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David Geller

How to Build the Perfect Job Envelope

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Being thorough in your intake procedures can prevent headaches later on.

Your point of sale software likely prints job envelopes for your repair and custom work — but what goes on them?

I want to share with you the envelope we used for take-in many years ago in hopes that it may save you some headaches today.

Name Box – Notice the black rectangular box around it? I gave the customer the envelope with a pen and said, “Please fill in everything inside of this box”. It helped me during the sale because I had a hard time remembering people’s names, and it helped us after the sale with thank-you notes and birthday/anniversary mailers.

Description and Value – This describes what we took from the customer, and yes, we asked for a value. When the Jewelers Mutual agent came in yearly and asked, “How much shall we insure customers’ jewelry for?” we added up the past year’s envelope values and gave him that figure.

Are any stones chipped, cracked, broken or flawed? – This was done mainly to get the sales staff to notate this.

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Instructions – Yes, I know this isn’t a lot of room, but we had another wide design sheet we used if we needed it that goes inside the envelope.

Are any items not guaranteed? – Every customer assumes everything is guaranteed for 12 months — and most of what we repaired was — but we notated here if we wouldn’t guarantee an item. For example, we couldn’t guarantee stone loss for small stones unless it had at least four prongs.

Your item will be made or repaired as written – This was to make sure the customer spoke up if the salesperson tried to take a shortcut by leaving off information. We didn’t accept envelopes that said “See me on this job.” This prevents miscommunication between your sales team and your jeweler.

Not responsible for items left over six months – In the state of Georgia, you’re actually required to hold a client’s jewelry for up to a year (check your own state law), but I put this on the envelope just to drive it into the customer’s brain that they couldn’t leave their stuff here. 

REVERSE SIDE OF ENVELOPE

Consultant – Sales staff would fill this in as to where they got their information on what to do and pricing. Now we know who to ask.

Casting Weights – Used for designing. The foreman would put how much gold the customer might have left us to make the ring. The weights of the casting(s) are put on next lines. The foreman does addition, and for the benefit of the sales staff, the customer is going to:

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a. Owe us some more gold

b. Will have to buy additional gold

c. If they gave us more than we needed, they can get the excess gold back (melted blob)

d. Or we will buy it from them. This is where we got a lot of gold for other clients who needed to buy extra.

Wax checked by – Someone is checking the wax prior to customer viewing, making sure it’s what they wanted and notating the envelope for the correct weight of the item.

Final inspection – Handled by shop foreman.

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Appraisal needed, weigh stones – We also had blue stickers we placed on the front of the envelope to get the jeweler’s attention to weigh the customer’s stones before setting.

Items returning to customer – For our records in case the customer asked later. If they gave us 20 diamonds to make a ring and we used 15, five were notated. Customers signed for items returned and whoever delivered the job also signed.

Waxer use only – This tells the foreman and the person doing the casting what they need to plan for.

Finishing instructions – Anything special was notated here and this space was also used to draw pictures of the item in the envelope.

 

David Geller is a consultant to jewelers on store management. Email him at dgeller@bellsouth.net. 


This article originally appeared in the July 2017 edition of INSTORE.

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Be Ready for ‘What Do You Have for $100?’ and Other Holiday Questions

As Christmas approaches, the queries you’ll hear from customers are actually pretty predictable, says jewelry store training expert Jimmy DeGroot. Here's how to make sure your team is prepared for the more common ones.

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David Geller

This Small Yet Logical Fee Can Add Big Profits to Your Bottom Line

This small yet logical charge can add big profits to your bottom line.

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I’M GOING TO GIVE you a tip that will make you $29,400 right here and right now. Here’s how:

Let’s say you take in 4,000 jobs a year. Of the 4,000 jobs, 75 percent of them (or 3,000 jobs) have five or more stones in them.

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Gene the Jeweler’s Rule: Never Buy the Same Piece Twice
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Gene the Jeweler’s Rule: Never Buy the Same Piece Twice

In your shop, you check and tighten up to four stones on any job, no charge. But if a piece contains five to 20 stones, you charge an extra $28 to check, tighten, and retighten if they get loose within 12 months (or replace melee if they fall out within the next 12 months). If there are 21 to 35 stones, you charge an extra $35.

This is worth it to both you and your customer.

I don’t care if the stones come in loose or tight, you charge the fee because you are on the hook. Whether they come in tight or not, you keep the $28. Therefore, your sales staff doesn’t have to check stones on take in; the jeweler does it at the bench.

When told this, 30 percent of customers will say, “No way, José.” So you write on the job envelope, “No guarantee; customer didn’t want to have stones checked and tightened.” You’re off the hook.

With that said, 70 percent of the 3,000 jobs with five or more stones will gladly pay the $28. That means you get to charge 2,100 customers an extra $28. That’s a staggering $58,800 you’d take in just because you asked!

Don’t complain how much it costs to replace a stone anymore. Don’t tell the client it’s her fault. You checked and tightened, and therefore you took in $58,800. Can’t you afford to make it right, even if it’s not your fault?

But maybe you’re still scared to do this. Let’s say just half of those clients said, “Yes, I want the guarantee.” Half of $58,800 is $29,400.

Do you know that is money that goes right to the bottom line, net profit on your P&L? Know what it takes to get an extra $29,400 in net profit? If your net profit is 5 percent of sales, you’ll need to do an extra $588,000 in sales to have that net profit.

In other words, just adding the $28 fee produces the same result as opening another store that does half a million dollars per year.

You’re welcome.

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David Geller

If Your Sales Are Acceptable But You Have No Cash, Look At Your Inventory

It’s an extremely simple formula.

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“IF I MADE that much money, where the heck is it?”

After getting one’s tax return back from the CPA, this is the usual question. Jewelers often tell me they aren’t making any money when, in fact, most I help do make a profit in the store.

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But making a profit and having money are two completely different things.

Let’s just talk jewelry sales. If you sell $500,000 and earn keystone, your gross profit is $250,000.

If expenses are $200,000, then your net profit is $50,000, which is 10 percent of sales. Awesome!

“But I have no money!”

Easy. Look at how much inventory you have. At keystone, the amount of inventory you should stock is about equal to your gross profit from selling jewelry. So, if your gross profit was $250,000, then $250,000 should be about inventory level. If inventory is $400,000, the extra $150,000 (which you’ve been overbuying for a few years) hits you in the behind.

Take that $150,000 “too much inventory” and divide by half to three-quarters (leaving either $75,000 or $110,000). Then go look at your QuickBooks or accounting program and add up your accounts payable, credit card debt, bank loans, and loans from owner.

And you’ll see excess inventory is equal to debt, give or take.

In the jewelry industry, a good inventory turn is 1.0 (one time per 12 months). For every month after 12 that stale item sits in the case, the selling price (at keystone) must be increased monthly by 4 percent to make the same amount of profit after a year. If an item cost $100 and sells for $200 and is a year old, then each month starting with month 13, you must add $8 to make up for the second year’s missing profit month-by-month. By month 18, you’d need to raise the price by $48. In two years, it would need to make you $200 instead of just $100. And just think: you could have invested that money into new inventory!

Note: If you have this kind of old inventory and have less debt, I’m betting you do a large amount of shop sales (which requires virtually no inventory) or buy/sell a lot of scrap. These are “free money” departments, requiring little inventory while throwing off good profits. But why work your tush off in one place to help pay for a debt-ridden department someplace else in the store?

Most jewelers think jewelry (including diamonds) doesn’t go out of style. Wrong. Jewelry goes out of money.

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David Geller

Here Are the New Inventory Rules of Jewelry Retailing

In today’s business climate, doing things the old way will kill your store.

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Did you previously work for your parents or a long-time jeweler? Because it’s not your grandfather’s Buick anymore!

When your parents or your old boss were younger, they enjoyed the luxury of “blowing money to the wind” on excessive inventory. Then they taught you how to manage a business, but now your livelihood is not as good as theirs was.

Back in the day, your parents or boss didn’t have to compete with Internet pricing and maybe didn’t have to worry about a “Rap list.” 

Back in the day, a store’s gross profit was 55-70 percent! Yes, stores got keystone on diamonds and four-time markup on color and gold. In the 1970s, I worked at Neiman Marcus as their jeweler, and I remember them selling a $100,000 diamond at triple key. Your parents or old boss may have told you, “Keep old inventory; it’ll sell.” And they may have said, “No one will pay higher prices for repairs; it will only hurt diamond sales.”

Not only are these things not true, but in today’s business climate, they will kill your store. Overall store gross profit margin percentage today is about 43-48 percent, and margins on diamonds continue to shrink. 

With that in mind, you can’t keep inventory for more than 12 months. Stock balance with vendors anything not selling within a year, or clear it out yourself. Additionally, you must increase your turn to compensate for low margins. Reorder anything sold within six months of stocking it. 

Lower gross profit margins on products means every department has to stand alone as an income and profit source. That means the shop is no longer a giveaway department; it must make its own money and it should be a 50 percent gross profit margin department.

Back in the day, high markups saved the day and you could be fat and lazy. Today, you have to be a lean, mean fighting machine. Your overall stock inventory amount at these lower margins needs to be about equal to a year’s gross profit dollars from selling this stock.

Be lean and mean and have more money and lower debt.

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