Question: I design custom jewelry. I have had several home-based parties and sold $3,000 to $5,000 worth of cuffs, earrings, and rings at each. I work with a local silversmith who does fabulous work, but he is limited in the number of pieces he can produce because each design is handcrafted. I would like to expand my business to a broader audience, but I need advice on how to increase production and sales.
Answer: You have a good dilemma on your hands if your products are selling faster than you can turn them out. There are several ways you could expand, including taking your jewelry to craft fairs, placing it in boutiques or consignment shops, or selling it on your own website or through Etsy and other online marketplaces. Choose one or two options to start, rather than trying to move on all fronts at once. Measure the returns and the effectiveness of those after a set period of time—perhaps a couple of months—before testing new strategies.
Let’s look at your production needs first. You will want to identify additional silversmiths and perhaps other craftspeople to add to your supplier list. This is something you should do even if your sales don’t expand as fast as you hope. “It is never a good idea to be overly dependent on one supplier—or distributor, or employee—even if that supplier could meet all your needs,” says Rhonda Abrams, president of PlanningShop, a small business resource website. “What happens if he gets sick?”
Charles Christiansen, a Score small business counselor in Knoxville, Tenn., suggests that you meet with your current supplier to explore how he can increase production. Can he find efficiencies in his current schedule? Hire assistants to help with prep or finishing work? If he’s maxed out, perhaps he can suggest another individual who has similar creative ability and competitive pricing.
In terms of expansion, you should aim for seven or eight revenue streams, says Jason Malinak, author of Finding Your Inner Etsy-preneur (2013). More diverse income sources will give you greater flexibility with your cash flow. In addition to the avenues already mentioned, you could sell wholesale to jewelry stores and boutiques in your area.
Malinak suggests that you also set up a Facebook (FB) page for your jewelry business. With ads on Facebook or other sites, you can send potential customers to that site and entice them to make a purchase by offering coupons or or other promotions in exchange for liking your page.
You may also want to rethink your pricing. Sales at home parties are a good way to start, but you may not be getting the best price you can in those settings, particularly since your jewelry is selling out, says Mike O’Malley, a business mentor at Score in Fairfield, Conn. “The tendency at a party is that you feel obligated to sell at an insider’s price, so you make it cheaper than it should be,” he says.
Rather than trying to just boost sales, O’Malley recommends that you aim for higher profits. The jewelry industry typically has margins of more than 50 percent, with prices doubling at each level of production, he says. So if the silversmith’s materials and labor cost him $10 for a particular item, he would charge you $20 or more, and you could charge upwards of $40 wholesale. A retailer who purchased from you at $40 would price the item at $80 or higher. “Jewelry has very high profitability, because it’s not a commodity and most items are at least somewhat unique in terms of design and manufacturing,” O’Malley says.
One way to increase profit might be to take a handful of your highest-quality items and market them as an exclusive line to a few of your best clients. “Increase the price of those items and turn those customers into club members who get exclusive first looks at the new, higher-end collections as they become available,” says business coach Therese Prentice. “By increasing prices for an exclusive collection, you can increase revenue while not having to increase production.”