How to Start a Jewelry Store
If you have experience and a passion for working in the jewelry industry, then you might be tempted to open a jewelry store of your own. As a store owner, you’ll have complete control over the inventory you stock, the customer base you market to, and the services you offer. This can be a freeing experience if you’ve worked for other stores for years, and you can make changes that contribute to the store’s success. Whether you have experience designing and making jewelry or have an eye for design and a desire to provide great customer service, read on to understand some of the other elements that come along with starting a jewelry store of your own.
Jewelry stores sell various types of jewelry and accessories directly to consumers. Stores typically specialize in either fashion jewelry or wholesale jewelry. They may specialize further, like by offering jewelry within certain price points or offering jewelry from particular jewelry designers or jewelry brands. In many cases, these stores don’t just sell jewelry but also offer fittings, repairs, customization, appraisals, and purchase precious metals. Some may purchase used jewelry, and some jewelry store owners not only stock pieces by others but also make their own handmade jewelry products to sell.
Jewelry stores face competition from online stores, but these stores are also at an advantage in many ways. Access to a brick-and-mortar store means customers can see and touch the pieces for themselves before committing to a purchase. Many customers seek out jewelers because of their expertise in the industry; a talented jeweler can help a customer custom-order a special piece, making recommendations about material types, colors, etc. This degree of customer service can set stores apart from their competition, and it also serves to establish a relationship with returning customers, ensuring future business.
Many jewelry stores are passed down through family, and entering the jewelry industry as a first-generation store owner can be challenging. A new store owner won’t have the reputation and industry connections that someone who inherited a family store will, which can cause many issues. New store owners may find it difficult to secure funding and to develop relationships with vendors.
In many cases, it’s best to gain industry experience before opening a store. Working in a store, holding an apprenticeship, and securing a relationship with a mentor can help a new store owner to “break in” to the jewelry industry. With the help of a mentor, a new store owner stands a better chance of being successful than they would when attempting to navigate the industry on their own.
According to IBIS World, the jewelry store industry recently experienced a decline in revenue but is expected to rebound. From 2014 to 2019, the industry’s revenue declined by 2.4 percent, with the industry bringing in $30 billion in revenue in 2019. During that same five-year period, the number of businesses declined to 61,235, and industry employment also fell to 157,750.
The decline in revenue is reflective of the weak economy and falling employment rates that occurred during that period. With reduced household incomes and wealth, customers also reduced their spending on luxuries like expensive jewelry. It’s important to remember that the economy is recovering, and per capita disposable income is increasing. As the economy becomes stronger, jewelry stores are likely to see a resurgence in sales and revenue.
The jewelry industry can fluctuate dramatically, so it’s important to be prepared for unpredictability in profits from year to year. The health of the economy can significantly impact jewelry sales, and fluctuating gold prices can also contribute to the uncertainty of this industry. Jewelry store owners should have plans on how to weather the times when the economy is down and how to maximize their profits during better times.
Many trends are affecting the changing jewelry industry. According to Sarine, jewelry store owners are under increased pressure to be transparent about their business practices. In particular, Millennials want to know information about the products they’re purchasing, including where the materials were sourced from, whether workers are being paid fair wages, and whether the products are environmentally friendly. Jewelry stores need to approach their businesses with this in mind, especially when it comes to selling diamonds since diamond mines can be seen as harming the environment. This is the ideal opportunity to highlight a business’ dedication to social and environmental responsibility.
There’s currently an increased market for personalized and unique pieces and styles. Nearly half of engagement rings have custom-designed elements. Stores that carry unique or limited lines with plenty of customization opportunities can use these benefits to attract customers.
Brick and mortar stores have faced tough competition from businesses that only selling jewelry through an online store, who have been able to offer jewelry at lower prices because of reduced overhead. However, in 2019, the industry began shifting. Online-only retailers started to realize the benefits of brick-and-mortar stores when selling fine jewelry, and some of these retailers have begun to open their own storefronts.
A jewelry store’s target market will depend on that store’s area of specialty. Stores offering high-end fine jewelry will market to affluent adults, while stores with lower-cost pieces can market to a broad middle-class adult audience. In all cases, stores will market to consumers who have enough disposable income to purchase jewelry. Customers may be couples who are soon to become engaged, couples who are getting married, individuals who want to purchase pieces for their own use, and individuals looking for jewelry to give as gifts.
Checklist for Starting a Jewelry Store
If you’re thinking about starting your own jewelry store, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
Step 1: Write a Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect business name for a jewelry store can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
You can protect your business name, so nobody else uses it by registering for a trademark with the U.S. Patent and Trademark Office.
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a jewelry store, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
Jewelry stores benefit from being in high-visibility locations in more affluent areas. While prime retail locations will carry higher rents, those are often justified by the walk-in traffic and general public awareness of the business that these locations bring.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
There are no specific licenses for jewelry stores; however, there are general business registrations at the local, state, and federal level that a jewelry store might need, such as a local business license, sales tax permit, Employer Identification Number, and Occupancy Permit, among others.
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a jewelry store is another. In order to get a small business loan, the borrower(s) will need to have good credit and be able to personally invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A jewelry store’s budget needs to include money for marketing expenses. Stores often use print advertising, online advertising, email marketing, and social media platforms like Facebook, Instagram, and Pinterest, to drive sales and brand awareness. Additionally, online marketplaces like Etsy and Amazon can be good places to expand your shop. Customer loyalty discounts and referral programs may also help drive sales and build up a larger customer base.
One important task while working on the marketing is developing an online presence. A website developer may be out of the budget, but Wix makes it easy for non-technical people to get a website running quickly and affordably.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a jewelry store. A few of these include:
– General liability insurance protects the business if a customer is ever injured while on the property, like a slip or a fall.
– Commercial property insurance protects the business against financial loss if its store or inventory is damaged or lost because of an issue like a fire.
– Worker’s compensation insurance helps to cover expenses like medical bills or lost wages if an employee is ever injured on the job.
The cost to insure a jewelry store can vary depending on factors like the store’s location, the value of its inventory, and the number of employees on staff. To get the most accurate idea of what insurance will cost, request quotes from multiple companies. Then, compare the quotes while paying attention to important variables like coverage limits and exclusions, premiums, and deductibles.
Step 10: Hire Employees
A business owner may be able to run a smaller store in its early years nearly entirely on their own, but at some point, it will probably be necessary to hire staff. Glassdoor reports that jewelry sales associates earn an average of $21,138 per year. Some stores may also choose to offer their staff commission on the sales they make.
In addition to employee salaries, a store’s budget needs to include expenses like workman’s comp insurance, paid time off, and health insurance contributions.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your store is critical to the long-term success of your jewelry business.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a jewelry store?
The cost to start a jewelry store will depend on the store’s size, location, and the type of jewelry that it offers. Smaller-scale jewelry stores may cost as little as $20,000 to start, while larger stores or stores that specialize in high-end pieces can cost hundreds of thousands of dollars.
Some common startup costs for a jewelry store include:
– Display cases
– Supplies like cleaning supplies and jewelry boxes
– Security system
How much can a jewelry store owner make?
Many factors will affect the profits of a jewelry store, including its location, the types of jewelry sold, and staffing. According to Salary.com, jewelry store owners make an average of $39,696 per year. However, jewelry store owner salaries can range from $32,169 to $49,467.
Are there grants to start a jewelry store?
It’s extremely rare to find a grant to start a jewelry store. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What skills are needed to run a jewelry store?
Starting a jewelry store doesn’t require a business degree, but certain skills and experiences can make the process easier and increase the chances of the store being a success.
Jewelry industry knowledge. Previous experience in or knowledge of the jewelry industry is important. Customers want to buy from informed jewelers, so a store owner who is highly familiar with the industry will be at an advantage.
Attention to detail. Detail is everything in this industry. From assessing the quality of pieces to designing attractive displays, a store owner needs to be detail-oriented.
Awareness of jewelry trends. A store owner who is knowledgeable about changing jewelry trends can make wise purchasing decisions and develop an inventory full of pieces that customers want to buy.
Customer service skills. A store’s reputation is quickly built on its customer service, so a store owner should have great interpersonal and customer service skills.
Management experience. When it’s time to hire employees, experience in hiring, training, and managing staff is helpful.
What is the NAICS code for a jewelry store?
The NAICS code for a jewelry store is 448310.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?