Start a gem sales business by following these 10 steps:
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 guide to starting your gem sales business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 much can you charge customers?
- 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 important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Gem Sales Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your gem sales business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
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
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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.
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.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
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.
Is this Business Right For You?
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.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
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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Take the Next Step
Find a business mentor
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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
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.