Independent jeweler in today's marketplace

Hi all, and Ron Mills I admire your fortitude. It is all about
attitude and working hard at what you love. I started as a penniless
20 year old with no business experience and only a high school
crafts class as my training. I fell into a job as a silversmith with
an older couple in a very small store. With only a few hand tools
and a torch, I made due. After a few years I bought out the owners,
a few show cases, safe, and cash register and have never looked
back. I wouldn’t change a thing. I learned while on the job and have
a thriving repair and custom shop in a out of the way location. It
can be done. The key is to keep your overhead low, build your
customers with word of mouth and buy tools as you can afford them.
Or marry rich. I chose the former. Janine in still HOT Redding
California.

The posts about how much money is needed to start up a retail
business do raise a very good point. It is extremely expensive to get
started. How do people bring the costs of starting and running a
business down? I am not talking about cutting corners and being
pennywise, poundfoolish, but about ways to save money.

Okay, I have to chime in here. What’s this “feeding the artist’s
ego” stuff? I feel like it is a put down of artists who are following
an inner muse rather than market trends. Has anyone looked at the
latest “Exhibition in Print” in Metalsmith magazine? Who gets to
decide what is wacky anyway? Does one make jewelry for the public or
to satisfy an overwhelming drive to create a personal vision? Or are
both valid approaches?

I agree that some of these pieces will be inaccessible to the
general public, but I don’t like the value judgement about "artists"
that these statements are making. I have found that work that I make
appeal. Perhaps it’s because I am clueless about what has general
public appeal. However, I wouldn’t criticize those of you who are
trying to make a living through jewelry who are successfully hitting
the trends and the general public.

Is it possible that today’s wacky jeweler is tomorrow’s Picasso or
Lalique?

Alana Clearlake

Hi Daniel,

I think that what you said,“Think big, be big. Think small…well you
get the message here,” is really interesting. I have thought this one
over myself. You are definately right about everything you talked
about and when I was starting my business four years ago, small is
all I knew how to think. Truthfully, borrowing large sums of money
scares the hell out of me. Maybe it’s because I never had much. I
think it is so important for someone to understand the risks involved
when going into business. Especially the financial ones. I found that
I couldn’t get comfortable with the money angle of running a business,
which is why I went back to school to get a degree for a regular job
with a salary. I think it is great that you planned your business
out, and I admire you for taking the risk. I don’t have it in me.
Thinking “small” seems to be my forte. This is why I wanted Annabell
to think what she is considering over carefully. Knowing that it may
take hundreds of thousands of dollars to compete in the field is a BIG
part of determining whether you want to try. Thanks for the insight.
I wish I could have talked to you years ago about this. It probably
would have saved me time, money, and dissapointment.

Augest Derenthal
Cry Baby Designs

Hi Craig,

Bankruptcy kills your credit! Don’t know about you, but I kinda need
it to like maybe buy a house, a car, uh, everything. Besides the
government just made the bankruptcy laws more stringent cause they
were being abused. Borrowing a huge amount of money and saying,“O
well, if things don’t work out I’ll just file for bankruptcy,” is
like getting married on a whim because it is always possible to get
divorced. I don’t feel comfortable with either of those options. It’s
a personal choice I guess.

Augest Derenthal
Cry Baby Designs

Augest, you said, “Jewelry is my hobby…”

So, I have a question for all of you who view yourselves this way. If
you consider your jewelry efforts as a hobby, not a business, How
can you sell on a web site, deal with state sales tax, get
trademarks, get Tax ID, etc? What do you tell the state that you are?

I ask because, even though I “launched” myself as a business, I’m
not makin g enough to support myself with it yet and I’m not so sure
now whether I’ll ever get there. At some point, will I need to tell
the state I’m changing status or something? Do I lose my tax id # so
that I can’t buy wholesale anymore?

Thanks for your insight.

Nan Lewis Jewelry
www.nanlewisjewelry.com

Jewelry is a statement of taste and/or an icon which represents a
relationship or a belief. If you are going to relate to a
potential buyer it is a given that you must connect with that
person in some way. 

I think that’s so true Ron, it’s important that the buyer feels a
connection with you, but also that they feel a connection with the
piece you are selling. This is one of the ways I see that I am able
to survive. I can offer a very personal service to clients, one which
those who mass produce jewelry can not. I want each client to feel an
emotional connection with their jewelry right off the bat, it must be
more meaningful to them than just the metal and stones. Of course
this custom jewelry will cost them more, but I’ve found that there
are many people out there who want something more meaningful and are
more than happy to pay the extra for it.

I was just reading a quote from Kevin Roberts, worldwide CEO of
Saatchi & Saatchi and thought of this thread… “For great brands to
survive, they must create loyalty beyond reason. The secret is the
use of mystery, sensuality and intimacy… the power to create long
term emotional connections with consumers.” Maybe the same could be
said for the independent jeweler.

Eva.
Eva Martin

Borrowing a huge amount of money and saying,"O well, if things
don't work out I'll just file for bankruptcy," is like getting
married on a whim because it is always possible to get divorced. 

…As Bejamin Franklin said: “Marry in haste, repent at your
leisure”. I think the same thing might be said about borrowing large
sums of money.

Lisa, (Dog is good, goats have new collars, chickens are laying, and
I bought a small truffle to go with the fresh eggs. Kid starts
school on Monday. Life is good) Topanga, CA USA

Hi

The posts about how much money is needed to start up a retail
business do raise a very good point. It is extremely expensive to
get started. How do people bring the costs of starting and running
a business down? I am not talking about cutting corners and being
pennywise, poundfoolish, but about ways to save money. 

There was a tip posted a few days ago. I thought it was an
especially good one. Make pieces that you know will sell and give you
a decent profit. Save as much as you can to allow your business to
grow over time and finance what you would like to make now and in the
future. Also, someone said something like “real creativity is meeting
the needs and wants of your customers”. I may not be saying it
exactly as it was posted originally, but I think the idea is
basically to make what people want (not necessarily what you want to
make), save/spend wisely, grow over time. Adding my own thing in, I
would say don’t get in over your head.By this I mean things like,
don’t finance your business heavily with the credit card, plan
wisely, price effectively. Many more people today are finding ways to
work from home. This option can save you a lot of money. It sounds so
glamorous to have a storefront, but it is also a ton of work and
expensive. I’m not saying don’t do it. I’m saying spend more time
than you ever thought you could doing research. Collect data. There
are networking options in the Chamber of Commerce, workshops through
colleges and small business administrations, there is a lot of info
available on the IRS website. I could go on and on.

Good luck
Kim Starbard

Hi Nan:

I ask because, even though I "launched" myself as a business, I'm
not makin g enough to support myself with it yet and I'm not so
sure now whether I'll ever get there. At some point, will I need to
tell the state I'm changing status or something? Do I lose my tax
id # so that I can't buy wholesale anymore? 

There are really only a couple differences in the way the government
views a small business as opposed to a hobby. The big thing is, you
cannot deduct hobby losses against non-hobby income. What this means
is, you file your small business on a schedule C, but you also work
in another job (for which you might receive a W-2). Unless you are
able to classify yourself as a business in the eyes of the IRS, you
will not be able to show a loss on your Schedule C. For example, I
have 35k income on my W-2. For my jewelry, I have 2k in sales, but 3k
in expenses. Unless I am classed as a business by the IRS, I cannot
deduct (legally) the extra 1k in expense. Now, the IRS’s requirement
for calling yourself a business is based on hours spent working. I
forget what the number is, but it should be on IRS.gov, but you have
to put in a certain number of hours working every year in order to
keep calling yourself a business. You can keep a work log to track
your hours in case you ever get a letter (which you probably never
will) asking you to justify your business expenses.

As far as losing your resale license, I don’t know. If jewelry is
just a hobby for you, you probably shouldn’t have a resale license.
They’re for businesses.

Good Luck
Kim Starbard

Hi Nan,

I was in a quandry over this too. When I decided I couldn’t hack
having jewelry as my main occupation I wasn’t sure where that left me
paperwork wise. I found out that in the state of New Jersey it
doesn’t matter how much you sell, or even if you sell on a regular
basis, if you sell ANYTHING at all you have to file sales tax. This
applies to “hobby” artists that do craft shows as well. I kept my tax
id number, I file quarterly sales tax online (even though most of the
time the amount I file is 0), I still have my website and recently
made a sale (whoopee!), and that’s that. However, we technically
still are a business and we technically have to file that way in our
tax documents. This means we are accountable for the money we spend
on things for our business. I can’t write off everything like I used
to when I was trying to be a serious business because, lets face it,
that’s a red flag for the IRS. I buy things out of pocket now, and
only report what I ended up using to make the sales I made over the
course of the year. If you are worried, I would suggest going to see
an accountant. I am no good generally when it comes to this stuff, but
hubby is and he does the taxes. The way I see it, I invested a hell
of a lot into my business. I trademarked my logo (all by myself!), I
created my website, and when I happen to do a craft show, I make a
profit. I am NEVER going to stop making and selling jewelry. I only
reduced the way I went about it. I do not have the constitution to be
a business woman and I’m okay with that. I am an artist, though, and I
love to share my vision with others. In the eyes of the government,
this still makes me a business. No matter how little you sell, they
want their piece, no matter how miniscule it may be.

Augest Derenthal
Cry Baby Designs

Annabel,

It goes without saying, start small, and don’t think you have to
have half a million dollars to get started. I started a year ago and
I’ve invested perhaps $ 30,000 in materials and tools thus far, but I
couldn’t spend another year at my alma mater for that much. It
wouldn’t cover tuition and room & board. So big deal - less than a
year’s cost of a college education gets me started in a whole
business. All profits go back into the business (for a while) to buy
more materials, and upgrade my tools as I go along.

Did you know there is a lot of state and Federal funding available
to help small businesses ? Tomorrow I am meeting with the district
manager of a local organization (one of my old (and still current)
computer consulting clients, actually) that is funded by the PA
Department of Community and Economic Development and is a National
Institute of Standards and Technology (NIST) Manufacturing Extension
Partnership. Every state has them. As jewelers, we’re manufacturers.
We fit under the dual criteria of being manufacturers of certain
commodities and being small businesses (unless you have more than 500
employees ;-). Thus, the Industrial Resource Centers (IRCs) that
exist in every state are mandated to help us. I’m expecting them to
help me pay for training - I may get my GG from GIA practically for
free. They can’t buy materials or tools for you, but they can provide
training, help with developing a business plan, obtaining financing,
and getting some PR, and just plain advice - and word of mouth
advertising too. They deal with literally hundreds of other
manufacturers, and you’d be surprised how much your name may get
spread around.

I could go on and on, but the point is - you don’t have to come up
with all of the bucks yourself. There is money out there allocated by
local, state, and Federal government agencies that can help. And
don’t be afraid of your bank - you might be surprised how helpful and
accommodating they can be. That’s how I got started in my consulting
business ten years ago - the bank extended a hefty line of credit.
I’ve used it and paid it off several times. I’ve tapped into it
again. I have no doubt that what I’m doing will work, because I want
it to, and I can get a little help from my friends. :wink:

Brian Corll
Brian Corll, Inc.
1002 East Simpson Street
Mechanicsburg, PA 17055

All,

I have read great posts here, about the success stories, about
making it big, about enjoying the journey, about loving your work,
about the art and so on.

However, apart from all the folks who are hanging in there, I’m sure
that there are plenty of others who have had to give up jewelry
because it was no longer a viable business proposition. Folks, let us
think about jewelry as a business since a lot rides on making it a
success for many of us.

Therefore, apart from innovation and catering to a niche segment
(which, incidentally, is shrinking rapidly), what I’d like to hear is
a business plan or a strategy that says how to survive the onslaught
of the online sellers and mass wholesalers.

Any ideas, folks?

Regards,
Rasesh Chasmawala.
Mumbai, India.

It’s important to carefully consider the sort of business one wishes
to have EVENTUALLY. While putting together a “soft” business plan (I
had no clue how I was going to make the numbers work) I looked at
the short-term obligations, minimal start-up costs, and focused on
the steady growth angle rather than an immediate dive into the debt
pool required for a fully featured retail business.

Want to know a secret?

If you know what you are doing with your jewellery skills and can
out-service your competitors, you can virtually guarantee that you
won’t need to look for financial aid if you begin one step at a
time. Taking on a large debt initially will cripple your ability to
work with clarity. Worrying about money is a killer.

I paid my initial bills by providing service for other jewellery
companies who offered repairs and custom work, choosing to
concentrate on custom work and setting, which I could charge a
decent rate for. Since I had rent and equipment to pay for, I worked
as many hours as I could for other jewellers and tried to slowly
gain private clients through word of mouth. It took a couple of
years to really get it rolling, scare away the other retailers with
price, and concentrate fully on developing my retail focus.

A line of credit is useful, as you only draw from it as it is
needed. Don’t use it to pay yourself. It should be used for
materials, capital investment, and studio rent only. These are
relatively easy to get if you have title to a house and aren’t
over-mortgaged or have massive credit card debts. If you are
carrying a large debt already, your situation is bound to become
less comfortable indeed.

A good lease is important. Retail frontage isn’t necessary if your
skill sets are well developed. People will find you if your work is
respectable and your promises are kept. A space that is easy to
secure and comfortable to spend a lot of time at is very important.
Spend your resources on time-saving tools and equipment, not padding
the pockets of owners of the best retail footage. Your risks will be
small if you manage your exposre properly.

Best wishes,
David Keeling
www.davidkeelingjewellery.com

This is what bankruptcy is for.. 

This is what bankruptcy used to be for–and I completely agree
that it should be available in such situations. However, if you are
in the US, before you take any chances these days, I suggest that you
consult with a very good bankruptcy attorney. You also might want
to pray that s/he actually understands the Byzantine requirements
that the government, at the behest of the banking industry, has now
put on the ability to file. Oh, of course, unless you’re a very large
corporation, in which case I’m sure you won’t have any trouble.

Lisa Orlando
Albion, CA, US

apart from innovation and catering to a niche segment (which,
incidentally, is shrinking rapidly), what I'd like to hear is a
business plan or a strategy that says how to survive the onslaught
of the online sellers and mass wholesalers. Any ideas, folks? 

Here’s one idea: Do something distinctive

My own experience is that if you are making your own jewelry and
selling it yourself, you have a variety of tasks and skill sets
required. Making jewelry is one of them. In addition-

Bookeeper
Market Analyst
Salesperson
Public Relations
Shipping & Receiving
Buyer
Webmaster (maybe)
Small-object photographer
Security
Miscellaneous duties as required

Being bad at any one of these could sink you, cause you problems, or
require you to pay an outside person an amount which you cannot
afford when starting out.

The hardest thing to do IMO is finding the connection with my
customer. Particularly since what I am doing is a little out of the
mainstream. I lay no claims to originality, I am just saying you
won’t find this stuff at Zales and you won’t find it two booths down
at the local art shows. There are people out there who like what you
do AND have the money to purchase your work, but you have to figure
out how to find them. Where are they likely to live? Where are they
likely to shop? What shows, if any, are they likely to attend? How
do they dress and talk? Will they perceive you as outgroup? Do you
need to tailor your personal image in order to sell to them? Finding
the connections can take quite awhile.

Unlikely as it sounds, I ended up in Phoenix with a fairly decent
venue at the local Farmers Market. You wouldn’t think that I would
find my niche selling next to a guy peddling organic zuccchini, but
it panned out; the market was in a section of town which was formerly
very depressed but which was being repopulated by artists, poets,
musicians and other counter-culture folk. The Farmers Market was a
place where people came who were rejecting supermarket consumerism
and looking to support local independent businesses. Most of those
who saw me didn’t have the cash in hand for my jewelry, but after
being there two or three weeks they started coming back with the cash
in hand.

You might assume galleries are the way to go. Maybe they are. Some
galleries will use your stuff as window dressing while hard-selling
their more bread-and-butter lines. Some galleries will attract
customers, but not YOUR customers. Galleries can be as hit-and-miss
as shows.

With shows, there are some advantages. The big one, IMO, is that I am
the salesman. Galleries sell my work. When I am at a show, I am
selling myself and my love of what I do as well as the work itself.
Also, I can see not only what pieces sell, but I can guage the
"fondle factor." Some pieces, people will see them from across the
aisle and come over to look at them, handle them, etc. I can say
"mental note, must make more like that." Not as easy when your stuff
is at a gallery.

Lee

Hi

Folks, let us think about jewelry as a business since a lot rides
on making it a success for many of us. 

My husband said to me a while ago “if you like making things, that’s
great, but you keep saying you want to be a business…you have to
decide, artist or business”. He’s very blunt, but correct. I try to
think in terms of products…time on a product, profit on a
product, sale of a product. If I want to think about the artistic
value of what i make, I put that part of my thinking in a different
time slot.

You would have to define success. Monetary? It’s great. but there is
a lot to be said for freedom. Working in corporate was no picnic. I
was a completely different person.

There is a lot of value in what I call “modeling”. If you would like
to be successful in a specific area, study someone who has already
done what you would like to do. Study hard and never stop thinking
you can’t learn more.

what I'd like to hear is a business plan or a strategy that says
how to survive the onslaught of the online sellers and mass
wholesalers. 

I would like to be a professional “finder”. It’s a hybrid gallery.
It has a bricks and mortar location, but the concept is loosely based
on a just-in-time inventory system. Not all inventory is carried in
house. A client walks into the gallery and they are analyzed
completely…what is their style, what is their coloring, what is
their taste…On a large monitor would play a slide show of pieces
available to the client, some in-house, some to be ordered. A
complete look, tailored to fit the needs of the individual. All the
latest styles. The client brings their vision of what they would like
their look to be…the gallery locates everything for her/him and
pulls it all together. A professional shopper, if you will. It takes
all the legwork and time out of the shopping process.

Ok, you guys can take your best jabs at me now. I know it sounds
like a crazy idea, but it’s where I would like to shop if it was
available. This is my vision of the ideal shopping experience.

Kim Starbard

What's this 'feeding the artist's ego' stuff? I feel like it is a
put down of artists who are following an inner muse rather than
market trends.

– Your post was a breath of fresh air, thank you. What is the point
of making art if we cannot create from spirit, and only for meeting
trendy “needs”? There has to be a BALANCE somewhere.

I can offer a very personal service to clients, one which those who
mass produce jewelry can not. I want each client to feel an
emotional connection with their jewelry right off the bat, it must
be more meaningful to them than just the metal and stones. 

– Perfectly said; precisely my outlook, too. By the way, to Eva and
to all, her website is one of the most successful websites in
portraying the meaningfulness of one-of-a-kind jewelry, fully
communicating with visitors.

Hi Nan;

Once upon a time, when I worked as an employee, I used to do a bit
of commission work on the side. I declared it on my taxes as earned
income. Later, when I was doing more of this, I filed as a sole
proprietor. Ten years ago I incorporated, so now I file as a Sub
Chapter-S corporation. Here’s what I know about it. Mind you, there
may be others here who will have better knowlege about these things
and I welcome their corrections (as long as they actually know what
they are talking about).

Sales tax is a state issue, and you file sales and usage tax
accordingly. If you collect above a certain amount, the state will
expect you to estimate your sales tax and pay it on a quarterly
basis. Sales to out-of-state customers, you don’t collect. It’s the
responsibility of the buyer to declare the purchase and pay sales tax
in their own state (which virtually nobody does). But here in NY, you
have to inform them of your total annual sales, and pay sales tax on
the amount that is taxable. In some states, materials are taxed and
labor isn’t, in NY, it’s all taxed. Wholesale income is not taxed,
that’s the responsibility of the retailer. I don’t think the state
cares where or how you sell, as long as you collect and pay them the
taxes. This goes for selling a car, garage sales, lemonade stand
income, whatever. Therefore, having a sales tax ID shouldn’t be
affected by how you file federal taxes, as long as you collect the
taxes and pay them.

I think you should talk to an accountant about this, but my guess is
that your best bet would be, if you want simplicity, to file the
income as earned income under sole proprietor status, which doesn’t
require any other filing except a DBA (doing business as:) which is
done at city hall. That is required if you sell using something other
than your own name, such as “Bo-Diddly’s Bead Emporium”, etc. Use
your own name for your business, you don’t need the DBA.

That said, I think there are advantages to being a Sub-S
corporation. As a sole proprietor, you will have to pay a “single
business tax”, in some states, which is a state tax, and a percentage
of your income from the business. Sub-S doesn’t pay that or pay the
corporate tax. But, with a Sub-S, an increase in assets, such as
equipment, inventory, etc., will pass through to your personal income
filing as a capital gain. Filing for a Sub-S, with a typical
accountant, will run you around $700-$800 year if they are handling
all the other tax filings like state sales, FICA, FUTA, etc. Again,
simplest way is as earned income. But beyond a certain amount, you
might flag the IRS if you don’t file as a sole proprietor. Ask an
accountant.

David L. Huffman