Kate Peterson, consultant and co-principal of Performance Concepts, lectured jewelers on a number of savings opportunities available in their businesses. “If you sell an extra dollar at the counter, most of it will go toward expenses,” said Peterson. “But if you save an extra dollar in expenses, all of it goes toward your bottom line.”
Her seminar, entitled “Penny Pinching for $750,00 to $1,500,00 Stores,” touched on various ways to save in numerous categories, including personnel-related expenditures. Perhaps the most effective investment for payroll is to provide a base hourly rate, incentive-based commissions on personal sales, and incentive-based commissions for team goals accomplished, suggested Peterson. “Keep your total payroll at 20%-22% of your sales, and keep your sales payroll at 16%-17% of your gross profits.”
But a number of savings opportunities exist in other areas as well. Pay your employees biweekly instead of weekly to save on payroll processing. Spend 2%-3% of your payroll dollars on training, and capitalize on vendor training resources. “And ask vendors for training if they don’t offer it,” Peterson advised. Use older inventory in short, month-long incentives to motivate and reward employees. “Remember that many of your employees can’t afford jewelry, so provide them ways to earn the product they sell,” said Peterson. “Cash incentives typically go directly to bill paying, whereas gifts are rewards to be enjoyed.”
Other ideas included having employees pay 20% of their health benefits at the time of the next rate increase so they appreciate the value of the bonus, reduce the number of vendors you deal with for better deals, “treat” your preferred customers to an annual inventory reduction event to clear out older merchandise, and only donate to charities that are a “good fit” with your store.