Years ago, like a lot of jewelers, we guaranteed customers that if they brought their diamond ring back to us, we’d give them full credit for the retail dollars spent. But with the evaporating margins on diamonds we are now putting out cash to take back a (sometimes not very good) stone that was bought years ago. Should we stop doing trade-ins?
Such trade-ins can still work, and well work well as a promotional tool, but keep in mind the following:
- Don’t try to charge keystone for the diamond;
- Ensure the customer knows that the metal is, or will be, based on the current (at that time) scrap price;
- The laws of probability are likely to work in your favor. Jewelers who offer such programs tell us that only about 10 percent or fewer of customers ever turn in their original diamond;
And most important, that you only sell better-grade stones. If you sell or stock junk, you’re dead, because you will never be able to resell it at a decent price. If you haven’t already, consider doing a GIA or other course to brush up on your diamond knowledge so you never, ever get stuck with stones that won’t sell again. And if you’re still not convinced that you can make it work, David Geller of Jeweler Profit, suggests putting it in writing that “We’ll give you full credit, but you have to spend twice as much on the second diamond.” Says Geller: “If you do that, and raise the margin a little on the new stone, you should at least come out very little out of pocket, waiting for their diamond to sell to then make your profit.”
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After five years in operation, my store has plateaued at a modest level (annual sales of about $450,000). The store generates enough cash to cover our bills, but I am still a long way short of my financial goals. How do I take it to the next level?
From the few details here, we suspect you might be taking too much of a “cash-flow” view of your business. As in your case, most small businesses use internal accruals to fund initial growth. While sometimes a store has a location or model that alone is strong enough to drive continued growth, in most cases you are going to need the spur of additional investments in marketing or other areas (new location, a website, different inventory) to take your business to the next level. And while you believe that you are covering costs and generating profit it is possible you’re not generating enough to support growth (it’s even possible that you could be running at a loss from a purely accounting point of view after you take into consideration depreciation and those other “hidden numbers”). So how to boost your profit? Get some outside help. Join a peer group (maybe even a buying group) or bring in a coach to go through your books and identify the areas you need to work on.
I have an older mentor I always turn to for advice on business and am currently facing a big strategic decision but don’t agree with his suggestion. Should I bow to his superior business experience?
On major decisions, whether in business or life, the purpose of seeking advice is not to get answers. It’s to gain perspective. No one has all the answers or knows what’s best for you. They can only share what makes sense to them (and in business, yes, experience counts for a lot). But the most important question to ask is not what you should do. It’s what you might be missing. Gather all the information and input you can, run the scenarios, do a pre-mortem, and then make a decision on what you feel is right. If your processes are sound, your decision will reflect what you knew at the time. No matter what happens, you made the best call you could.
I once read about a chain jewelry a being successfully sued for turning down a job candidate because she wore a headscarf. Does someone’s right to wear religious attire always trump store policy?
As a general rule, if an employee holds a sincere religious belief that affects his or her job, the employer must at least try to find a way to accommodate the worker if it is reasonable to do so and it would not cause the business too much hardship, says Larry McNamara of the law firm Spencer, Crain, Cubbage, Healy & McNamara in Dallas, TX. This could mean that in a situation involving a headscarf you could refuse to allow a Muslim employee to wear a face-covering chador on the grounds that customers look for visual clues such as smiles, etc., but not prohibit the wearing of a regular face-revealing version.
A smaller rival is taking potshots at us in their advertising. Should we fire back?
Marketing consultant and author Roy H. Williams says one of the basic rules of advertising is to never respond to a challenge from a competitor that is smaller than you. “Drawing attention to a smaller competitor makes them larger in the eyes of the public,” he explains. “Conversely, if someone bigger than you is foolish enough to shine their spotlight on you, dance in it.” The one exception to this rule is if the rival is peddling untruths about your business. Then you need to expose their lies and crush them.
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