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David Geller

An Open Letter About the Shortage of Jewelers

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Want to know why you can’t find a bench jeweler? Because you won’t pay enough.

Dear fellow jewelers and store owners:

I’m a 14th generation jeweler. My father had our family tree traced back 500 years, from Atlanta, New York, Russia, Spain, France to England. Dad and my grandfather were diamond-setters on the Bowery in New York. My father came to Atlanta in 1939 and set up shop and his business grew. I started my bench training at the age of 10 during the summers.

My trainer was the shop foreman and a World War II veteran. He ran a shop that at one time had 15 jewelers at the bench.

As a jeweler in my father’s shop, Willard was able to:

Buy a house in a good neighborhood as well as two cars.

His wife worked only part time. He did some work “on the side” to help when his kids were in college.

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He had some savings. All of this working as a jeweler.

When I eventually opened my store I didn’t have a hard time finding qualified jewelers. In 1999, our jewelers were paid from $32,000 to $61,000 a year; average pay was in the high 40s.

So why can’t you find a qualified jeweler? Because you won’t pay them a decent wage. Shame on you! Why should a young person consider learning to be a jeweler when he can learn another trade or computer programming and start on a salary of $40,000 or more?

Recently I spoke to staff at one of the excellent jeweler schools in the U.S. where someone can take a three-month program and learn most of the functions related to a jeweler’s workbox. (Yes, he might be slow at first and need more training but he will still be a money-making asset for your store from Day 1.)

They told me one of their best students ever was offered $14 an hour, or $29,000 a year. That’s what Costco pays for an unskilled worker. Starting pay should at least be in the very high $30s.

My Geller Price Book is based on paying a jeweler from mid-$40,000 to the high 50s. A wooden workbench should produce between $185,000 to $250,000 a year in repair and custom sales. That means there’s plenty of money to pay a good wage to get a good jeweler. Stop trying to hire cheap. Hire and pay well, and then charge correctly and all the numbers will fall in place.

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Think you don’t have enough work to keep a full-time jeweler? Then get busy advertising your in-house jeweler to bring in more business. Until we turn our industry around, you and I will still need to grow and invest in our own jewelers.

Give them extra training if there are jobs they can’t do. Get a laser machine. Hire high school students as part-time polishers (there’s no money in polishing) and train them as jewelers. Share this link, BeAJeweler.com, with prospective young people, and high school and college counselors to get them promoting jewelry as a career. The shop is its own profit center. Treat it as such and pay well.

WHERE TO FIND A BENCH JEWELER

Here are three of the many jewelry schools in America offering one-week and three-month jewelry-making classes.

New Approach School

Franklin, TN
Blaine Lewis
(800) 529-4763 / newapproachschool.com, beajeweler.com

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Gemological Institute of America

Carlsbad, CA
Mark Mann
(800) 421-7250 / gia.edu/gem-education/ program-graduate-jeweler

The Revere Academy

San Francisco, CA
Alan Revere
(415) 391-4179 / revereacademy.com


Headhunter for bench jewelers

Vic Davis
Springfield, MO
(417) 890-7582 / vicsjobs@aol.com


David Geller is a consultant to jewelers on store management. Email him at dgellerbellsouth.net.

This article originally appeared in the March 2016 edition of INSTORE.

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David Geller

Here’s What’s Really Keeping Jewelers From Having More Money

If you think it’s low margins, you’re wrong.

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I WAS READING THE Big Survey in last month’s issue of INSTORE, and one question popped out at me: “What will be your greatest priority next year?”

Thirty one percent of respondents said, “Boosting profitability.” The money-savvy ones (21 percent) said, “Clearing old inventory.” Most jewelers just don’t get that there is a big difference between making money and having money.

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Someone once taught you that margin was your most important metric. Yep, that was a good thing when everyone made two and three times key, but no more. What hampers you from having money is not low margins as much as inventory level.

Your debt typically equals one-half to three-quarters of your inventory that’s more than a year old. It shows up as accounts payable, credit card debt, lines of credit, and money owed to you (the owner) for money you’ve personally loaned the company.

Having money depends on your ability to keep that debt to a minimum. How can you do that? As a jewelry store/shop owner, there are a few options.

  1. Repairs. This is a revenue stream that requires very few resources to produce income. Your ongoing costs are findings, small stones and your jeweler’s paycheck (plus the occasional equipment upgrade).
  2. Buying scrap. This really only requires several thousand dollars of cash on hand to make a profit. Buy it on Monday, mail it on Wednesday, get a check on Saturday and you’ve made a profit and replenished your cash to do it again.
  3. Inventory sales. This is likely your biggest cash outlay, and it needs to throw off revenue monthly. All of it must throw off revenue at least once a year. All of it. You can’t wait two and three years to have money come in to pay a bill or check tomorrow.

Look at 1 and 2 above. The amount of money required is small. You don’t keep scrap very long and most people order “just enough” in findings for jobs this month, maybe a few extra items.

But inventory piles up for years and causes debt. In a jewelry store, your average inventory level should be somewhere between your cost of goods sold and gross profit amounts for a 12-month period. Any amount above that will show up as debt and poor cash flow.

Keeping inventory within these two numbers (give or take) will increase positive happy cash flow, increase your checking account balance, lower total overall debt, remove stale and outdated inventory, and may actually increase sales as you have more leverage to buy new fashionable jewelry that pleases your customers.

That would be a good thing, right?

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David Geller

Can You Make Money at 12 Percent Margin? Yes, But Here’s What It Takes

As one factor decreases, another must increase.

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CAN YOU MAKE a living on a profit margin of just 12 percent? Did the word no come to mind? You’re wrong.

For coin or bullion dealers, 8-12 percent gross profit margin is the norm, and they make a lot of money with little debt.

The “magic triangle” includes profit margin, inventory turn and inventory level. The combination of all three tells your future in a store, how much money will be left over to pay all bills and have money in the bank.

Let’s take a simple store math example for a year using keystone. A typical jewelry store would have a net profit of 5 percent. Here’s how a P&L would look:

Total Product Sales: $500,000
Cost of Goods: -$250,000
Gross Profit: $250,000
Expenses (45%): -$225,000
Net Profit (5%): $25,000

Are you making money? Absolutely. Do you have any money left over after paying expenses? Depends.

Imagine if last year, you sold everything at Christmas, not a stitch of inventory left. January 2nd, you fly to New York with three suitcases and buy the $250,000 of inventory that the cost of sales above pays for. You’ll have no debt. If something sells within six months, you have the money to reorder the replacement for the case, thus always having a stocked showcase.

Divide $250,000 in cost of goods by inventory of $250,000 and you get one turn a year.

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Now assume the same figures above, but instead of three suitcases costing $250,000, you bring five suitcases and bring back $600,000 of inventory for the store. Same sales and profit numbers as before. Did you make a profit, make money? Yessiree Bob! Do you have money? No! You bought $100,000 more inventory than the sales you took in. So how do you pay for it?

  • Owe vendors way past the due date
  • Put it on credit cards
  • Go to bank and take out a line of credit
  • Personally skip paychecks
  • Take money from your personal checking accounts

In this scenario, your inventory is $350,000 higher than the cost of goods sold. Divide cost of goods by inventory level, and it shows you have a 0.41 turn. A turn of 0.41 means this store has more inventory than needed for two years.

So, what’s the secret to having money?

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The long and short of it is, if you’ll keep your inventory levels approximately equal to the gross profit dollars you’ll make over a year, you’ll both make money and have money.

The lower the profit margin, keep inventory lower, or if you must have a higher inventory level at lower margins, then turn it faster. Instead of taking 12 months to sell it, sell within nine.

It takes all three for The Magic Triangle to work magic in your store!

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David Geller

What You Can Learn About Turn from Clothing and Furniture Stores

Hint: Turn more, earn more.

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THERE ARE REALLY only three important numbers in a retail store: gross profit dollars, inventory on hand, and inventory turn. So who’s better at managing money among these three retailers?

Store                         Gross Profit %
Jewelry                      42.6%
Furniture                  45.0%
Clothing                    46.5%

Darn close, aren’t they? The grass isn’t so green on the other side after all. Or is it?

Let’s look at inventory turn, which means how many times a year an item sells. (These numbers are from stores doing “pretty well.”)

Store                            Turn            Days in the Store
Jewelry                   1.4                       260
Furniture               3.5                       104
Clothing                 4.3                       84

A clothing store won’t keep a shirt/suit/jacket/blouse in the store more than three to four months. They will heavily discount it at that point to get it out the door; they don’t just “squash” merchandise closer together to show more like jewelers do.

Furniture stores work the same way. They have a natural problem: available floor space. The biggest reason for high turn in a furniture store was told to me by a furniture store owner: “Where am I going to store an extra 100 mattresses?”

Clothing stores get rid of their merchandise every quarter. Furniture stores get rid of their inventory every four months, and a good jeweler turns their merchandise a little over once a year. But most jewelers I meet have had their total merchandise for two-and-a-half to four years! This causes terrible cash flow and piles of debt.

If you buy jewelry in January, it should sell at least once by Christmas; that would be a turn of 1.0. If it stays until after Christmas, discount it or give a spiff to the sales staff to unload it, or even return it to your vendor and exchange it.

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If it is still there in 18 months, scrap it. That’s what clothing and furniture stores do.

Let me show you the money-making power of turn. All three stores are going to buy an item for $200. For a jeweler, this might be earrings; for a clothing store, a nice jacket; and for a furniture store, it might be a chair. In the table below you can see the cost, profit margin in dollars, and what that brings in for total product dollars in a year.

Keeping an item long-term is a detriment. Even if someone buys it three years from now, you should have had that $207 in profit for each of the three years, totaling $621 brought into the store (not the measly $163.35 you would make by holding it three years).

When it’s over a year old, most things need to be disposed of and replaced. Maybe your customers just aren’t buying what you have in stock. Change that!

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