgen Maerz, a master bench jeweler and technical consultant to Platinum Guild International. “This alloy is hard, malleable, ductile and the alloy of choice for many high-end manufacturers.” On the other hand, if you’re doing fabricating work, 95/5 Platinum/Iridium is better because of its high malleability. “The work hardens rapidly, so it is great for die-striking, but casting is difficult because of its low hardness,” says Maerz, adding that it tends to scratch and will bend almost twice as easily. Platinum’s tensile strength is actually one of its greatest selling points. If a customer asks which alloy to use, suggest platinum/ruthenium, and tell him the ring “will last a lifetime.”

[componentheading]PAY SCALES [/componentheading]

[h4][b]How do I know if I’m overpaying my staff?[/b][/h4]

Research! Start with free sites like PayScale.com, CBSalary.com and Salary.com, as well as the Bureau of Labor Statistics’ site at bls.gov, JA’s Cost of Doing Business Survey and INSTORE’s Big Survey (see the October 2010 issue). We ran a quick search for the category of “Jewelers and Precious Stone and Metal Workers” and chose Boulder, CO, as our target market. PayScale.com and CBSalary suggested an hourly rate (excluding all benefits) of between $18.70- $20.60. Salary.com annoyed us so much with offers of a new college degree and requests for our e-mail address that we gave up. The BLS site didn’t provide specific data for Boulder but offered a national average of $17.60. Those numbers are in line with INSTORE’s surveys, which typically ask for total compensation. Hourly salaries are, of course, only a small part of the equation, and a better way to look at this issue might be: If your staff isn’t making money for you, you’re overpaying them. Rather than viewing staff as a cost, consider them an asset. Tiffany’s, which invests heavily in training, generates sales of about $322,500 per employee, far above the industry average of $201,200 per employee. And, according to industry analyst Ken Gassman, it’s primarily due to the “superior productivity” of its salespeople. Yes, keep an eye on your costs, but don’t forget the bottom line.

[componentheading] SOCIAL MEDIA [/componentheading]

[h4][b]I’m trying to get a social media presence going but it’s so time-consuming. I have doubts it’s really worth the investment in time.[/b][/h4]

It’s a cliché but leave your social-media management to a younger employee who “gets it.” It does take time and, equally important, requires an authentic and enthusiastic voice. If that’s not you, relinquish your “handle” to one of those Gen Y whippersnappers.

[span class=note]This story is from the January 2011 edition of INSTORE[/span]