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So You’ve Made $1 Million! What’s Next?

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A strong location, capital reserves and careful hiring could lift your business to undreamt-of heights

 STORY BY EILEEN MCCLELLAND

he next turning point comes at about $1.4 million. At that point, if you have the right people and systems in place, you may find the journey to $2 million is faster than the trip from $800,000 to $1 million. But if you don’t step back from the day-to-day control of your business at $1.4 million and learn to delegate, the $2 million mark may prove out of reach, Brown says.

Crabtree refers to the space between $1 million and $5 million as “the black hole.” Why? Because at this point, you may be forced to add staff and infrastructure before you can really afford to, which risks driving down profitability and ultimately destroying your business.

“When you’re at $1 million and you start adding people you need, you feel really happy about it,” Crabtree says. “You’re building a growing business and you think that anybody you hire will work for you forever. But then you may realize that that person isn’t the best fit. People change, and one of the keys to success is continually upgrading your staff.”

The most challenging level of profitability is $2 million to $3.5 million, Crabtree believes. It’s really expensive at that point to hire the wrong people and then replace them. The more times you have to repeat that hiring cycle, the more expensive and damaging it becomes. Hiring mistakes can mean lost profit, which makes other, productive staff members nervous; they may leave and you’ll be stuck with your hiring mistakes. One suggestion: Hire young talent and invest in their education.

You’ll also need capital reserves. Most entrepreneurs who have businesses in this range need to build up about $2 million of liquid, safe, core assets that give them stability. Calculate how much cash you need to hire the people you need, then estimate how long it will be before your business can pay for new hires and remain profitable.

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Pay yourself a market-based wage and live off your wage rather than the profits from your business. You need to reinvest in your business, but that doesn’t mean you shouldn’t make a profit. Leave the profits in your business to fund growth, rather than relying on debt or investors.

Don’t add too much expense too quickly without making sure the resources you already have are as productive as they can be, Rath says. “Retailers are clogged with aged inventory or people who are not performing at the level that you would expect. Examine your merchandise productivity, too, by linear foot of case space to be sure it’s as productive as it can be.”

 

A BIT OF LUCK AND A GREAT LOCATION

or the owners of Gold-n-Memories in Steinbach, Manitoba, Canada, being a family business in an easily accessible mall location paid off when a major competitor left the market completely.

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A popular department store moved in right next door, too.

Amanda Lanteigne, who bought the 2,000-square foot mall business from her parents and works with her husband and brother, had to scramble to keep up with unprecedented 30 to 40 percent growth in the wake of that unexpected occurrence.

“Almost immediately we saw an influx,” she says. “We doubled our sales volume in six years. I’m still learning how to handle the $750,000-plus increase.”

When they bought the business, annual revenues were at about $750,000. Now total revenues are just under $1.6 million. Business jumped from $100,000 to more than $400,000 in Pandora jewelry and bead sales alone.

An Edge Retail Academy mentor helped keep Lanteigne and her partners on track. They concentrated on hiring the right people and learning to delegate (a staff member has completely taken over marketing) while concentrating, too, on budgets and forecasting and finding time to travel to trade shows to discover new jewelry lines.

“I no longer know everything that happens in the store and have had to let go and trust my employees,” Lanteigne says. “That’s been the hardest thing.”

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Lanteigne says working with a business mentor has been a key component of their success story.

“When you are an independent business owner, you’ve got nobody who tells you if you’re doing it wrong,” she says. “It’s really nice to bounce things off of somebody who knows the business but isn’t a competitor.”

 

CULTIVATING SUPPLIER RELATIONSHIPS

esides the power of positive thinking, Laurelle Giesbrecht of French’s Jewellery in Wetaskiwin, Alberta, Canada, is headed toward the $2 million revenue mark due to a variety of factors propelling steady growth since the late ‘80s and despite a variety of setbacks.

“Our local economy has been negatively affected by droughts, creating agriculture devastations, mass wildfires, and most recently low oil prices, creating huge job losses,” she says. “These factors have created some roller-coaster years.”

First, she cites fantastic suppliers who offer a beautiful balance of cutting edge styles and timeless classics. Her relationship with her vendors is special, she says. “I want them to grow and succeed, and they want the store to flourish. For special pieces, these key suppliers will offer stock balancing, which allows us to inventory unusual styles and in some cases, to push a higher price point.”

 

French’s Jewellery cites strong vendor relationships and hiring jewelry lovers as reasons for growth.

 

The discovery of Canadian diamonds was a game changer for her, too. The year the movie Blood Diamond was released, her diamond sales increased dramatically because she offered certified Canadian diamonds in rings, pendants and earrings. She sold five diamond tennis bracelets that Christmas Eve.

Hiring people who love the store’s product mix is also important. The majority of staff were at one time her clients. “Training people on the inner workings of the jewelry industry can be done,” she says. “Loving what we sell can’t be taught. If you love something, you can sell it to anyone.”

She encourages that love of the product by offering store discounts and credits for personal staff shopping.

“It is much easier to sell larger diamonds if the sales team are wearing beautiful pieces. We make it as affordable as possible to wear great and impressive jewelry.”

She reinforces her staff’s enthusiasm with education, enrolling key staff members into GIA’s Jewelry Essentials class and taking full advantage of free education offered at trade shows.

 

 

FORGING A STRONG PARTNERSHIP

ark and Monika Clodius started Clodius & Co. of Rockford, IL, with an 800-square-foot store and after three years bought an old branch bank building near a busy corner. From 2003 to 2004, they saw annual revenues double from $500,000 to $1 million.

Their first misstep, though, as Monika sees it, was failing to embrace the three-stone ring trend. “People wanted to walk in and just buy it, and Mark wanted to make it. So we had an OK Christmas, but no evidence of the kind of growth we had exhibited prior to that,” she recalls. “That was humbling.”

Mark learned to be more open-minded, and Monika, who felt she hadn’t pushed the trend strongly enough, learned to be more assertive. 

“If we would not have had that experience,” she says, “we would have still been productive and successful, but I don’t think we would have grown as quickly as we did.”

What helped them traverse the uncharted territory between $1 million and multi-millions in revenue was seeking advice from a wide range of industry experts and studying the JA Cost of Doing Business survey. The survey revealed an unsettling pattern: As stores grew, profits and net income dropped. So a store might be doing twice as much volume as before with less of a net take-away.

“The only way you can do more business is to have more help,” Mark says. “But that help has a cost. Getting from $1 million to $2.5 million, you have to have staff and layers of management and procedural things to handle the volume before you can become more profitable.”

At this point, you’ll be twice as busy and you need to shift your mind-set and concentrate on managing people.

“Now you have all this new staff that you have to train, more people walking through the door, and yet less cash flow. That can be extremely challenging,” Monika says.

Managing people is the most difficult side of the business, she says, “because everyone will have a good reason of why it was OK to bend the rules,” she says. “For us that is still a challenge.”

For example, their lay-away policy requires a deposit, a payment must be made every month, and the jewelry must not be altered in any way until it is fully paid for. But if nine salespeople each make a few exceptions to that rule, there might be 30 clients with layaway accounts that are inexplicably inactive.

So they’ve learned that they can never stop training and reviewing their policies and procedures. “When we have store meetings and we go back to the ultimate basics, people still seem surprised,” Mark says.

 

 

 

 

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Eileen McClelland

2019 Big Survey: 10 Times When Jewelry Store Employees Left the Job in Dramatic Fashion

Results of the 2019 Big Survey have been rolling in. Here’s a sample.

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WE ASKED SURVEY respondents to share the most epic ways they’d seen someone quit or be fired. Dealing with employees on their way out can be touchy. Sometimes these unfortunate encounters even culminate in award-winning dramatic performances. Read on for the most memorable ways employees have parted ways with jewelry stores:

Top 10 Countdown

The award for best dramatic performance goes to the employees who:

10. Screamed at the top of their lungs, “I QUIT”

9. Showed up in pajamas, had a breakdown, then quit and walked out.

8. Threw rings at the boss while asking for a raise, then quit.

7. Threw a crystal piece through a showcase shelf.

6. Hit the jeweler in the head with a bag of bananas.

5. Threw his key at me.

4. Came in wielding a pipe wrench screaming that we were liars.

3. Ran out of the shop, arms raised in the air, saying “he’s trying to kill me.”

2. Got drunk at a charity event we were sponsoring, hit on one of the ladies and pulled her skirt up. Police were called.

And the No. 1 best dramatic performance goes to:

1. The employee who hired a marching band to quit.

The 2019 Big Survey was conducted in September and October and attracted responses from more than 800 North American jewelers. Look out for all the results in the November issue of INSTORE.

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How to Promote Healthy Competition and More Of Your Questions Answered

It all depends on how you present it.

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How can I promote competition among staff without it turning my store into the setting for Lord Of The Flies?

The key to fostering healthy competition, according to new research done by a team at Harvard Business School, lies in how you communicate the competition. When employees feel excited, they’re more likely to come up with creative solutions and new ways to better serve customers. When they feel anxious or worried they might lose their job or be publicly humiliated in some way, they’re more likely to cut corners or sabotage one another. Leaders can generate excitement by highlighting the potential positive consequences of competition (such as the recognition and rewards that await outstanding performers) rather than creating anxiety by singling out and highlighting low performers (think of the steak knives scene in Glengarry Glen Ross).

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We want to lay off a sales associate, but we’ve never done it before. If we are to give them “a month’s pay,” does that mean their base pay, or do we factor in their average commission earnings as well?”

Suzanne Devries, president of Diamond Staffing Solutions, says that legally, you’re required to give them only the vacation, sick and personal days they have accrued, although she recommends that you base your decision on how valuable an asset this person has been to your organization, and how long they have been with you. “If it’s a long time and they have been loyal, you should definitely consider a certain amount of days per year. Second, make sure you have documentation that states why you are having layoffs.” She also advises you do an exit interview and have the person sign documentation stating that they understand why “they are part of a force reduction.” An important thing to keep in mind is how other staff will view this. They will want to know that they will be treated fairly even when times are tough.

I keep hearing contradictory advice: Set goals or don’t set them. What’s your take?

There are three main arguments against setting goals: One, that they can lead people to focus on the wrong things (by, for example, becoming too aggressive in chasing sales targets) or cut ethical corners; two, that they become demotivating when it becomes clear they can’t be reached; and three, that it’s healthier to live your life focused on the present. The secret to smart goal setting, then, is to do it in a way that addresses these problem areas. That means:

1. Set challenging goals, but don’t make a big deal of it if someone falls short.
2. Structure goals that focus on behaviors, so your people are learning and improving, rather than wildly chasing a financial goal.
3. Be specific. Setting vague goals can produce higher rates of success with motivated staff, but if your employees are normal human beings, being specific will prevent procrastination.
4. Make the first couple of milestones easy so that people can build momentum toward the major goal. Progress is a huge motivator.
5. And finally, don’t make goals a death march; have fun trying to accomplish them.

I’d like to hire a trainer, but I’m worried about the return on investment. How can I be sure it will be worth it?

To really get your money’s worth, you need to focus on two things: 1.  Hard skills. Overinvest in training that helps to increase ability, rather than motivation. Focus on small but vital aspects of your staff’s sales skills. It could be when to pause in a presentation, how many features to stress, or phone manner tips. Break tasks into discreet actions, practice within a low-risk environment and build in recovery strategies. 2. And this is just as important: Follow up. Bring in a trainer, but only if you yourself are willing to buy into their lessons and do ongoing training and reviews.

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Wow Your Customers with This Video Messaging App

Jewelers can make online experiences feel a lot more like in-person experiences.

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DO YOU REMEMBER the last time a business did something unexpected for you? Something you truly appreciated? Of course, you do. Those are the moments that imprint themselves on our memories. For me, it was with a video messaging app called Bonjoro.

My Wow Moment

When I signed up for their free trial, I expected to get a video message from them. That’s what they do. And they told me I would. What I didn’t expect was to get a video answer about a tech issue I was having minutes after I emailed them about it. That blew me away.

In the jewelry industry, we pride ourselves on our in-store service and fret about our online marketing. Gone are the glory days with greater foot traffic. Now everyone wants to kick the tires online before they commit to coming in. But what if you could bring your amazing customer service to customers before they ever stepped foot in the store?

Bonjoro to the Rescue

That’s exactly what Bonjoro allows you to do. Bonjoro is an easy to use video to email messaging app for businesses. They make recording and emailing a personalized video to customers almost effortless. And you can even send these videos when they’ll have the biggest impact, like right after they fill out a contact form on your site.

Imagine a prospective customer visits your site. They fill out a contact form with some details about the type of engagement ring they’re looking for. After they press submit, someone on your sales team gets a notification. Once they have a free minute, they pull out their phone and record and send a video in less time than it would take them to respond to the email.

“Hi, Jim! I know exactly the style that you’re looking for, and we have some great options for you. You can see a few of them in the case behind me, but I have a few more that I’d like to pull out and show you. You mentioned that you have a lunch break at noon. Why don’t you stop by tomorrow, and I’ll have them all ready for you? In the meantime, there’s a link to our website’s engagement ring gallery in this window. If you see anything else you like, you can write me a quick message, and I’ll be sure to add it. See you soon!”

An Experience Like No Other

This is an experience most jewelers aren’t going to offer. The enthusiasm and confidence communicated in a video are hard to match in an email response. And the customer has likely never received a response like this from a jewelry store. Just the thought that someone took the time to personally address them with a video will make them more likely to stop in. Plus, they already feel like they know you.

Almost Face-to-Face

Bonjoro is a way to send quick, personalized videos to customers. They’re meant to be mixed into the daily routine and workflow of your sales team. This isn’t the time for high-quality video production or perfect angles. This is much more personal and organic than that.

People online aren’t used to being addressed personally by video. It gives them a personal touch that usually only happens in the store. When you use Bonjoro, the most important thing is to press the record button and talk to the customer like they’re right there in front of you. What a wonderful way to wow your customers!

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