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David Geller

David Geller: Insta Budget




Creating financial forecasts in QuickBooks isn’t nearly as hard as most people think, writes David Geller.

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[dropcap cap=M]ost folks dislike accounting, I know I did. But in college I did very well in it, one of the few classes that I can say that about. Like making jewelry, there’s something appealingly methodical about accounting.[/dropcap]

But studying accounting and using it are two different things. Even after my mentor — an accountant/watchmaker — showed me in the late 1980s how to price repairs, I still didn’t do much in accounting except write checks.

[inset side=right]Your financials are a true picture into how you are doing.[/inset]

But once I understood what I was looking for — things like GMROI, and turn — I bathed in the subject. Your financials are a true picture into how you are doing. The P&L is like a pretty girl giving you a smile. You feel good for a moment, but before long you’re back to your old ways — owing money.


The first step to financial health is setting up the (dreaded) budget. The few folks who I have helped with a budget become better at running their business; they make more money and have greater amounts of cash to pay all of their bills.

(Some folks can’t understand how it’s possible, if their accountant showed them that they made a profit — and a nice one to boot — that they can’t pay their vendors. The reason is simple. “Accounts Payables” don’t show up on the P&L. It’s on the other sheet you ignore — “The Balance Sheet”. If you make a profit of $50,000, that’s not enough to pay off your $145,000 in accounts payables. Net profit pays the things you owe on the balance sheet.)

Take my word for it. Setting up a budget and running the report every month will “set you free”. Maybe even set you on fire.You’ll compare what you think you should be doing to what you really did.

A budget is not a system designed to make you curb your spending. It’s 100% about how to get you to where you want to go. So, where do you want to go? I boldly say you want to:

A.) Pay off your payables
B.) Pay expenses as needed
C.) Make great money
D.) ????

If the answer to D is “more time,” that comes from having more staff to take over your job and that takes a little more money.


Setting a budget requires you to begin someplace on the P&L, and it’s probably best to start with expenses. QuickBooks has a great and easy budget maker. Go to the top menu “Company” and “Create Budget”. It can pull up last year’s numbers for you (and you better have these!) and will plug them in for this year. Then you should analyze the numbers to see if expenses should change. An example:

A.) We want to increase advertising to 8% of total sales.
B.) Payroll should be “x%” of projected sales, lets plug that in.
C.) We will limit computer expenses to “x”.

QuickBooks can also, very easily, by the click of a button, increase all expenses by a designated percentage — or increase just one item by a set dollar amount. Then, you can individually change each month. An example: You might set your advertising budget at 8% of your sales. But you wouldn’t want the same number each month. So you’d enter higher numbers in December, lower ones in June. In QuickBooks, it’s easy to set up the expenses.

[h4][b]Now comes the fun part. (Actually it’s two fun parts.)[/h4][/b]

You now calculate, based on your overall gross profit margins, how much business needs to be done to have enough gross profit left over to pay the expenses. (For those of you recently joining us from the moon!, gross profit is sales minus the cost of those sales.)

Let’s say your added expenses are $100,000 and you currently have a 44% gross profit percentage. Right off the bat, we know we need $100,000 in gross profit. So divide the $100,000 by 44% and you’ll get $227,272.


That means that you’ll need to make $227,272 in sales to have the money to pay that extra $100,000 in expenses. The difference between $227,272 and the $100,000? It’s your “cost of goods” = $127,272.

But don’t enter that yet. With this formula, we have not made any net profit. We’re breaking even. And, of course, that’s not why we’re in business. So let’s strive for 8% net. Expenses can go up as business goes up (payroll, advertising, boxes, etc), so you’ll probably have to keep punching that calculator. But, in general, in this example we must remember that expenses and net profit come from sales minus cost of goods.  

So for a store needing to do $227,272 in sales, let’s push up the projection to $280,000 in sales.

If you do $280,000 in sales, your gross profit at 44% will be $123,200. If we subtract the $100,000 in expenses, that leaves $23,200 in net profit. If you divide the $23,200 by your sales of $280,000 you’ll get a net profit of 8.2%. Perfect!

[inset side=right]You can stop borrowing so much and owing vendors so much as the business will pay it’s own way. What a novel idea![/inset]

Part of the $23,200 will go to pay accounts payables and long term debt — and, not to mention, put a little money in your pocket. Some of your accounts payables will be paid by your cost of goods as you ordered in a ring in January, it’s delivered in February, and you pay the vendor from the cost of goods from that month’s sales. So you’ll have even more money actually left over. But in addition, you’ll be able to fund your own debt. You can stop borrowing so much and owing vendors so much as the business will pay it’s own way. What a novel idea!

Did you notice though that to get an 8% net profit of $23,200, you had to increase sales by over FIFTY GRAND? That’s around 23%. Hey, those are the facts of life! (But it does kind of make you think differently about giving away free repairs, doesn’t it? You can easily make $23,000 more “free money” in repairs by charging correctly, especially since repairs have a 90% closing ratio.)

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

[span class=note]This story is from the August 2004 edition of INSTORE[/span]



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David Geller

What You Can Learn About Turn from Clothing and Furniture Stores

Hint: Turn more, earn more.




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.


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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David Geller

Here Are a Few Tips You Haven’t Seen to Make the Most of Your Bridal Custom Designs

They’re simple yet brilliant.




IT’S 2019, AND it’s not your daddy’s jewelry store anymore. No more high margins on diamonds. Where’s the money now? The mounting.

Keystone is the goal, and many get it on the mounting, but comparison shopping can make it difficult. That said, the really big problem with selling from the showcase is the amount of inventory you must carry.

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On the other hand, custom designing an engagement ring has many advantages:

  • Higher profit margins
  • You pay for the item after you’ve collected money from the customer.
  • The customer feels like they are directing the process rather than being “sold.”
  • If you share the process of designing their ring with the customer, they will likely share with their friends and family. It’ll be on social media, texts and emails.
  • You can adjust which components go into the ring to more fit their budget.
  • Selling from the showcase has a closing ratio of 30 percent in most stores, but custom design has a closing ratio of 70-80 percent.

The downside? Someone must know how to design the ring, how it comes together and pricing. Training is essential, or having someone specific to sell the ring and lead the customer through the process. Figuring out how to price the item requires particular skills.

Here are some additional tips to make the most of your custom design process:

  • While designing the ring, if you use CAD/CAM, take a snapshot of the model on the screen and send it to the customer, saying something like, “Well, Jim has gotten started on your beautiful design.” If you hand-carve the wax or mill it, take a picture and send by text or email. Same goes for the casting process and another of the jeweler finishing up the ring.
  • When appropriate, send out a handwritten thank-you note.
  • Go to Office Depot and buy a pack of 100 sheets of do-it-yourself business cards. Make yourself a master blank company business card with no logo, just everything else about your store. Take a good picture of their new ring and paste it on the card, then print a sheet of 10 and have it in the envelope when you deliver the ring.

After they “ooh and aah” over the ring, tell them, “I’m glad you love it. You know, we have more customers come in from referrals than anything else and would love for you to refer family and friends. Here are some of our cards.”

Then plop them down on the showcase face up.

They will be so excited that they will not only place one on their refrigerator door, they’ll give them out to friends and show everyone how their ring is on “my jeweler’s business card.”

Isn’t this a fun business?

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David Geller

Close More Sales, Courtesy of David Geller’s Uncle Irv

These four “tricks” from an old sales pro will help you make more money in your store.




MY UNCLE IRV WAS the No. 1 car salesperson for every single dealership he ever worked for. When he retired in 1987, he was the No. 1 Jaguar salesman in the United States. Here are some tips I learned from Uncle Irv that will help you make more sales today.


My Uncle Irv had a Rolodex, and while the salesmen on the floor waited for a “hot one,” Uncle Irv was calling his previous customers to see if:

  • They had friends looking for a car.
  • Their lease was up and it was time to buy.
  • They were getting tired of the older model he sold them years ago.

He made appointments while the rest sat around and waited.

Tip from Uncle Irv: Call your customers twice a year to just say “hi.” Contact them or their spouse about milestone dates for gift ideas.


Uncle Irv fought in the Philippines, and at age 26, he was considered an “old soldier.” He told me they were preparing to go to battle and a 19 year-old started to cry. The sergeant came to the private and asked, “What’s wrong?”

“I’m scared, Sarge. I don’t want to go.”

The sergeant replied, “You don’t have to go, son. You just can’t stay here!”

In the 80s, I almost went bankrupt. Uncle Irv told me this story and said, “David, you just can’t stay here where you are now.” So, I got up enough gumption, fired half of my 16 employees, started over, developed the price book, and a year later, started to make it back.

Tip from Uncle Irv: You can’t keep doing things the way you have been. Times are changing and you must change, too.


When Uncle Irv was the sales manager of a big Chevy dealership here, he had to motivate and train the sales staff, but also give them confidence when times were tough. You’ve had the same feeling: it’s getting close to having to make payroll, funds are low and you’ll take any price to get money into the bank account. Uncle Irv didn’t want to have the salesmen look at a walk-in customer as their last meal ticket and give away the farm.

Out of his own pocket, he gave each salesman three $100 bills to carry around at all times. He wanted them to feel like they didn’t need the sale, so that they wouldn’t discount so much.

Tip from Uncle Irv: In one way or another, throw money and jewels at your sales staff. Make them feel and look richer, and they will sell better. I used to let my staff buy or custom-make any piece of jewelry at 10 percent above our cost and take it out of their paycheck over six payroll periods.


Uncle Irv told me that many salespeople are afraid of silence. He said, “Tell the customer the price and then shut the hell up!”

Scenario: You tell the customer $1,495 for the ring, and then there’s silence. Twenty seconds go by and you’re thinking “OMG, they aren’t saying anything. They are going to bolt or go online. Maybe I should give them a discount; I need this sale.”

Meanwhile, the customer is thinking, “Hmm, let me see — rent is due Friday, car note next week, summer camp dues in three weeks. No — I’m OK, I can do this.”

The first person who breaks the silence will give up their money to the person on the other side of the showcase.

Uncle Irv also brought his lunch every day. He told me, “I can’t afford a $500 hamburger.” (You’ll get it.)

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