You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your gem sales business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a gem sales business?
First and foremost, you’ll need to secure a few wholesale options for your gemstones, and make some initial purchases, in order to display items for customers. These initial orders will come out of your pocket, so choose wisely and don’t overspend. You will also need to purchase a business license, insurance for you and the business, and invest in some start-up advertising to make customers aware of your new business venture. If you operate out of a shop location, you’ll also need to factor in rent and utilities. Some gemstone businesses choose to operate out of a warehouse or from home. While this can be a cost effective option, you do lose the benefit of foot traffic and walk-in business. If you are more of a wholesaler, or if working from home is a better option, you can offset your lack of walk-in customers with a more involved online presence through a website and social media. A good website and continued social media presence is an added cost, but is recommended for all business types to extend customer reach.
What are the ongoing expenses for a gem sales business?
Most ongoing expenses will directly pertain to the buying and selling of gemstones. You can also designate some of your business expenditures to traveling to gem shows, locations where the stones are being mined, or seminars and symposiums about gems and the gem industry. You’ll need to stay abreast of your industry and continually seek out new sources of gemstones. Having a unique selection that stands out from other gem dealers and retailers will help your business greatly. You can also expect to spend money on your rent and utilities for a shop, internet and phone service, website monitoring, and advertising and marketing.
Who is the target market?
Your target market will mainly be 20-45 year olds who appreciate natural beauty and unique jewelry creations. Gemstones are popular, simply as stand alone decorations, too.
How does a gem sales business make money?
Gem sales businesses make money from the sales of the precious gemstones they have available and/or through special or custom jewelry orders.
How much can you charge customers?
Gem pricing depends on a number of factors including, the type of gem, its quality and clarity, its rarity, and the way that it’s been cut. Pricing will also depend on your location and competition.
How much profit can a gem sales business make?
Precious gemstone businesses can make good money, but it’s critical that you find a niche for your business. Create a unique style of jewelry, offer gemstones not many other businesses have, or select a location or traveling circuit that will allow you to show off your wares to a large audience. Annually, you can earn anywhere between $30,000-65,000, with more revenue garnered as you gain recognition. If you are able to operate as a wholesaler, your profits may increase. However, a wholesale business will require a larger investment both to create and maintain.
How can you make your business more profitable?
Some mines offer lesser quality gems and minerals for novice rockhounds and jewelry makers to buy at reduced costs. This may be an option for increasing your profit margin, as well. Bad cuts, cast-offs, and stones of lesser quality may still be of great interest to gem and mineral enthusiasts without large budgets.
Another option may be to offer classes on quality and clarity, types of gem cuts, and the different types of stones and where they can be found around the world. Small group seminars will not only help your existing customers, but can also introduce your business to a larger audience.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your gem sales business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
In most states, it is necessary to obtain a sellers license. Certain state permits and licenses may be needed to operate a gem business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Certificate of Occupancy
A gem business is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a gem business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your gem business will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a gem sales business
As mentioned above, it is critical that you connect with customers and gemstone enthusiasts. A website or social media accounts can help you connect with gem buyers and sellers and spread your business name. This is also a great way to interact with various organizations and appreciation societies. Organizations, such as the International Gem Society, the Gemological Institute Of America, and the American Gem Society are all great sources for connecting with other gem retailers, wholesalers, and customers.
You can also research and attend gem and mineral showcases around the U.S. and internationally. Many of these gatherings are happening close to you and will offer chances to meet and network with like minded potential clients and professionals. This can prove to be some of the strongest advertising and marketing available.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
For a gemstone business, ensuring return customers requires a large selection of unique and high quality gems and competitive pricing. You’ll also need to regularly conduct market research to see what other gem dealers are offering and what’s selling best with customers. Finally, make sure you’re staying excited and engaged. Your enthusiasm will be contagious and keep your customers coming back for more.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Gem Sales Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Selling gemstones requires a general knowledge of the different types of gems, the criteria used to judge their quality, and experience assisting customers. While your knowledge and expertise with regard to the gemstones is important, you can build this over time and still remaining successful. The biggest part of your success, from the beginning, will depend on your interactions with customers and other gem dealers. An ability to build personal relationships and provide customer service will be key to creating and continuing a career in precious gem sales.
What happens during a typical day at a gem sales business?
The daily activities for a gem sales business will mainly consist of buying, selling, or trading gemstones. If you are operating a retail shop, you will conduct more face to face customer service. If you operate as a wholesale business, you’ll create more business relationships with other gem dealers, buyers, and sellers. Either way, bringing more gemstones into your business to sell to customers will be the main function of your business.
Additionally, you will be:
- Interacting directly with gem wholesalers or mines
- Advertising and marketing your products and services
- Organizing, attending, or inquiring about gemstone trade shows
- Consulting with customers and fulfilling custom orders (if your business offers this)
What are some skills and experiences that will help you build a successful gem sales business?
Since this business focuses on gemstones, it is best if you have some understanding of gemstones and their worth and quality before you begin. This is knowledge that can be built on while you’re building your business, but a basic foundation in the field is recommended. The other skill sets you’ll want to hone are your customer service skills and small business finance knowledge. Customers will make or break the success of your business, and you must also know when to spend and when to save, in order to help your business grow and become successful.
What is the growth potential for a gem sales business?
Precious gem dealers and retailers consistently make money, as there are large numbers of people looking for new and unique stone and jewelry options. Now, more than ever, the traditional jewelry business is seeing greater competition from cottage industry jewelers. Small business jewelry makers and gemstone sellers are finding a niche in the jewelry and fashion industries as unique, one of a kind, decorative gem designers. Accordingly, there is more demand and profit available for those wishing to make their living buying and selling a piece of Earth’s natural beauty.
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One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a gem sales business?
Know your gemstones. The more you know, the better. No matter what level of knowledge you bring to the business, continuing to learn and grow in the field is critical for continued success.
Be a people person. Create solid relationships with customers, other retailers, wholesalers, and gemstone societies and organizations. Since this is a niche market, you must tap into the communities of people who care about and understand the value of the gems you’re buying and selling.
Advertise and market your business. You will not be able to build essential customer relationships unless people know your business exists. Join online forums and gem society groups. Go to trade shows and exhibitions. Create an active social media presence and follow up with anyone who shows interest. You’re selling yourself and your business as much as you’re selling precious gems.
How and when to build a team
Often, a precious gem business can run as a one or two person operation. Much of the day to day business can be handled by one person, with another in charge of orders from wholesalers, finalizing customer payments, and keeping track of the other business expenses. If you are considering a wholesale business, or if your business is growing exponentially, you’ll need a few additional employees to manage large orders entering or leaving your warehouse.