Ask INSTORE Where to Sell Your Store, Contesting Negative JBT Feedback and More of Your Questions for February INSTORE’s experts answer your February queries. Published 7 years ago on January 28, 2014 By INSTORE Staff Instore February 2014 Issue Share Tweet I’d always planned to put my store on the market to fund my retirement, but a jeweler friend said I’d be smarter to sell it to my manager or another insider. What do you think? Your friend may well be right. The market for small businesses is fragmented and illiquid, which means it’s unlikely you’ll have investors just waiting with the cash when you’re ready to sell. “Buyers are more likely to offer to pay over time from the company’s future earnings, which leaves the retired CEO with no control over the business and utterly reliant on the new owners to maintain its profitability,” says Jim Kohles, a CPA in Walnut Creek, CA, who specializes in retirement planning. Kohles says a good alternative is to establish an S corporation combined with an employee stock ownership plan (ESOP). “You’re selling the company to the employees while retaining control until you phase yourself completely out,” he says. “The ESOP doesn’t pay income taxes — the employees do when they retire. And you don’t pay taxes on the money or the stock that you contribute,” he says. David Brown of the Edge Retail Academy agrees this is a good option and notes that you will often get a better price for the goodwill in the business when you sell internally. But he adds you should be careful not to become so focused on the technical components of a sale such as tax minimization that you lose sight of the bigger goal: ensuring you have a solidly profitable business to sell. “My overall preference is to help retailers add value to their business while at the same time generating a largely ‘passive’ income for themselves,” he says. “Ironically, the more successful they become at doing this, the less attractive it is to sell it. CREDIT RATINGS We are experiencing some negative feedback on our JBT rating. When we call the JBT to ask about it, they are unwilling to release any information to us concerning who is reporting. Isn’t that unfair? While it may feel one-sided, the confidentiality granted to vendors does keep the system going and ultimately lowers risk in the industry. Unlike consumer reporting agencies, which are required by law to provide you with a fairly detailed accounting of your credit status, business credit bureaus do not have to disclose the identities of the creditors supplying the information. The reason is that without such anonymity, says Dione Kenyon, CEO of the JBT, suppliers would be less willing to provide updates on how punctual their clients are about paying their bills. Kenyon says that if a retailer believes there is an error in their report, the JBT will promptly recheck the data with at least five vendors (five is the minimum to support a payment rating; for some retailers there could be 20 or more), discuss the results with the retailer, and revise the rating if warranted. “We work hard to get it right,” she says, adding, however, that “in most cases, the retailer really is slow in paying.” Advertisement Kenyon added the most common cause for credit disputes is miscommunication — often between the store owner and the original sales rep — over the repayment terms. Retailers can help themselves, she said, by voluntarily providing the JBT with as many supplier names as possible so that it can base its rating on “the broadest and most representative data available.” A weak credit rating can be improved over some months’ time unless there are significant collections claims on file with the JBT, in which case the process could take a year or longer. “Bottom line, we are available to discuss this individually with each company depending on their circumstances,” Kenyon said. BREACH OF TRUST We gave a dealer a gold item on memo … and he disappeared. My insurer says that because I willingly gave the item to him, he had not “robbed” me, and as such, I cafile a claim. Do I have grounds to challenge the insurer or will I have to pursue this case myself? Jo-Ann Sperano, a mediation specialist at the Jewelers Vigilance Committee, has — sadly — no words of encouragement for you. “The insurance company is 100 percent correct,” she says adding that even the second option puts you in a tough spot. “This would be costly to litigate since the investigators would have to locate the gold buyer to serve papers.” LIGHTING I bought natural daylight LEDs and they give off a blue color. Why is that? When the term “natural daylight” is used in the sphere of lighting it refers to the Kelvin temperature of sunlight. Natural daylight is in the 5,500-6,500 Kelvin range, which is a blue-toned light, explains Howard Gurock, president of LED maker Econo-Lite. “In the real world, we don’t walk around with blue complexions because the sun has every spectrum of light. But a light in this range is considered to be natural daylight, hence the blue tones.” Advertisement What’s the Brain Squad? If you’re the owner or top manager of a U.S. jewelry store, you’re invited to join the INSTORE Brain Squad. By taking one five-minute quiz a month, you can get a free t-shirt, be featured prominently in this magazine, and make your voice heard on key issues affecting the jewelry industry. Good deal, right? Sign up here. Related Topics: click to Comment(Comment) Up Next The Right Way to Display Loose Gemstones, and Other Questions You Asked Us Don't Miss How Long to Hold Repair Records, Making Change Stick and More of Your Questions for January INSTORE Staff Over the years, INSTORE has won 80 international journalism awards for its publication and website. Contact INSTORE's editors at [email protected]. Continue Reading Advertisement SPONSORED VIDEO Wilkerson Testimonials Retirement Made Easy with Wilkerson The store was a landmark in Topeka, Kansas, but after 80 years in business, it was time for Briman’s Leading Jewelers to close up shop. Third generation jeweler and owner Rob Briman says the decision wasn’t easy, but the sale that followed was — all thanks to Wilkerson. Briman had decided a year prior to the summer 2020 sale that he wanted to retire. With a pandemic in full force, he had plenty of questions and concerns. “We had no real way to know if we were going to be successful or have a failure on our hands,” says Briman. “We didn’t know what to expect.” But with Wilkerson in charge, the experience was “fantastic” and now there’s plenty of time for relaxing and enjoying a more secure retirement. “I would recommend Wilkerson to any retailer considering a going-out-of-business sale,” says Briman. “They’ll help you reach your financial goal. Our experience was a tremendous success.” You may like Promoted Headlines Digital Warrior: A Conversation with GemFind’s Alex Fetanat GemFind A Sales Meeting Platform for The 21st Century The Plumb Club With Average Retails of $250, This Is One Brand You Won’t Want to Miss! 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