Roadmap To A Million Dollar Year

PetersonMany jewelers just can’t seem to get past a particular sales threshold. If you’re at $300K, you wonder what it will take to do $500K. From $500K, how can you reach $750K? And, what seems most impossible, from $800K – that “magic” level where many jewelers seem to plateau – how do you get to $1M?

The higher your current operating level, the greater the challenge to rise to the next milestone. The numbers seem overwhelming, always floating just out of reach. Yet the first step to surpassing thresholds is the easiest: recognize where you are and, if you’re stable (rather than declining), make a commitment to the next threshold. A “threshold” is the next real milestone in gross sales – usually $500K, $750K, $1M and then $2M. Once you commit to reaching it, you’re ready to clarify your goals, define a plan and set a time line.

What is your next goal?

How much must you grow to reach it?

When will you do so?

Most threshold achievements take a number of years. With aggressive planning – and a little good fortune – a jeweler can grow from $300K to $1M in seven or eight years; from $500K to $1M in four or five years. Start your journey to the next threshold by knowing exactly where you currently are in gross sales. Measure your sales accurately for the current fiscal year, then break them down by month, by category (diamond rings, gold chains, etc.) and by employee. Know your overall gross margin and your gross margins by category.

You need a good handle on productivity. Many independent jewelers rank an employee’s loyalty and friendliness above his or her ability to produce sales. To grow your business, you must make sales a priority and measure productivity. Monitor gross margin (especially if you allow discounting) and payroll percentage as well as sales productivity for each employee.

To recognize your current status and plan for the next threshold, you must examine your general cost of doing business. Cutting expenses, although important in raising profits, is not necessarily the way to grow. Bare-bones business may attract bare-bones employees and bare-bones customers – hardly the road to the top! Generally, you must spend money to make money. The trick is to figure out exactly how to invest it most wisely.

To grow your business, you’ll have to spend money on a well-planned marketing program, on inventory mix, on information control (yes, a computer), on store appearance and, perhaps most importantly, on staff selection and training. You can’t get there alone. You must empower others to help you make your dreams (and theirs!) come true. If you invest wisely and monitor your business closely, you will succeed.

“If you always do what you’ve always done, you’ll always get what you’ve always gotten!”

It’s funny how many of us keep doing the same things, over and over, while hoping somehow for different results! Some business owners admit their businesses have grown in spite of, rather than because of, themselves! They’ve been lucky. To get tangible, sustained improvement in your business, your profits and your lifestyle, you need to commit to clearly-defined objectives, carefully craft a plan and take the steps needed to see it through.

A generation of jewelers is just waking up to the fact that they have only 10 to 15 years left to achieve financial success. This group of 40- to 50-year-olds dreamed they’d run their businesses, raise their kids, put them through college and retire young enough to enjoy the fruits of their labors. Problem is, many are still struggling to pull little more than middle-income dollars out of their stores. They’re paying for college as the kids go, rather than from savings. The nest egg never materialized. The lifestyle includes 12-hour days and 6-day workweeks. The store can’t afford to pay help very much, so turnover is high and productivity low. Such jewelers find themselves covering the sales floor, the repair shop and the accounting office.

Sound like anyone you know?

As the clock continues to tick, it’s time to divide up the remaining years and outline realistic steps to take you where you want to be when you want to be there.

“Some people dream of accomplishments, while others wake up and make them real.”

The best way to make a dream come true is to set clear, specific goals. Goals are dreams with deadlines. These mileposts by which we measure and control growth provide a systematic approach through which we realize our dreams, one step at a time.

The six essential steps. Good luck, not good management, is at work when good results occur without effective goals and planning. Goal-setting is the determination of where you want to go; planning is the rational course of action by which you get there. Action plans guide you toward your goals over defined time periods.

An effective goal is one that motivates you to take action in a clear direction. Effective goals have eight characteristics. They must be:

Your own!

Realistic and achievable, yet challenging.

Relevant and important to your growth.

Clear and specific.

Measurable and verifiable.

Time-limited.

Compatible with your overall vision.

Written.

In short, every goal must answer four very simple questions: Why? What? How much? By when?

Goal-setting and action-planning are intertwined; following a step-by-step pattern will help you achieve your end result quickly and efficiently. Be sure to put every step in writing!

Step 1: Define the “real.” Take an objective look at where you are, listing each strength and weakness.

Step 2: Envision the “ideal.” How will you know when you get to where you want to be? How does it look? Does a model currently exist? Describe it in detail.

Step 3: Identify the major discrepancies between the “real” and the “ideal.” Keep each item separate and distinct. Prioritize the items by degree of impact on your business.

Step 4: Set a goal (using the above eight criteria) to achieve the “ideal” in each area. Remember: why? what? how much? by when?

Step 5: Identify and list all potential resources and obstacles for each goal. When considering resources, include both finances and people. Obstacles might include those of “context” (like systems, structures and practices), as well as of “mindset” (like beliefs, values, aspirations and confidence).

Step 6: Define clear and specific actions you’ll take to achieve the “ideal” in each area. Be sure to include roles, responsibilities and specific methods for surmounting obstacles.

Expect success to be gradual; we don’t run before we walk. Remember that unrealistic goals can become discouraging and counterproductive. But reaching a realistic goal, even just a short-term one, provides encouragement to strive further. An athlete doesn’t high jump 7 ft. without first mastering 5 and 6 ft. Likewise, a jeweler won’t break a major sales threshold without stabilizing early levels.

The task of growing your business should seem daunting. If it doesn’t, you may be overlooking some important areas. Don’t be fooled into thinking that addressing the issue of sales volume alone will bring success. Other key elements must also be in place to support and supplement your sales growth. The right merchandise, the right marketing, the right inventory turn, the right edge, the right expenses, the right clients, the right timing and the right sales staff with the right training. When setting goals, each of these areas requires objective assessment and strategic vision.

Critical growth areas. As you move forward, you’ll find “benchmarks” – averages and superior performances in stores similar to yours – very helpful. One of the most readily available resources is Jewelers of America’s Cost of Doing Business Survey. Published annually, it provides comparative data for sales, margins, inventory turns, sales productivity and more. To obtain a copy, call Jewelers of America at (212) 768-8777.

Checking benchmarks in specific “critical growth areas” often helps you identify major discrepancies between the “real” and “ideal” in your own operation. Once you know where you stand, you’re ready to set clear, specific goals in each of the following areas:

  • Personal growth. Consider growth in training and education, health, attitude and selling skills.

  • Sales. Consider individual sales and overall store sales.

  • Profitability. Consider gross margins, reducing expenses, increasing individual and team productivity and net profit.

  • Marketing. Consider measurable media effectiveness, market reach, public relations effect, cost effectiveness and prospect development.

  • Inventory. Consider fashion, selection, depth, distribution, pricing, positioning, turn and return on investment.

  • Client development. Consider return on prospects, multiple sales to single customers and measurable referrals.

  • Service. Consider time lines, cost of providing service, profitability, multiple sales and sales of real inventory.

  • Environment. Consider windows, case display, interior decor, lighting, signage, ambiance and amenities.

  • Information. Consider point-of-sales data capturing, user friendliness, system cost, analyst cost and application.

  • Staff development. Consider mastery of product knowledge, selling skills, operational details, sales performance, profitability, teamwork and client development.

Once you’ve fixed a “vision of success” to each of these critical growth areas, set goals that define your path to each objective. Most people find it takes some effort to reduce lofty dreams to sensible steps. So review your goals several times before committing to them to make sure you’re exactly on target.

Remember, setting and achieving goals in just one critical area may not serve your ultimate objective. You must meet goals across the board to help your business grow and to achieve the personal prosperity you seek.

Mobilizing an action plan. Your roadmap for action should include the steps needed to make progress in each critical growth area. Use these major steps to craft your plan – in writing! – and work out the little steps you’ll take along the way. Lay out your goals by week and by month for your entire fiscal year. Here are some suggestions to help get you started.

  • Personal growth. Ask each staff member, as his or her contribution to the overall plan, to set individual goals for both professional and personal development.

Formally review the strengths and weaknesses of your staff. Empower each one in an area of strength that will contribute directly to the person’s own self-worth and to the growth of your business.

Develop training plans for each individual. Include specific timelines and ways to measure progress.

  • Sales. Determine historical sales performance by month and year. Post for the staff.

Determine sales performance expectations for the store and for each staff member.

Establish minimum acceptable performance standards as a condition of employment. Develop monitoring and reward systems for sales performance.

  • Profitability. Determine historical gross margins overall and by product category. Set goals for current gross margins by category and price merchandise accordingly.

Establish selling-price guidelines and policy and link employee compensation to gross margin.

Analyze expense categories and reconsider allocation of spending by line item.

  • Marketing. Analyze the effectiveness of the media used for the past two years.

Establish a marketing plan favoring the most effective media.

Determine advertising philosophy and balance among price, product and institutional messages.

Create a marketing plan for 12 months.

Plan two promotions to occur within your fiscal year.

Prioritize your public relations efforts.

Establish methodology to capture and act on a prospect list.

  • Inventory. Evaluate your inventory in terms of fashion, selection, depth and distribution by category compared to your significant competition.

Analyze your current pricing policies and establish your position in each product category.

Calculate your inventory turn by category and determine a plan to augment inventory based on fast movers and high profit items.

Devise a plan to move aged inventory.

• Client development. Commit to a client development system. Define each staff member’s role in building loyalty and advocacy.

Establish a methodology to find, contact and track prospects and referrals.

  • Service. Determine the true costs and benefits associated with services such as installing watch batteries, wrapping gifts, offering diamond warranties, etc.

Eliminate time- and resource-consuming functions that do little to build client loyalty or sales volume.

Implement new services which will, at relatively little cost, set you above your competition in terms of value and professionalism.

Evaluate your turn-around times for repair and service. Re-engineer your processes for greater efficiency, cost control and profit.

Establish guidelines and training to convert service requests into inventory sales.

  • Environment. Evaluate your current decor and decide how and when to remodel or modernize.

Evaluate your window and case displays. Determine a process to update fixtures, props and display theme items.

Evaluate present lighting and examine new products and efficiencies available.

Evaluate your current signage. Consider new options for logo visibility and efficiency.

Evaluate the “shopping mood” in your store. Reconsider music, refreshments, education or entertainment (video, literature, children’s corner, etc.).

  • Information. Determine the efficiency and quality of data output by your current source (manual or electronic). Establish a clear goal for obtaining or updating data for ease of use, clarity, value and applicability.

  • Staff development. Assess the qualities of your existing staff. Identify strengths, weaknesses and voids. If you plan to hire, create a job description based on your true needs.

Schedule regular staff meetings and adopt a consistent training program for product knowledge, selling skills and operational details.

Establish a reward/compensation system based on performance.

Establish sales productivity standards and monitor them.

Establish a clear philosophy on team and individual effort.

Do’s and don’ts. Keeping an eye on a few basic reference points will help you stay focused and directed. Remember, frustrations often drive change and small victories add up to create major advances. So:

Do review your plans regularly. Make sure your behavior matches your goals!

Do explain your goals in detail. Involve those who will have a direct impact on implementing your plans.

Do keep your plans focused on your goals.

Do set aside time for planning and reviewing accomplishments every day.

And, on the other side of the coin:

Don’t ignore your limitations (i.e., staff or resources). Instead, work improvements and upgrades into your plan.

Don’t attempt any new tactics without examining their fit into your overall strategy

Don’t trust your memory. Write it down!

Don’t over-schedule. Allow time for tending to day-to-day business.

Got it? Good! Now, your plan is in place. But don’t forget that while you’re doing all this positioning, someone has got to run your business, greet and sell to customers, and develop your future clientele.

A critical factor to growth is understanding and accepting that you cannot do it all alone. You must win the support of your staff. Prepare and empower them to perform to their maximum potential. Allow them to be the mirror representative of you and your company philosophy to current and future customers. Only then will you be able to devote the time you need to setting and achieving the goals that will grow your business and fulfill your dreams.