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Surviving Recession

Depending on who you listen to its either here or near. But you’re
going to have to deal with it. Some markets will get killed, some
will do OK, others will flourish.

I’d suggest that anyone who owns a jewelry business look carefully
at your plan to survive or flourish as the case may be. The tricky
thing about recessions is that they can be totally different from the
last one. One may hit worker bees, the next may hit middle managers,
another may crucify investors and then you have the ripple effect.
You should identify who your customers are, where they are on the
food chain and why they buy from you, assess the risk and make
accommodations to alter your plan if needed.

This is my fourth enterprise. I’ve been killed a few times already.
Sometimes it was my own stupid fault. I ignored the warning signs
and just ‘kept the faith’. Faith will not get you through. You need
income greater than expenses. Sounds simple but it can be hard to do.
You need to be able to respond to challenges and the best way is to
anticipate those challenges. Look realistically at your situation.
Detach yourself for a quiet hour and examine things as if you were
doing it for a great friend who asked you for advice.

And do it before you actually HAVE a problem.

This time around I am confident that if this recession hits my local
market I will at worst, survive. I’m projecting continued growth
despite a new competitor in town. Not because I’m the eternal
optimist but because things are in place to get the job done. I’ve
made investments yet I still retain flexibility.

So that’s my unsolicited advice.
I thank you for not snoring.

Depending on who you listen to its either here or near. But you're
going to have to deal with it. Some markets will get killed, some
will do OK, others will flourish. 

It is important to understand the roots of current economic
downturn. I am not an economist, and may be it is my ignorance of the
subject that cast shadow of negativism on my outlook for the future,
but I do think we are in for a rough ride.

In very general terms, Wall Street boys have been burning midnight
oil for the last few years, and they come up with a thing which is
called “derivative”. This animal exist under many different 3 and 4
letter designations.

There have been $500,000,000,000,000 or 500 trillion dollars of
derivatives created by financial Einsteins in recent years. If one
computes 1 to 2 percent fees from those deals, one can understand
where their huge bonuses were coming from.

Why is it bad ? Under generous estimate, if we could sell planet
Earth, with everything included, to some aliens, we probably could
get close to 100 trillion dollars. Where is the rest 400 trillion is
going to come from ? I have no idea.

Can anybody explain this ?

Leonid Surpin.

I’m combining these two threads, at least briefly, because I think
they are connected to some extent. Where I live in rural SC we
aren’t coming into a recession - we have never come out of the one
started way back by 9/11. We still have a huge number of empty
manufacturing plants, storefronts, houses that have been on the
market for years. Little to no growth, lots of unemployment and
underemployment. None of this particularly new to our area,

Which leads to John’s excellent quote below:

You have to ask the question of would a customer be quite so happy
if the sapphire was 3 carats, $15,000, and set in a ring with prongs
and diamonds, though. 

The answer being, of course, that in an area with recession only
those lucky enough NOT to be hit by it - and they ARE there, but not
many of them - can afford the $15,000 worth of stones. The rest of
the market would love to have it, but has to settle for what they can

Which means, for me, that I do very well with decent - definitely
NOT top of the line - but nice to look at colored stones set in very
attractive and solid sterling silver settings, or set and strung and
mixed with pearls (lots of interest in that!). It gives a luscious,
expensive “look”, but at a price that folks having to watch
discretionary spending can afford. Plus it is handmade, and there
are still consumers who really appreciate that.

And I really think that is what it is all about. Folks who can
afford the nicest stones set in gold or platinum are still - and
probably always - going to go that route. Silver, done properly,
provides a way for the rest of the population to have elegant
gemstone jewelry at a price they can afford. When you are worrying
about having the gas to get to work, and paying for kids clothes and
food and medicine, you are buying gold or platinum. If you buy
jewelry at all (and most women still want it, thankfully!), you will
buy the less expensive silver.

Beth in SC

Neil, you have hit the nail on the head. I saw changes in my business
a couple of years ago. At that time I was still buying stock and gems
from most of the salesman that came through my door. It seemed no
matter what I had in my showcases, I had to do it over anyway. If it
was white gold they wanted yellow. If it was Tourmaline they wanted
Sapphire. So my new business plan was just to wait and see what the
customer wanted. I still have a nice display of things for sale, but
I do so many custom orders that business hasn’t suffered. I do worry
about the high price of gold. But my thinking is that there will
still be people who want what they want and will pay. Works for me,
Janine in Redding CA.

I think one general formula for recession situations is quantity vs
’quality’ (as in platinum, expensive gold, etc). You need to sell
more ‘inexpensive’, nice looking articles instead of a few pricey
items. If you can quickly switch gears to different types of valued
items and figure out how much you need to sell of what you can market
properly to stay flexible.

This economy is probably never going to change. The recession we are
seeing now is caused by the credit crunch and housing markets.
People were ‘gambling’ with money that didn’t really exist now it’s
crashing down. The problems prior to this were because of global
competition for goods (oil, gold, etc), and offshoring of jobs
(mostly manufacturing and IT). I can’t think of a recession caused by
9/11 other than the Iraq war which is a huge drain on our countries
resources and has been driving us into a huge deficit.


Hello Everybody,

I’ve had to hugely scale back. I haven’t been able to buy metal for
a while, so when I run out, that’s it.

I’ve gone back to school, working on concurrent bachelors and
masters degrees in accounting, working towards my CPA. This was the
best option for me, because I have kids I have to support. I don’t
have time for the economy to pick up - I need to be solvent now.

I still enjoy making jewelry, I will continue to do so, but for now,
it can’t be full time. This is the choice I’ve had to make, but
given how hard the last year and a half has been, it was easy
compared to all the other choices.

Susannah Page-Garcia

Dear Beth,

Which means, for me, that I do very well with decent - definitely
NOT top of the line - but nice to look at colored stones set in
very attractive and solid sterling silver settings 

Thank you! You put it beautifully. And something I’ve been attempting
to say is that a handmade necklace/pendant for the bride and
bridesmaids made of solid silver and gemstones would be far nicer and
a more valuable keepsake and wearable piece than the junk sold in the
bridal shops at inflated prices - and an affordable alternative to
gold/platinum for us everyday folks.

Although others like you Beth, have expressed a similar point of
view to mine, ie that there’s nothing wrong with setting sapphires in
silver, some seem to take issue with me saying it - perhaps because
I’m new - but others on this forum are in the same position as me in
that I’m unable to afford to work in gold yet, OR their average
customer can’t necessarily afford to buy gold and will go for the
more affordable silver.

If I had the money to buy a 3 carat, $15,000 USD sapphire, then
chances are I’d already be working in gold and platinum and in that
case I probably wouldn’t set that sapphire in silver either, but
would opt for the more valuable gold or platinum.


This economy is probably never going to change.

While it’s always hard to imagine it when you’re in the midst of it,
if you look at this historically you will see that the economy goes
through fairly regular peaks and troughs. Some troughs are worse
than others but some peaks are better than others. You can blame the
current administration (and certainly many of their laissez faire
policies have added to the current mess) but the fact of the matter
is the economy goes up and down on a regular basis. When it’s down
it’s always a time when you separate the men/women from the
boys/girls. Anyone can make it in an up market. Only the good
survive a down one. And as hard as it is for egocentric Americans to
understand, there are plenty of areas in the world now that are NOT
going through what we are going through. The smart people recognize
this and use it to increase business wherever it may be. Besides you
can look at a 5% (or 7% or 10%, whatever) unemployment rate as 1 in
20 or 1 in 10 people being unemployed or you can look at it as 19
out of 20 or 9 in 10 people are employed. I choose to look at it as 9
of 10 being employed. But then I’ve survived a whole number of these
economics booms and busts, and managed to do it fairly successfully.
As a matter of fact during the downturn in the late 80’s our sales

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambrige, MA 02140

Hi Craig;

I think one general formula for recession situations is quantity
vs 'quality' (as in platinum, expensive gold, etc). You need to
sell more 'inexpensive', nice looking articles instead of a few
pricey items. 

I would like to politely disagree with this, or at least suggest
that people consider it more broadly. The less expensive an item is,
wether it’s due to less expensive materials or less involved labor,
the more competition there is, since it becomes within reach of more
lower capitalized makers. You will be putting yourself directly in
the fray with goods made overseas, or south of the border in the US.
You will also be competing with all the hobbyists willing to under
price their work due to ignorance, and all the online sellers who
don’t hold any goods, just take orders and pass them on to
manufacturers. I think that it is imperative that you continue to
compete on the basis of quality and service. When money is tight,
people don’t always think “cheaper”. Sometimes they thing “smarter
value”. Cheap jewelry is an impulse buy for Wal Mart shoppers.

I think you have to be more creative. Try these:

Advertise that you will re-use clients materials like gold and
diamonds at a savings to them. Of course, you have to be a skilled
artisan to do that.

Offer customers discount for referrals, and make it big enough to be

Sell the engagement and woman’s wedding band in gold, offer the guy
one done in stainless or palladium, but make it something handsome
and well made. I don’t know about platinum, but there will be
customers who will pay for it whatever the price, but the average
customer won’t be able to afford it, I’m guessing. Not to say there’s
no point in giving them the price in case they’re interested.

Carry a line of silver with gold accents, but don’t make it cheap,
just “less expensive” than your gold lines. Solid sterling with no
gold is real hard to get a margin out of. People will perceive that
the addition of a little gold places the article in a different class
of jewelry.

Don’t mark up the gold with a straight percentage. Calculate what
margin you’d like to make, forget this “keystone” habit. That worked
with mass produced crap. Don’t sell the labor cheap, but don’t expect
to be able to continue doubling your material costs, unless you are
certain your market will bear it.

Go over all your business expenses and shave them down. Order less
often to save shipping costs. Turn out lights and computers that
aren’t in use. Dial down the thermostat and wear a sweater (but keep
the showroom warm even if you have to use space heaters). Shop for
the best deal on phone service. Bag lunches instead of ordering out
(hey, that fast food’s not good for you anyway). Walk to work, or
park where it’s free and walk the rest of the way (we all need
exercise). Grow more of your own food, buy in bulk and freeze it or
can it.

Fact is, our personal finances, as business people, will need to be
well managed if we find we are unable to get as much money out of our
businesses. We may have to cut back on the “lifestyle” a bit, but for
God’s sake, don’t start thinking about laying of workers. That’s
about as dumb as selling of your tools. Might be a time when you
don’t have a choice, but make sure that’s the case first.

Best of luck, all.
David L. Huffman

I do see a trend, customers buy more colored Stones like garnet,
Aquamarine, Chrysoberyl, citrine zircon and amethyst rather than the
major 3, Blue Sapphire, ruby and the emeralds.

Also I find making small lots of gems move faster as I can give
lower prices than If I were to sell a piece at a time. the over head
of taking photos and uploading them to a mailing list is the same.
whether it be one piece or a lot.

As a wholesaler supplying the trade Its a mater of stocking whats
moving. supply lower value items to get a larger volume I think is
the key to survival in this economic condition.

best regards
Ahmed shareek

I think one general formula for recession situations is quantity vs
'quality' (as in platinum, expensive gold, etc). You need to sell
more 'inexpensive', nice looking articles instead of a few pricey

My observation and experience suggest just the opposite-- We cannot
compete with overseas labor on inexpensive items. It is high-end
that still sells, if you can find your niche.


I can't think of a recession caused by 9/11 other than the Iraq war
which is a huge drain on our countries resources and has been
driving us into a huge deficit 

Well Craig, you are obviously not in the American South, where our
economy came to a complete standstill after 9/11. To the extent that
grocery stores put their meat market and vegetable market managers
on extremely limited part time hours. I am not talking small impact

I do conventions and trade shows around the country with my
husband’s business, which sells largely to the moving industry. The
first convention we did after 9/11 (all the October ones were
cancelled) was in November. It was fascinating to talk to people from
all over the country. Those from the West Coast seemed completely
unaffected, mid- America somewhat, and the East Coast and South were
hard hit. I have no idea why these differences existed.

I do know that we still have plants standing empty, and more
closing. Houses that haven’t been moving well since then - even in
resort areas which often withstand these pressures. Still very high

It IS better though, as the grocery managers came back to full time
within a year of 9/11, and are still at full time.

Food and moving are pretty good indicators of what is going on, and
the moving industry is still hurting very badly nation wide. When
money is tight companies don’t pick up the tabs for employees to
move, so you get more people moving themselves. And this has not
improved since 9/11; to the point that two major van lines, North
American and Allied, went into bankruptcy reorganization just last

The Iraq war has probably actually helped the South, with our large
number of bases and defense related industries.

Beth in SC

ie that there's nothing wrong with setting sapphires in silver,
some seem to take issue with me saying it 

I’ll say again that I for one don’t care if anyone sets anything into
anything. The important thing to understand is that the marketplace
does care. You can make anything, but can you sell it? You may set a
$5 sapphire, $100, $200 (or GBP, doesn’t matter), and do well, but
there will come a time when the marketplace will demand more. That’s
hard to know or gauge, but it is real… And again, much of that is
not snobbery, it’s actual quality - strength, engineering, longevity.
People don’t take kindly to having a 5-figure value stone pop out of
the setting…

Hi David,

When I said ‘inexpensive’ I didn’t mean to imply cheap. I meant
items that cost you less to make, but still held the same niche for
what you sell.

The Asians do flood our country with their wares but the one thing
I’ve noticed is that they don’t always catch on to fashion trends, or
even what USA customers like. For example many of the rings that
Thai’s like would be thought of as gaudy around here.

I’m in a little bit of a different situation since most of what I
sell has custom cut odd/different shapes, concave
faceting, etc so it gives it a different look. I often sell on this
and not on the setting (since I don’t fabricate my own settings yet,
still learning jewelsmith).

Anyway, I’m just going by what works for me.


Hi Craig;

Anyway, I'm just going by what works for me. 

I agree completely, it’s always best to pay attention to what works
for you, and if it ain’t broke, don’t fix it. I see your point, less
expensive, not cheaper. I just wanted to put in my 2 cents that one
has to be careful not to make something flimsy, or use shoddy
craftsmanship, or incorporate worthless materials. I think a lot of
people are getting panicky (I’m picking up on that), and I don’t
think people should jump to the conclusion that they need to “compete
down”. That’s what got a lot of mom-and-pops in trouble in the first
place. Instead of understanding the their customers were looking for
"value", they mistook that for “bargain” and tried to carry the same
crap that WalMart does.

I believe that by carrying low quality merchandise, we end up finally
with a customer base that can only afford that. And you can certainly
affect peoples perceptions by putting inexpensive jewelry in the same
cases as the higher end stuff. Just makes people wonder why the good
stuff is so expensive. In any case, I hope we get through this, I’m
afraid we’re going to see a lot of thinning of the herd. Not
necessarily a bad thing, but still miserable if you fall through the

David L. Huffman

Well Craig, you are obviously not in the American South, where our
economy came to a complete standstill after 9/11. 

Beth, I’m glad to hear someone else articulate this. I’m in Atlanta,
and the economy here has just been weird. Right after 9/11 people
were spending and living high because they got hit with just how
short life can be, but soon after that phase, everyone entered a
hang onto your money and wait phase, which only gets even worse in an
election year.

The strange thing is that our housing market is still holding
strong, and there are ridiculous numbers of commercial office
buildings and pseudo-lofts (new buildings made to look like converted
warehouses) being built. To drive through downtown and try to
remember what used to be in a particular spot just last week would
make one think that the place is booming, still people are weird
about disposable income type purchases, and galleries of all kinds
are closing by the dozens.

Over half the business I used to do in town with galleries came from
tourists and business travelers. I wonder, since there are still
travelers here, why they have not been able to gain back that
business. It’s certainly made me look to other venues more.
Strangely, galleries in smaller souther towns that survive on the
tourism of historical or scenic sites have survived the best. People
still want a unique memory of that experience.

David, I too agree that one has to be more creative. Really good
point! Bad as the economy has been, I still sell more pieces in the
$2000 range than I do in the $300 range.

Recently, I’ve decided the only way any of us will survive long term
is to find ways to create more of a demand for one-of-a-kind pieces,
some kind of “un-advertising” that says real bling is yours alone
and not something everyone else already has.

Hoping everyone hangs in there,
Victoria Lansford

Hi David,

I can’t agree with your comments more. Maybe I wrote what I was
thinking incorrectly. I would never suggest that someone try to
compete with walmart, or BJ’s. Although, if you find you carry some
of the same style items (like journey pendants) then you will have to
make adjustments where you can (I believe anyway).

I know when I sell my custom cut gemstones I often get jewelers who
want to know why they are so much more than overseas purchased goods.
It’s hard to deal with these people since they are all about profit
and not about the quality of the goods they are dealing (although
there ARE some good overseas cutters). It takes a lot longer to cut a
stone that is not run of the mill and displays unique reflection or
has concave facets (or both).

If someone wants to create unique jewelry you need unique items and
if you’re using run of the mill ‘jewelry television’ cut stones then
you’re pieces will reflect that.