Every business owner periodically must ask and answer three key questions relating to his or her business: Where am I? Where am I going? How do I get there? The answers are basic to the success of every business—and they’re especially important to every retail jewelry business owner.
Why single out retail jewelers? During the AGS Conclave in April, industry analyst Ken Gassman made an important distinction between the love of jewelry and the business of buying, selling, and—more importantly—managing a retail jewelry business. Gassman stated that it is crucial to recognize the difference between the jewelry business and the business management of a jewelry enterprise.
But many in this business are focused on technology, gemology, and the more technical aspects of the business. In essence, they fall in love with their assets. They are enamored with the beauty of the products, and they identify with the happy times in their customers’ lives in which jewelry plays a role. But a retail jewelry business is a business, and generating a profit should be a primary—not a secondary—objective.
I recently spent three days with a group of 13 jewelers in a Profit Mastery Seminar that focused on laying the foundation for running a more successful retail jewelry business. The seminar was exciting, interactive, and informative, and it taught specific analytic skills the participants carried back to their businesses.
These jewelers came from every section of the country and represented every image type, from carriage trade to mid-stream. Each wanted to gain a better understanding of their financials so that they could improve the performance of their businesses.
The seminar began with a presentation on measurement tools (P&L and balance sheet) that enable you to make money as well as discussions of industry-specific problems that hinder progress toward that goal.
To give you a taste of what was discussed, consider a situation that many jewelers face—a low-cash position. Low cash may be caused by poor pricing, poor buying, bookkeeping errors, poor inventory control, or low productivity. Individually or collectively, those factors will result in a low-cash position. Low cash, in turn, prevents you from taking cash discounts and causes more borrowing as well as borrowing at higher interest. Identifying the cause of a low-cash position enables the retail jeweler to change the result by taking appropriate action.
Here’s an example: An improvement in inventory turn from 1 to 1.2 will have a positive impact on cash, reduce borrowing expenses, let the owner take advantage of cash discounts, and improve gross profit margins. The question is, how do you make that improvement happen?
Understanding the relationships among the components of your P&L and balance sheet, combined with the discipline to prioritize and take the necessary steps, will get you to your objective—and that’s what this Profit Mastery Seminar provides. For information, call me at (610) 205-1101. firstname.lastname@example.org