This year, either do it your way again or do it their way!
Who are “they”? Successful jewelry stores with excellent sales, low debt, good salaries and excellent cash flow.
For everyone whose definition of “success” includes money, here are some characteristics of a successful business:
- Assuming over $750,000 a year in sales, the owner is paid 10 percent or more of total sales.
- Virtually no bank loans other than property bought
- Credit cards paid off monthly
- Vendors paid as they have requested, not late
- Good customer traffic
- Checking account balance is at least 10 percent of total store sales.
How is this achieved? There are five reasons for financial distress in a jewelry store. Address each of these areas to see improvement in 2018.
1. Your inventory that is over one year old is greater than 20 percent of total owned inventory. When I visit stores, I typically see that inventory over a year old is 50 percent or greater of total inventory. Less old inventory allows you to purchase new hot-selling items, which increase sales.
2. You have the wrong price points. Owners and staff tend to buy what they like, and if you like it, it’s probably a higher price point than customers typically are buying. POS programs will tell you how many units in each category you sold in a year and how many are on hand. Stock the same quantity as you sold last year, and you’ll have money.
3. You don’t charge enough for repairs and custom. Repairs are not price-sensitive; they are trust-sensitive. Any increase in repair charges will not make customers walk but will go to the bottom line.
4.You don’t have enough traffic. This is tougher today to accomplish, but there are plenty of companies to help you with this task. Better advertising and marketing will drive more traffic.
5. When customers do walk in, the staff allows most to walk without buying. Most stores sell only three people out of 10 anything from the showcase. If you could get this to go to four out of 10, your case sales would skyrocket 33 percent! That requires sales training, showing higher-priced items, and continuing to sell until the customer says, “I’m good; thanks.”