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David Geller

Know These 6 Signs of Financial Distress and How to End Them

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A man owned a small jewelry store. The State Workforce Department claimed he was not paying proper wages to his help and sent an agent out to interview him.

“I need a list of your employees and how much you pay them,” demanded the agent.

“Well,” replied the storeowner, “there’s my bench jeweler who’s been with me for three years. I pay him $10,000 a week plus free health care. My salesperson has been here for 18 months, and I pay her $750 per week plus free health care. 

“Then there’s the half-wit. He works about 18 hours every day and does about 90 percent of all the work around here. He makes about $300 per week, pays his own health care, occasionally loans the store money, and I buy him a bottle of bourbon every Saturday night.”

“That’s the guy I want to talk to, the half-wit,” said the agent.

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“You’re talking to him right now, sir,” replied the jewelry storeowner.

When you see the following signs, you know things are off-kilter financially:

  • Staff members are paid more than the owner.
  • Credit cards are used for store purchases, but the card is not paid off every month.
  • Accounts payable only go down at Christmas and always show the store is behind in paying vendors.
  • Inventory in the case is old and stale. 
  • The store’s financial books are a mess. The checkbook has not been correctly reconciled in years. 
  • Inventory in the POS system is never correct.

What causes this? There are five reasons for financial distress in a jewelry store:

1. The store charges too little for repairs and custom design.

SOLUTION: Raise the prices. With a 90 percent closing ratio, repair customers will gladly pay and those extra dollars fall into the checkbook.

2. The store doesn’t have enough people coming through the front door.

SOLUTION: Advertising and marketing. Consistent advertising is better than a few big splashes. Don’t forget marketing to your customer list, they love you. Be sure to invest more time and dollars in social media marketing.

3. When people do come in, the sales staff lets the majority of them walk without buying anything.

SOLUTION: Weekly 60-minute training meetings will get you there along with paying incentives. All sales staff should be on some type of bonus system. Rewards instill new habits.

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4. The store has too much inventory and a majority of it is over 12 months old.

SOLUTION: Stores with excellent cash flow try to sell everything within 12 months.

Product over a year old should be discounted, spiffed to incentivize staff, returned to the vendor, or lastly scrapped for cash.

5. The store has the wrong price points (too many high-priced goods).

SOLUTION: Run reports to know these numbers. Return high-priced items to vendor for credit to buy lower price points. If you can’t do that, re-tag the older items and move them into lower price points to help get rid of them.

David Geller is a consultant to jewelers on store management. Email him at [email protected]


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

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David Geller is a 14th-generation bench jeweler who produces The Geller Blue Book To Jewelry Repair Pricing. David is the “go-to guy” for setting up QuickBooks for a jewelry store. Reach him at [email protected].

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