Owners Salaries
As a relatively new owner, at this time I am not taking a single penny from my store. I am fortunate my husband has a great job and works hard to support our family. I hate the fact I work between 60-70 hours a week and have nothing to show for it—but in due time I will. I just have to remind myself this at least 5 times a day or so.
I keep thinking about the day I’ll have most of my opening inventory paid for (which is not so far away—yeah!) and I’ve also been thinking about how much I will be able to pull from the store for my own salary? I understand it differs based on individual stores expenses, gross sales, and profit margin. But is there any sort of standard? On average my folks and most my friends are taking out 10% of their gross. Is this inline with other jewelry store owners?
Hedda Schupak commented:
JCK's Annual Salary Survey (every November) lists a hugely
disparate range for owners' salaries, starting as low as $20,000 a
year, and going well into six figures. On the ultra-low end, one
can only assume that the owners are writing off their basic living
expenses to the store, rather than paying themselves a salary. I
can't comment on the right or wrong, but I also can't see anyone
wanting to own a business only to earn little more than $10 an
hour.
Ben commented:
Hi Shanu, great question. I was wondering myself too, about the
appropriate percentage of sales one should take out of a jewelry
store as a salary. The problem I'm sure many owners are facing is
that, while the inventory value keeps on going up, it is difficult
to take anything out of the business, especially when the goal is
towards expansion. A simple example is when you have 10 new items
for sale. It is highly improbable for you to tell all ten items (we
usually achieve about 60%). Those four items eventually, become bad
stock. The profits from the six items, you go on to prepare another
10 items for sale... and it starts all over again. So, inventory
keeps on going up. We hold a yearly sale with significant discounts
with the purpose of getting rid of the bad stock. And we make it a
point to ONLY do this once a year, unlike many jewelers who
unscrupulously hold 10 big sales a year to entice unknowing
customers. Due to this, many customers anticipate this event and
the bulk of our income comes in during this month. Only then do I
take a percentage out of the business as my bonus, usually around
20-25% of gross. Other than this particular month, I have a fixed
monthly salary. Any other jewelers here with their thoughts on
this? Would love to hear everyone's response.
Gary commented:
Shanu, Thank you for raising this important question. I myself was
wondering about this. I could not find any particular information
online either. I'll be watching this blog for responds. Best of
luck to you, Gary www.therussianstore.com
