Start a jewelry store by following these 9 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 step guide to starting your jewelry store. 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 jewelry store?
A small jewelry store can be started for as little as $20,000. However, depending on your location, it might cost up to $100,000 to get started.
A typical breakdown of expenses might look like this:
- Rent: $0 (if you start your business out of your home); $1,000 per month for a small storefront; up to $10,000 per month for a larger storefront, depending on location.
- Overhead and raw materials: $500 for basic raw materials to make low-end jewelry; $10,000+ for precious metals and gemstones.
- Insurance: $500 - $1,000 per year.
- Basic tools: $200 - $300
As your business grows, you will want to add more tools to your tool set, including grinders, a professional workbench, various gemological tools, hammers and mallets, laser welders, loupes and magnifiers, metal forming tools, gauges and scales, molds and casts, engraving tools, beading supplies and beaders, burs and drills, adhesives and various specialty compounds, polishers, and safety equipment.
Costs vary, of course, depending on the size and scope of your operation. However, a full tool set may add several thousand dollars to the overhead cost.
To reduce the overhead cost, consider bootstrapping your business.
For example, instead of taking on large loans, consider borrowing money from a retirement account, cash value life insurance policy, your own savings, or from a friend or family member. Grow the business slowly over time as finances allow.
What are the ongoing expenses for a jewelry store?
Ongoing expenses for a jeweler vary based on the size of the operation.
A jeweler may have to pay rent, supply costs, and labor for a small to medium-sized operation. Larger operations usually cost more to run.
A typical breakdown of costs may look something like this:
- Rent for building: $3,000 - $10,000, depending on location
- COGS: Precious metals spot price + spread + gemstone = $3,000 - $50,000+
- Labor cost: $25,000 - $50,000+ per employee
- Insurance: $1 - $2 per $100 of merchandise
Who is the target market?
Ideal customers are those shopping for an engagement or wedding ring. Alternatively, those who are interested in and can afford luxury jewelry or custom pieces are also ideal customers.
How does a jewelry store make money?
A jewelry business makes money by fabricating and selling jewelry. Customers typically pay a set price for the piece which is based on the cost of metal, gemstones, labor for fabrication, and jeweler’s markup.
How much can you charge customers?
Jewelers have their own language when it comes to pricing their product, called “keystone pricing.” This means wholesale pricing times 2. In other words, traditional jewelers will mark up pieces 100%. A piece purchased for $100 should be sold for $200, minimum. However, it’s not uncommon for rare items to be marked up 300% or more, which is called “triple keystone pricing.”
With smaller jewelers, cash or credit is the standard method of payment. For larger retailers, in-house special financing is often arranged for more expensive pieces.
How much profit can a jewelry store make?
According to the Bureau of Labor Statistics, a precious metals worker makes just under $40,000 per year. If a jeweler is an owner-operator, he may make this much net of costs. A successful owner-operator could earn more, however, depending on location and size of the operation.
How can you make your business more profitable?
Growing your business is the key to more money in the jewelry business. Prices for metals are determined by the commodities markets and gemstone pricing is determined by distributors. Therefore, jewelry store owners need to focus on business expansion.
Some ideas include:
- Selling over the Internet through popular online marketplaces (markets like etsy, ebay etc.)
- Selling through local markets, farmers markets, mall kiosk/pop-up shop, or other temporary locations
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.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your jewelry store 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
Certain state permits and licenses may be needed to operate a jewelry store. 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.
If a jewelry business is working with multiple artists that will be using the online business to market/sell their own jewelry, it is advisable to draft a standard contract regulating terms of conditions under which you may sell their artwork. This type of agreement is often referred to as a consignment agreement.
- A sample gallery-artist agreement can be found here.
For more 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
If a jewelry business plans to have a physical retail presence, a Certificate of Occupancy (CO) will be needed. A CO confirms that all building codes, zoning laws and government regulations have been met.
When leasing a store 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 Jewelry 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.
When purchasing or building a store 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 Jewelry business will be in compliance and able to obtain a CO.
As well, many retail establishments will play music in the store to offer an aesthetically pleasing environment, requiring a music license:
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 jewelry store
Marketing a jewelry store is usually done via word-of-mouth and local advertising. Advertising of this type can include anything from explaining your business to those in your social circle and asking them to tell others they know about your business to participating and presenting your jewely at various community events and local fairs.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Jewelers who specialize often outperform their peers. For example, a jeweler who specializes in custom wedding pieces will attract a unique kind of customer and outcompete in that market.
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 Jewelry Store 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?
This business is suitable for individuals who have a passion for metalworking and are experts in the trade.
The jewelry business is also influenced by the gemstone and precious metals industry, so business owners should also be metals enthusiasts and enjoy watching the metals and gemstone markets.
What happens during a typical day at a jewelry store?
Business owners typically work late hours and spend a lot of time creating jewelry, taking inventory, and managing supplies.
What are some skills and experiences that will help you build a successful jewelry store?
Being a jeweler is a trade, so most entrepreneurs who get into this business already have experience in the industry. However, that doesn’t mean an outsider cannot start a jewelry store. Experience in metalworking, sales, gemstone cutting and analysis, and accounting is strongly recommended.
What is the growth potential for a jewelry store?
Being a jeweler is a low overhead business. You can run it out of a home or garage or rent a small office or building. Small jewelers are usually owner-operated and focus on custom jewelry and pieces for the general public. Large retailers may or may not do many custom pieces and often focus on mass market appeal.
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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.
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.
How and when to build a team
If you already have training in metalwork and gemology, then you probably don’t need to hire help outside of an accountant and other support staff. However, if you’re a first-generation jewelry store owner, at minimum you need staff with gemological training and experience working with, buying, and selling precious metals.