August 28, 2013

Launch Your Jewelry Business :: Step 1 of 10

Are you ready to make the leap from a home jewelry hobby to running your own jewelry business? What are you waiting for?!

It can seem overwhelming but with clear goals and a bit of elbow grease, you will be running a successful business in no time. With 30 years of experience, I have made every mistake in the book.  In 10 STEPS I will help you avoid those pitfalls while  passing on the tips and advice that have helped my business grow.

Step 1-BLOG

STEP 1: Book Keeping

Book Keeping is the main difference between a hobby and a business.

Invest in a professional book keeper from the get-go. Have her help you set up your books correctly and walk you through the process so that you truly understand everything you need to record in order to track all of your income and expenses in a way that will satisfy the IRS.

Accountants are not Book Keepers! But your accountant can probably recommend one and you can & should have your accountant review your books regularly to confirm compliance and help you understand if you are making a profit or losing money because that is not as straightforward or obvious as it seems.

Take the time to learn how to read basic financial statements and understand a few key concepts including the ones listed here: Profit & Loss Statement (P&L), Balance Sheet, Return on Investment (ROI), Gross Profit vs. Net Profit, Break Even Point, Profit Margins, Cash Flow, Variable vs. Fixed Costs, Cost of Goods Sold or CGS

Fully understanding your personal and business finances is an important part of running a successful business.

Stayed tuned for next month’s post. I will explore more business tips including how to cut through the Red Tape that  small business owners face.

Interested in more business advice? Our friends at Interweave were kind enough to let me hold my own webinar on jewelry business tips. You can purchase my recent webinar here.

Meet me at Step 2 :: Red Tape

August 27, 2013

Launch Your Jewelry Business :: Red Tape :: Step 2 of 10

In Step 1 we discussed the importance of book keeping to a successful Jewelry Business. Aside from setting up your books, there are several very important steps you need to take to make your jewelry business official and compliant with Federal and State Laws.

Cut the red tape BLOG

The IRS and Small Business Association have great checklists & introductions on their websites.  The list below is only a sample of some of the most important items that will require your attention.

  1. Select a Business Structure: Decide if you want to be a Sole Proprietor, Corporation or LLC (Limited Liability Company). Consult your account because there are tax implications for each choice.
  2. Apply for a federal EIN# if necessary, again, consult your accountant
  3. Employees: There are additional taxes and regulations that come into play if you have employees. Consult an HR professional to be sure you understand your responsibilities. These services are not expensive and will dramatically  decrease your risk of law suits.
  4. State Sales Permit: A state resale license is issued by the state in which you do business and registers you as a wholesale business with your state tax agency. This permit is called different things in different states. For example, the California license is called a Seller’s Permit issued by the State Board of Equalization. In New York, it’s called a Certificate of Authority issued by the Department of Taxation and Finance.
  5. City business license, especially if you have a commercial space
  6. Register your Business Name with the County Clerk. They will require you to do a search to make sure no one else in your industry is using the same name.
  7. You may decide to register a Federal Trademark for greater legal protection. Consult a lawyer about this.
  8. Partnership Agreements.  This is my pet peeve. I have seen too many friendships destroyed in a messy “break up” that could have been avoided with a clear partnership agreement.

There are a variety of taxes that are associated with doing business including city, county, state and federal taxes.

CHECK with your advisors to be sure you have all the permits and licenses you need to operate legally.

Work your way through this list and keep checking back. Next up, STEP 3: Pricing

August 26, 2013

Launch Your Jewelry Business :: Pricing :: Step 3 of 10

Filed under: A Business : 10 Steps — Tags: @ 9:00 am

Pricing depends heavily on how and where you plan to sell your jewelry. If you are selling directly to the end user, ie the women who will wear the jewelry or people who buy jewelry as gifts, then you are selling RETAIL. If you are selling to shops or other distributors, then you are selling WHOLESALE.

 When you sell wholesale, your prices and your profit margins are lower, because the shop will at least double the price they pay you and there is a limit to how much a woman buying a dress will pay for a pair of earrings to match. However, there is more potential for volume sales in a wholesale business than in a retail business.

Because the profit margins are lower, Wholesale businesses usually have to have much higher revenue than retail businesses to make the same amount of profit. This is IMPORTANT. A small retail operation with low overhead can sometimes make MORE $ in profit than a company with very high sales numbers and low profit margins. A company with millions of $ in sales may barely break even! Revenue alone can be a very misleading number!

Common mistakes in pricing include forgetting to add in labor costs (what would it cost to pay someone to make your jewelry)and forgetting to add in overhead costs (rent, utilities, insurance etc)

Step 3  Pricing

Here is where knowing your goal is crucial. If you are selling jewelry to fund a hobby and you work alone out of your house, it does not really matter if you ignore these costs or undervalue them. Thus, the crazy low prices that we often see on Etsy.

If you are building a business to generate income you will FAIL if you do not account for both of these expenses in your pricing. Even if you are making the jewelry yourself in the beginning, at some point you will have to outsource or hire help to keep up with orders while you attend to other responsibilities. If you start your business at home, at some point, you will have to rent a studio or office with all of the associated costs. Once you attract a clientele that is accustomed to certain price points, it is very difficult to suddenly boost them dramatically just because your costs went up. Best to have realistic pricing from the start and build a sustainable business model.

Pricing labor depends on your local economy but be realistic. How much do skilled workers actually make where you live? Remember, you will have to invest time in training so you want to pay enough to create an attractive position without a high turnover rate. Don’t forget to factor in payroll taxes!

Pricing Materials is also tricky. If you buy a strand of garnets you have to track how much they cost per piece if you use 6 beads in a pair of earrings. How many beads on each strand are cracked or too crooked to use? Those beads make the good beads more expensive.  You should spot check and establish an Average % of materials that you assume you will lose from each strand.

There are many pricing models. You have to experiment to see which one works for you. If you have very inexpensive materials, you need a higher mark-up to cover overhead. For very expensive materials you might take less. Here is a place to start for Wholesale Pricing:

Wholesale Price = (Labor + Materials)X2.5

The 2.5 should leave plenty of room for overhead and profit.  If customers push back too hard at this level and you can’t make sales, it is OK to cut a bit but NEVER go below X2 unless you are dealing with gold, excepting a truly massive order or just trying to fund your hobby. If you can’t sell wholesale at X2, you don’t have a viable product for a sustainable, income generating wholesale business. However, you may still be able to get your X2 through a Retail venue.

For retail sales you can usually take a X3-4 depending on how expensive your materials are. This sounds high, but remember, you are investing much more time to sell each individual piece of jewelry than you would in a wholesale model.

Many people sell through a combination of wholesale and retail venues. This requires extra care. Your wholesale clients will get very upset if they hear that you are selling your jewelry at the Farmer’s Market for lower prices than they are selling the same items for from their store in the same town.

After you work out your pricing formulas, meet me at STEP 4: Branding

August 25, 2013

Launch Your Jewelry Business :: Branding :: Step 4 of 10

Filed under: A Business : 10 Steps — Tags: , @ 8:15 am

As a jewelry designer,  you have a huge advantage in Branding and Marketing because creativity is the key to creating a distinctive brand and to getting the word out.

bb

Bronwen has a fantastic LifeStyle Brand. Her Target Market is Active women who love to travel. These women want jewelry that looks great and won’t fall apart on the road or in the surf. Lifestyle brands also attract wannabes. There is a subliminal fantasy that goes something like this  “If I buy this jewelry maybe I will be as gorgeous as Bronwen and get to travel to Exotic Locations.”

If you spend time designing your brand it will pay off handsomely. Here are three questions to help you clarify your brand:

What’s your twist? What makes your jewelry special? Imagine yourself overhearing two women chatting about your jewelry. What would you want to hear them say? At Nina Designs the fact that we design our own product line is our twist.

 What is your brand promise? At Nina Designs our primary brand promise is inspiration, with an emphasis on quality and social responsibility.

Target Market? Who are you trying to sell your jewelry to? Try to get as specific as possible. I highly recommend that you start out with women like you. If you love your jewelry, chances are that women in your social circle will love it too. After you have been in business awhile ask yourself: Do my actual customers match the profile of my target market? Sometimes you attract a whole different clientele than you expected & you need to adjust your branding & marketing to match reality.

When people start businesses, they often go after whatever target market they think will be most lucrative. You can find reports that will tell you which age group spends the most $ on jewelry every year. Don’t go there! Design the jewelry you love. Then channel your passion into your brand. By now, you have no doubt worn your jewelry designs enough to have a sense of who is drawn to them. Think about the times you got compliments and try to assemble a description of the women who would like to wear your jewelry.

Spend A LOT of time on branding Up Front because your branding decisions will guide many of your marketing decisions moving forward.

Now, meet me at STEP 5: Marketing

August 24, 2013

Launching Your Jewelry Business :: Marketing :: Step 5 of 10

Filed under: A Business : 10 Steps — Tags: , @ 8:00 am

If you build up the prestige & name recognition of your brand through marketing, you can command higher margins, which is a fancy way to say that you can charge more for your jewelry and earn higher profits.

What is the personality of your brand?

Make sure all of your marketing materials have the same personality.  For instance, if you make very cute, crafty jewelry, you don’t want a website that looks boxy and corporate.

There are some basic marketing venues that every jewelry company should leverage whether they are Retail or Wholesale, large or small. Some of the least expensive are the most effective.

Human Bill Board: The least expensive, most obvious and extremely effective way to promote your jewelry is the one many of us neglect: Wear your own jewelry every single day!  When women see jewelry they like, they immediately want to know where they can buy it.

homepage

Website: You MUST have a website, even if it is just one page with your logo, some beauty shots and contact information. However, building a nice website is a good investment, especially if you include an ecommerce module. Even if you do most of your sales at Craft Shows, you can continue your relationship with clients year round through your website.It is very expensive to acquire new customers. It is always cheaper to sell additional items to your existing customers than it is to get new ones. There are many companies that sell website packages that are reasonable to customize. I would hire someone to help with this. Remember, your home page should reflect your brand promise.

Alternately, you could set up an Etsy Site. This is a good option for Retail businesses because it has SEO advantages, meaning you will get better search engine results, and very low set up costs. However, you will be competing with people taking very small margins and you are limited to the Etsy format.

Newsletters: Start building your email list IMMEDIATELY! Gather names at events and on your website. Send out a newsletter at least once a month with news about your brand, products, peeks behind the scenes and special offers. Newsletters are useless if no one opens them or clicks through to your site. Great Photos will improve your click through rate. One large photo with about 100 words is a good rule of thumb.

Social Media: Just do it! You want to meet your current customers and potential new customers wherever they hang out. Ask yourself, “Who is my target market? “ Ask one of your customers what social media they use and sign up!

Print advertising: It’s Expensive! But it can be effective. Again, ask yourself, “Who is my target market? What do they read?”

Online advertising? Google PayPerClick: Its an easy way to sink $ quickly but you can jump start traffic to your website. Get help! Also, we have had good luck with Facebook Ads.

Let me know which marketing techniques work best for you! See you at STEP 6: Distribution

 

August 23, 2013

Launching Your Jewelry Business :: Distribution :: Step 6 of 10

Filed under: A Business : 10 Steps — Tags: @ 1:26 pm

How are you going to distribute your products? The answer will differ depending on whether you are selling Retail or Wholesale.

Retail Options:

1. Website/Etsy, which we have already covered in Step 5

2. Shoe Box

Jewelry is a great conversation starter. When I was in High School I carried a shoebox around filled with earrings. Any time I was waiting for the bus, for class to start or for an appointment, I would take out the box and start playing with the jewelry. Within minutes, I would be surrounded by a flock of women who wanted to see what I had. Jewelry pretty much sells itself. You don’t need to use a shoebox, but always have at least a few samples of your work on hand. A small jewelry pouch goes a long way toward building a loyal clientele!

3. Farmers Markets

Farmer’s Markets are one of the least expensive ways to show your jewelry in public. They are a great way to test the water and explore the mass appeal of your designs. Not everyone will be in the mood to shop for earrings early Sunday morning, but there are advantages to displaying your work at a venue with very few jewelry booths.

5. Craft shows

Before the internet, Craft Shows were one of the only ways that artists could connect directly with customers. Today, jewelry designers have many more options, but the Craft Show scene remains vibrant.

6. Charity Events

Charity events often have bazaars attached where vendors set up and a % of their sales go to the charity. These events attract high end customers who can feel good about indulging their jewelry habit for a good cause. There is an online version of this where you create a strategic alliance with a non-profit you believe in and sell jewelry either through their website or your own with a % of revenue dedicated to them. Causes that benefit women and children are a good match. Send out a press release and you might even get media coverage. Susan Schaps combines home shows with charity themes to create highly successful annual events.

7. Mocking Bird

Mocking birds sneak their eggs into other birds’ nests. Likewise, planting your jewelry in a novel location can generate a great deal of business. When I was starting out, I made up small jewelry displays and placed them in local hair salons. The salons were thrilled because they made money without an up-front investment and I was able to sell to a captive audience. It turned out that women with cute new haircuts could not resist pretty earrings. Any location with women waiting around has potential. I know a woman who does a huge business at Dental Conferences because the wives are bored and thrilled to shop for jewelry.

8. Home Parties

Home parties are one of the lowest overhead, highest profit margin ways to market jewelry. There are large companies like Silpada and Stella and Dot that understand this and have grown by using a Tupperware Party model to spread their products around the country. You can harness the same energy to sell your own jewelry.

It helps to develop a few friends or loyal clients in different geographic locations who will host jewelry parties for you once or twice a year. After a few years, it becomes a “tradition” that people look forward to. If they know that Carol always hosts a jewelry party in early December, they will come armed with their Christmas lists!

9. Mommy Bloggers

10. Pop Up Stores

11. Permanent Store Front

step6

Wholesale Options:

1. Website

If you sell wholesale on your website be sure retail folks can’t see wholesale prices. Marlene does a fabulous job on her Danialli website of offering tantalizing images and then directing retail customers to actual storefronts to make purchases.

2.  Cold Calls (not as scary as they sound).

Local boutiques are the traditional launching ground for wholesale jewelry businesses.  Boutiques are always looking for a fresh look. The owner of a shop that you patronize regularly will almost always agree to look at your line.

3. Portfolios sent out to targeted galleries with follow up calls & visits. Include press coverage in the portfolio, awards won, photos and pricing.

4. Consignment

Consignment is a quick, easy way to get your foot in the door of wholesaling. Boutique owners often have tight budgets and they may be reluctant to invest in a designer who is not yet established. By offering your jewelry on consignment, you give the store an opportunity to see how well your products sell. While this is a perfectly fine way to get started, there are disadvantages in the long term. Consignment ties up capital and there is always the question of who is responsible if items are damaged or missing. If a buyer does not believe in a line enough to make a purchase, how motivated will the staff be to sell it? If you feel that consignment is your only option, agree up-front to revisit the arrangement in six months. If the store isn’t prepared to make a purchase by then, it probably isn’t a good fit.

5. Trunk Shows

Boutiques that carry jewelry will often invite the designer to do a trunk show. At these events, the Jewelry Designer makes a personal appearance and brings in a large amount of additional inventory for sale on that day only. These shows are a good way to beef up sales. It is an opportunity to demonstrate to the store buyer that there is enough demand for your jewelry to expand the line year round. If you haven’t been asked to do a trunk show, suggest it yourself! It is a low risk proposition for store owner’s because they don’t need to invest in the extra inventory and it helps generate a buzz and get people in the door. Sarah Graham sent this stunning trunk show notice out to everyone on her mailing list to generate foot traffic at the event.

6. Tradeshows

A tradeshow is a marketplace with many booths where wholesale buyers gather to place purchase orders. These events are extremely expensive and require a great deal of preparation and investment. This is the Big Time. Don’t be surprised if it takes several seasons to build up a clientele.

7. Show Room/Reps

Many designers rely on sales reps and showrooms bring in wholesale business. This model minimizes the amount of time spent on sales, leaving more time to design and produce jewelry. The convenience comes at a steep cost. It is not unusual for reps to charge 25% commission plus showroom fees. As one of many lines represented, there is a danger of getting lost in the crowd.

Most businesses have more than one distribution channel. It may take some trial and error to discover what works best for you. Once you make your choices, meet me at Step 7 :Write a Business Plan.

 

August 22, 2013

Launch Your Jewelry Business :: Write a Business Plan :: Step 7 of 10

Filed under: A Business : 10 Steps @ 9:46 am

Now that you have thought through all the facets of your new jewelry business you are ready to write a Business Plan! Most people write a business plan to attract financing from banks or investors. I think the jewelry business is one case where it makes sense to start small with your own money. However, writing a business plan is a great way to organize your thoughts and plans for the business.  The process will force you to think about issues that you might want to avoid or just had not thought of, such as analyzing your industry, market and competitors.  It is a very good Reality Check. The financial projections in particular are very useful. You can run different scenarios to see how much jewelry you would actually have to sell to reach your Income Goals.

step 7

Getting used to looking at your business through Financial Statements will help you as the business expands.  If your business succeeds, you will want to grow. Slow growth can be self financed from profits but if you get a huge order or decide to shift the business into a higher gear, you will need Capital, ie Cash, to purchase materials, pay for marketing, hire employee etc. That money will have to come either from a bank or from Investors, both of whom will want to see a business plan.

The Small Business Administration website has a very good guide to writing Business Plans. If you can’t bring yourself to invest the time in a traditional business plan, I would highly recommend Jim Horan’s One Page Business Plan. It is a workbook that you can get through in just a couple of days. There is a version for Women Business Owners that actually has a jewelry business as one of the Case Studies. I have used his template for the last two years and I love it. It helps my whole team focus on our objectives for the year and track our progress.

Meet me at Step 8: Copy Cats & Jewelry Copyrights

 

August 21, 2013

Launch Your Jewelry Business :: Copy Cats :: Step 8 of 10

If you are a good designer I can guarantee that people will copy your designs. There is nothing more frustrating than working hard to develop a great concept and then watching others swoop in and profit from it. I wish I could tell you there is a magic bullet to prevent that from happening but there isn’t. However, there is some protection from copyright laws.

Copyright laws are very complex and I am NOT a lawyer so I am not qualified to give legal advice. Fortunately, I was able to get this quote from Dawn Newton of Fitzgerald, Abbott and Beardsley LLP.

“Unlike fashion designs, jewelry designs may be copyrighted under current law.  To qualify for copyright registration, they must only be an original work of expression, in fixed tangible form.”

When we create new jewelry parts from original sketches at Nina Designs, we apply for a Certificate of Registration with the Copy Right Office of the federal government. If we did not register, our designs would still be covered by copyright laws but we could not recover legal costs in the event of a law suit and winning would be more difficult.  Keep in mind, there are many generic shapes and findings that are not eligible for copyrights.

There is a difference between “obtaining a copyright registration for your work and preventing anyone from creating their own work that bears any similarity.  If your inspiration comes from nature, or anything in the public domain, other designers are also free to draw from those sources of inspiration, and it can be difficult to establish that a designer copied your design if that design is just a faithful replica of a natural phenomenon.  The more unique your design in some aspect, the better the likelihood that you can distinguish your product from others and, if you choose to make a claim for copyright infringement, you have a better chance of succeeding.” –Dawn Newton

step 8

This quote basically boils down to the fact that the more original your design is, the more likely you will be able to defend your copyright. Out lotus pendant is copyrighted but other people still have the right to create their own lotus designs. It would only infringe if it is clearly a copy of our specific design. This has happened! People will make copies with every petal exactly like ours, which is both lazy and just plain silly.

We have detailed guidelines and instructions for how to copyright jewelry designs on our Blog.

Even if your designs have copyright protection, enforcing that protection is very expensive, risky and time consuming. It is also very unpleasant. Pick your battles carefully. Many times, people don’t realize they are infringing on a copyright and a simple phone call is enough to resolve the issue. Other businesses are less cooperative. My rule of thumb is that when someone has clearly created a business plan based on stealing my designs I pursue all avenues to prevent them from continuing.

Creativity is the best defense. Creating a steady stream of innovative, new designs is a more reliable formula for success than getting continually bogged down in copyright disputes.

When you are ready, meet me at Step 9: Celebrate Your Mistakes!

August 20, 2013

Launch Your Jewelry Business :: Celebrate! :: Step 9 of 10

Filed under: A Business : 10 Steps — Tags: , @ 9:00 am

Celebrate Your Mistakes!

Don’t be afraid to make mistakes. Celebrate them!

The only way to avoid mistakes is to DO NOTHING. Mistakes are our best teachers, especially expensive mistakes. Our deepest knowledge is laid on the bedrock of terrible mistakes that we never want to repeat. Entrepreneurs are very hard on themselves but beating yourself up is a waste of time. Analyze your mistakes for lessons learned and then MOVE ON.

At our weekly company meeting we have a section called, “Mistakes we can all learn from” where we share our most recent mistakes with one another. (I stole this idea from Gail Goodman, President of Constant Contact who shared it at a conference). Sharing helps us avoid repeating the same mistakes twice and makes us feel better when we do make mistakes because we regularly hear about other people we respect doing the same.

Every successful business owner makes a million mistakes. To succeed, you have to make more good calls than bad calls, ON AVERAGE. No one bats 1000.

step 9

Celebrate Your Achievements!

Set mile markers and CELEBRATE YOUR ACHIEVEMENTS as well. We tend to rush from one goal to the next without giving ourselves credit for what we just accomplished. Savor the moment before diving into the next challenge.

Now that you are committed to celebrating your jewelry business journey, meet me at our final installment, Step 10: Delegate.

Are You Ready for Business?

If you are enthusiastic about making jewelry, you have probably had women stop you in the street and ask to purchase your creations, or had a friend ask you to make a gift for someone special. At some point, the question “Should I start a jewelry business?” is unavoidable. There are many wonderful aspects of owning a jewelry business including creativity, making women look and feel gorgeous, time flexibility and the ability to work at home, which is especially appealing to Moms.

Are You Ready for Business BLOG

Starting a Jewelry Business is tempting but before you decide to make the leap, ask yourself a few crucial questions:

–          Am I ready to spend many hours a week working ON my business

–          What in my already busy schedule am I willing to give up to free up this time?

–           What is my real goal? Generating income or funding my hobby?

It is crucial to be clear about your Goal! If you just want to fund your hobby, you will only have to spend about 20% of your time on  administrative tasks leaving 80% for jewelry design and creation. If you are serious about generating income you will spend up to 90% of your time working on BUSINESS issues rather than making jewelry. Are you Cool with that?

The Joys of starting Small: I really believe in this model!

-No Huge investment necessary

-Gives you a chance to see if being an entrepreneur suits you.

-You can learn from your mistakes without dire consequences.

-You have time to get to know your customer profile. Do my actual customers match the profile of my target market?

-You can fund your own growth from profits.

-You can grow at your own pace because you don’t have bank payments or investors breathing down your back.

If you decide that owning a jewelry business is right for you, I can help you get started. Click here for Step 1 of 10 to Launching a Jewelry Business.

Older Posts »