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David Geller: Bench Press

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Is your bench is lifting its fair share of your store’s weight? David Geller shows you how to run the numbers.

{loadposition davidgellerheader}

[h3]Bench Press[/h3]

[dropcap cap=R]unning the bench in your store? Two minutes to size a ring here, 15 minutes to fit a shank there and you’re thinking: “Yeah, we’re making money from my work.”[/dropcap]

Well, you may be thinking wrong. I’ve found most store owners underprice their bench work. A lot. But you’d never know it if your accounting is not set up correctly. In your accounting program (assuming you or your accountant has set this up correctly) you should have at least three separate income categories, and thus three separate cost-of-goods categories. They are:

[h4][b]Income Category[/b][/h4]

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1) Showcase Sales;
2) Special Order & Memo Sales;
3) Shop Sales (Repairs).

[h4][b]Cost of Goods Category[/b][/h4]

1) Showcase Cost of Goods;
2) Special Order & Memo Cost of Goods;
3) Shop Cost of Goods, with sub-categories:
a. Findings, Gold, Castings;
b. Shop Tools & Supplies;
c. Gas & Oxygen;
d. Melee Stones;
e. Jewelers’ Wages;
f. Jewelers’ Matching Taxes.

Concerning the shop, it may not make the same gross profit dollars as showcase sales but it sure as shooting should match showcase sales in percentages! If the showcase brings in a 50 percent gross profit margin, shouldn’t the shop as well? Absolutely! So the way to find this out easily in any given week is to change the expense coding on your books for anyone that works in the shop,

[h4][b]From: “Payroll Expense” To: “Shop Cost of Goods: Jewelers’ Wages”[/b][/h4]

Do the same for their matching taxes, and you’ll know the true cost of the shop. But what if the only jeweler is also the store owner? Figure out what percentage of the day you work at the bench as a jeweler. Be truthful. If your store is open from 10 am until 6 pm, that’s eight hours (don’t forget to subtract for lunch). If you come in at 8:30 in the morning and stay until 8:30 at night, then you’ve got a 12-hour day. If out of that time, you help on the floor and do paperwork six hours a day, then you’ve got six hours at the bench. So your paycheck should reflect that 50 percent of the time, you’re the bench jeweler and 50 percent of the time, you’re the owner.

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So when you receive a paycheck and it’s entered into your accounting program, split the check into two categories:

50 percent towards: Shop Cost of Goods: Jeweler/Owner Wages

50 percent towards: Payroll Expense: Owner’s Draw

It’s all perfectly legal and now you’ll know if what you do at the bench is profitable. If you can’t do this in your accounting program, you can do it on paper:

[h4][b]Income For Shop[/b][/h4]

Includes:

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1) Repair Sales;
2) Custom Design;
3) Melee Stones for Repair;
4) Findings for Repair;
5) Mountings for Custom Design.

[h4][b]Cost of the Shop[/b][/h4]

Includes:
1) Jeweler-Owner wages;
2) Jeweler Matching Taxes (estimate if you like);
3) Benefits for Jeweler;
4) Findings;
5) Melee stones for repair;
6) Raw Gold;
7) Mountings for Custom Work;
8) Shop Tools and Supplies.

Now you’ll know if the shop is profitable. Find the gross profit (income minus cost of goods) and divide that number by the income. This will give you the shop’s gross profit in percentage. It should at least be as much as product sales from the showcase and for sure should be a minimum of 50 percent.This would include all of your freebies you’re so famous for!

David Geller is an author and consultant to jewelry-store owners on store management and profitability. E-mail him at [email protected].

[span class=note]This story is from the June 2003 edition of INSTORE[/span]

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SPONSORED VIDEO

Wilkerson Testimonials

Gone Fishin’ (Thanks to Wilkerson)

Whether you want to go fishing — or enjoy some of the other good things life has to offer — you can take a cue from Jim Adair and choose Wilkerson to run your retirement sale. After 38 years in business, Adair decided it was time to enjoy some free time. His Missoula, Montana store, Adair Jewelers, will stay in business but without him at the helm. It was the perfect opportunity to call in the experts in retirement sales. Adair says he spoke to a lot of people who have done retirement sales to help him make his decision and he chose Wilkerson. “Wilkerson seemed to have the best set up, the best organization, the most current marketing of any of them,” he says. “If you want to run a successful sale, you have too much money on the line to be screwing around with trying to do it yourself.”

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David Geller

David Geller: Bench Press

mm

Published

on

Is your bench is lifting its fair share of your store’s weight? David Geller shows you how to run the numbers.

{loadposition davidgellerheader}

[h3]Bench Press[/h3]

[dropcap cap=R]unning the bench in your store? Two minutes to size a ring here, 15 minutes to fit a shank there and you’re thinking: “Yeah, we’re making money from my work.”[/dropcap]

Well, you may be thinking wrong. I’ve found most store owners underprice their bench work. A lot. But you’d never know it if your accounting is not set up correctly. In your accounting program (assuming you or your accountant has set this up correctly) you should have at least three separate income categories, and thus three separate cost-of-goods categories. They are:

Advertisement

[h4][b]Income Category[/b][/h4]

1) Showcase Sales;
2) Special Order & Memo Sales;
3) Shop Sales (Repairs).

[h4][b]Cost of Goods Category[/b][/h4]

1) Showcase Cost of Goods;
2) Special Order & Memo Cost of Goods;
3) Shop Cost of Goods, with sub-categories:
a. Findings, Gold, Castings;
b. Shop Tools & Supplies;
c. Gas & Oxygen;
d. Melee Stones;
e. Jewelers’ Wages;
f. Jewelers’ Matching Taxes.

Concerning the shop, it may not make the same gross profit dollars as showcase sales but it sure as shooting should match showcase sales in percentages! If the showcase brings in a 50 percent gross profit margin, shouldn’t the shop as well? Absolutely! So the way to find this out easily in any given week is to change the expense coding on your books for anyone that works in the shop,

[h4][b]From: “Payroll Expense” To: “Shop Cost of Goods: Jewelers’ Wages”[/b][/h4]

Advertisement

Do the same for their matching taxes, and you’ll know the true cost of the shop. But what if the only jeweler is also the store owner? Figure out what percentage of the day you work at the bench as a jeweler. Be truthful. If your store is open from 10 am until 6 pm, that’s eight hours (don’t forget to subtract for lunch). If you come in at 8:30 in the morning and stay until 8:30 at night, then you’ve got a 12-hour day. If out of that time, you help on the floor and do paperwork six hours a day, then you’ve got six hours at the bench. So your paycheck should reflect that 50 percent of the time, you’re the bench jeweler and 50 percent of the time, you’re the owner.

So when you receive a paycheck and it’s entered into your accounting program, split the check into two categories:

50 percent towards: Shop Cost of Goods: Jeweler/Owner Wages

50 percent towards: Payroll Expense: Owner’s Draw

It’s all perfectly legal and now you’ll know if what you do at the bench is profitable. If you can’t do this in your accounting program, you can do it on paper:

[h4][b]Income For Shop[/b][/h4]

Advertisement

Includes:

1) Repair Sales;
2) Custom Design;
3) Melee Stones for Repair;
4) Findings for Repair;
5) Mountings for Custom Design.

[h4][b]Cost of the Shop[/b][/h4]

Includes:
1) Jeweler-Owner wages;
2) Jeweler Matching Taxes (estimate if you like);
3) Benefits for Jeweler;
4) Findings;
5) Melee stones for repair;
6) Raw Gold;
7) Mountings for Custom Work;
8) Shop Tools and Supplies.

Now you’ll know if the shop is profitable. Find the gross profit (income minus cost of goods) and divide that number by the income. This will give you the shop’s gross profit in percentage. It should at least be as much as product sales from the showcase and for sure should be a minimum of 50 percent.This would include all of your freebies you’re so famous for!

David Geller is an author and consultant to jewelry-store owners on store management and profitability. E-mail him at [email protected].

[span class=note]This story is from the June 2003 edition of INSTORE[/span]

Advertisement

SPONSORED VIDEO

Wilkerson Testimonials

Gone Fishin’ (Thanks to Wilkerson)

Whether you want to go fishing — or enjoy some of the other good things life has to offer — you can take a cue from Jim Adair and choose Wilkerson to run your retirement sale. After 38 years in business, Adair decided it was time to enjoy some free time. His Missoula, Montana store, Adair Jewelers, will stay in business but without him at the helm. It was the perfect opportunity to call in the experts in retirement sales. Adair says he spoke to a lot of people who have done retirement sales to help him make his decision and he chose Wilkerson. “Wilkerson seemed to have the best set up, the best organization, the most current marketing of any of them,” he says. “If you want to run a successful sale, you have too much money on the line to be screwing around with trying to do it yourself.”

Promoted Headlines

Most Popular