Connect with us

David Geller

How To Do Financial Planning For Your Jewelry Business

David Geller tells you how better planning puts more cash in your pocket.




BACK IN THE OLD DAYS when you made triple key on a one-carat stone, managing by the seat of your pants did pretty well. But today, smart retailers plan next week, next month and next year. Zales, Jared and the bustling flower shop down the street run their stores by the numbers.

Here’s how to run yours, with some help from QuickBooks software.

Get your profit and loss statements from your accountant — or from QuickBooks if you’ve been a user for more than a year. You’ll need to know:

  • Percent of sales from selling inventory
  • Percent of sales from repairs
  • Percent of sales from appraisals
  • Gross profit margin percentage from selling inventory
  • Gross profit from the whole store

Armed with this information, get into your budget working backwards.

1. Figure expenses per month first; this will tell you overhead.


2. Figure the net profit you want to attain. An average jewelry store gets about a 6 percent net profit (bottom line), so use that number.

3. Add 16 percent to your net expenses, which will give you the amount of gross profit from total sales you need to pay for expenses and still give you a net profit of 6 percent. (Trust me on this 16 percent thing. It works.)

4. After knowing how much gross profit you need, figure how much you will have to do in total sales to make that gross profit using the gross profit percentage that you’ve made in the past.

5. Split the sales up by Inventory Sales, Repair Sales, Custom Design, and Appraisal Sales based upon the percentages you already know from above.

6. Knowing your gross profit percentage and subtracting from 100 gives you the cost of goods you can expect, because Sales minus Cost of Goods leaves you with Gross Profit.

7. After plugging in these numbers, you should have a Profit and Loss Budget that will help you run your store better throughout the year.

8. Take each month’s sales goal and divide them up among the sales staff and owner. If you all do your fair share, you’ll make your sales goals.


You can do this on a spreadsheet or even with a pad and pen, but it’s not nearly as easy as using QuickBooks, particularly once you’ve been using it a year. Why? Because QuickBooks will enter all expenses for you for the coming year! Of course, it will be last year’s expenses, but you can just change them (some will stay the same).

In QuickBooks, go to the very top menu bar and click on Company, then on Planning & Budgeting and Set Up Budgets.

You’ll get a box asking to Start from Scratch (for those new to Quickbooks) or Create Budget From Previous Year’s Data (for those with a year’s worth of data).

Get rid of Income and Cost of Goods in the new budget QuickBooks made for you by deleting the number in January and then clicking on Copy Across. Cool, eh? That’s also how you’ll input numbers like rent.

What’s in front of you is last year’s expenses. Look at expenses and type in for each month a number that seems realistic. In QuickBooks, if you need to increase an expense by either a dollar amount or percentage, just click in the first month to adjust and click on Adjust Row Amounts to change the whole year.

The sad news is that QuickBooks doesn’t add up the budget for you at the bottom. Keep the budget open and go up to Reports, then Budgets & Forecasts, and then choose Budget Overview. Then follow through clicking Next and Finish at the end. If you saved your budget, then it will add up on the overview. The overview, like the budget itself, has no income or cost of goods, just expenses. So if you scroll to the bottom, expenses will be added up for you. Net profit will be a negative as you have no income — yet!

Next month, I’ll discuss how to establish sales goals for yourself and your employees based on how much net profit you want to make. You’ll be in for a surprise: You may just find that you have to raise your prices.



When the Kids Have Their Own Careers, Wilkerson Can Help You to Retire

Alex and Gladys Rysman are the third generation to run Romm Jewelers in Brockton, Mass. And after many decades of service to the industry and their community, it was time to close the store and take advantage of some downtime. With three grown children who each had their own careers outside of the industry, they decided to call Wilkerson. Then, the Rysmans did what every jeweler should do: They called other retailers and asked about their own Wilkerson experience. “They all told us what a great experience it was and that’s what made us go with Wilkerson.” says Gladys Rysman. The results? Alex Rysman says he was impressed. “We exceeded whatever I expected to do by a large margin.”

Promoted Headlines






INSTORE helps you become a better jeweler
with the biggest daily news headlines and useful tips.
(Mailed 5x per week.)


Latest Comments

Most Popular