A 4 Part Guide for the Growing Jewellery Company

A 4 Part Guide for the Growing Jewellery Company

A 4 Part Guide for the Growing Jewellery Company

The following guide to running an effective small or midsize jewellery company hopes to provide useful advice on improving productivity, sales, costs, and competition. Before we get into those specifics, I’d like to emphasize the value of communication.

As a growing jewellery company with 5-25 permanent staff, it’s crucial that you and everyone you work with understand the big picture and how what you’re trying to produce fits into it. Every employee should know how the company works, what other people are doing, and what’s going on at the moment. It is certainly worthwhile to strategize on priorities, using each person’s time wisely, and distributing labour for maximum summary effect, but the reality is that in smaller companies, most people typically end up doing a bit of everything. It is for this reason that effective communication and cooperation are therefore absolutely vital to success of the jewellery company.

1. Productivity

Increase production capacity. As your jewellery orders increase in number and volume, you’ll need to step up production. Invest time in improving modes of operation and evaluate ways to make your life easier. It will be worth it. Make time, even if you don’t think you have any. If you’re overwhelmed, and consistently feel that way, it is all the more important to invest in more efficient ways to do things. Spend time to make time.

Reduce the time of the business cycle. Your jewellery business cycle will look something like this:

1.Buy beads, stones, pearls, chains, components

2.Design jewellery

3.Produce small quantities of jewellery for display / sales

4.Sales reps sell the jewellery to the stores, also sell to larger house accounts

5.Take jewellery orders

6.Produce large quantities of jewellery to meet orders

7.Package jewellery orders and ship them out

8.Collect payments for jewellery orders

In Step 1 you spend money, and in Step 8 you get a return on that initial investment. The sooner you can complete the cycle, the sooner you get a return on your investment. You want the cycle to be as short as possible so that you are out of pocket for the least amount of time. With proper organization you should be able to reduce your risk.

Improve your computer skills. Accounting and organization will both improve as a result. Without computer skills, you’re simply limiting your mode and rate of production. Computers and the internet are vastly more effective methods of reaching greater volumes of people, circulating information internally, and keeping records.

2. Costs

Streamline your staff. Keep staff small, and make use of part-time labour wherever possible. Make the company a tight corps of highly productive and integrated personnel. Managing turn-over is critical- 10% is considered a generally healthy rate. Essentially if you’re firing too many people you need to look at your hiring practices, and if youäó»re firing too few you are probably keeping people who are poor performers. Naturally, you’re bound to make some mistakes when hiring employees. You can never avoid these mistakes entirely, but you should take your time when interviewing and screening candidates. Don’t go on gut feeling- always test out their skills. If someone says on their resume that they can type 80 words a minute, sit them down and have them retype a document to see if they actually can. Focus on getting value for your dollar: it is worth paying a bit more for good people. While a big company can afford a couple of weak links, it’s simply not possible with a small/medium one. Unproductive people will pull down your whole team, and keeping them around isn’t fair to those in the company who are actually pulling their weight. You must put the company first and do not be shy or sentimental about letting poor performers go when it needs to be done. It’s worth any severance that may be involved, and will be a huge relief for everyone when they’re gone.

Minimize on the cost of real estate. Along with staff, this is one of the main expenses you will have to deal with, and the less you can spend on it, obviously, the better. Spend time finding a suitable accommodation for your jewellery business and don’t rush into anything without a foundation of thorough research and comparison. Location is important for employee accessibility and warehouse sales, so balance centrality with cost-effectiveness. Try, also, to streamline your operations so that you can work in as small a space as can be; it doesn’t make sense to pay for space that you don’t need. If you think it might be worth more space, evaluate carefully whether or not the extra space will actually bring in more sales.

3. Sales

There are three ways to generate more sales: sell more jewellery pieces to the stores you already deal with, sell to new stores, and be more effective in your sales to get higher returns on investment. This section should provide helpful advice on how to do all three.

Sell more to each store. Stores will only buy more of your jewellery if they sell more of your jewellery. There is no quick fix for this. If you sell them more jewellery than they can sell then they will order less or not at all the next season. Although it may seem like it is out of your control you can help the stores improve the sales of your accessories in several ways:

-Provide customers with sales tools and product knowledge of your jewellery
-Add tags, cards, and literature to your jewellery products
-Promote the image of a recognizable label (branding)
-Offer breadth and variety in designers and lines so that stores sell your jewellery pieces to numerous demographics
-Give exclusive rights to stores for certain lines or limited edition jewellery pieces. Stores and their customers will both appreciate something special that can’t be found just anywhere.
-Contact stores frequently to see if they’ve sold out. If they have, they will restock your shelf space with other designers’ jewellery. When a store sells out of your jewellery, you want to have more stock for them as soon as possible.

Sell to more stores. There are two ways to do this: find customers in a new area, or find new customers in areas you already sell to.

Adding sales reps will help you expand your business area. If that’s what you’re looking to do, study demographics of populous and not-so-populous regions, and don’t overlook metropolitan areas that may seem too small at first.

With regards to increasing concentration of customers in areas that you already have some foothold, think heavily about what role each jewellery line you sell plays. A wide range of designs and branding of cleanly separate lines will help you sell jewellery to different stores in the same proximity. Stores won’t like it if you try to sell the same items to their nearby competition, and it’s not in your best interest either since sales in both stores will suffer. If you have two or more distinct lines that cater to different demographics at different price points, there is nothing stopping you from selling to two stores on the same city block. In this way, you can increase business in areas you’re already familiar with.

You can roughly determine potential sales in untapped or under-tapped markets by looking at how much business you already do in others: if you sell 50 pieces a month in a city of 1,000,000, you should be able to sell about 100 pieces in a city of 2,000,000, and so on.

Sell out old stock. Look at it this way: since the first few sales of any item simply pay back money you’ve spent on components and production, it is only after that point that you start profiting. So it is the last few jewellery pieces that are the most purely profitable. When jewellery items sell out, the maximum return/investment ratio is achieved. Do whatever you can to get rid of old inventory. Be creative… warehouse sales, trade shows, and other kinds of jewellery sales events are great for this purpose. The longer you hang on to old inventory the more difficult it will likely be to sell, so cut your losses after a certain point and take what you can get to recuperate money on your investments.

Inform sales reps. Provide them with as much literature and information on your jewellery, as possible so that they can do their job more easily and confidently. Let them know which products need to be pushed more aggressively so that you end up with very little inventory at the end of the season. Give them the tools they need to represent your company the way you want it to be represented.

Develop tight organization for sales initiatives. Organize sales plans into campaigns with clearly outlined goals that are specific, measurable, attainable, relevant, and time-bound. Evaluate results at every step of the way, and keep track of what works: ideas that seem ineffective must be closely examined to see if they’re worthwhile, and those that are clearly beneficial should be repeated over and over again. Generally speaking, 10-20% of your yearly sales initiatives should be experimental and 80-90% should be modeled after past sales ventures that were successful.

4. Competition

For more information on the nature of the accessory industry and its competitors, click here.

Your hard-earned business connections should be a well-guarded secret. Keep customers secret from suppliers. While Stones and Findings is an established and reputable wholesale jewellery component supplier, beware of others that are connected to copycat jewellery manufacturers (see below) who would love to undercut your prices. Keep customers secret from other customers, as well, as you don’t want to upset your relationship with a retailer who finds out that you also sell to their competitors (even if it is a different product line). A possible exception to this rule is that you may want to provide examples of other reputable customers when approaching new stores for sales as a means of marketing your success.

To compete with large companies… Provide variety & exclusivity in your jewellery. You must have a higher perceived value- do what big companies don’t do: great customer service, smaller minimums, and unique designs that canäó»t be found everywhere.

Their Advantages:

-Low labour costs from overseas manufacturing

-Low cost of materials

-Capable of large quantities

Their Disadvantages:

-Large minimums

-Generic designs

-Cash up front, no terms

-High shipping costs, long delivery times

-Poor quality, high rate of defects

To compete with copycat competitors… Use components they don’t have access to. Squeeze their margins by keeping quality high and prices low. Keep all suppliers confidential and all jewellery designs secret. Only show your jewellery designs to potential customers, and never give out samples to anyone you don’t know and trust; be wary of customers who want only one of anything.

Their Advantages:

-Lower cost

-Willing to produce to order

-No minimum

-Low overhead, can change production immediately

Their Disadvantages:

-High material costs. No steep volume discounts.

-Poor quality, use cheap substitutes for high margins

-Restricted to local component supply

-Can’t produce high quantities

-Don’t add any design value

-Put out of business by one large order