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Diamond store business plan.

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strmrdr

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Quick and incomplete Diamond store business plan.

Location: web based and by appointment locally.

Employees: myself and my wifey2b to start.

Contact: email, 1-800 number.

hours: 12 noon -10pm cst Monday tue thur fri sat 12 noon - 4pm wed.

advertising: local Christian radio station, pricescope and google, but mainly my web site.

Product: super-ideal cut SE/asscher diamonds and mid-range gemstones, other shapes available.

Source: Talk a certain cutter of ags0 princess cuts and super-ideals diamonds into cutting storm worthy SE diamonds for me. Contact 2 custom gemstone cutters I know about supplying products for side stones and center stones.

stock - 10-12 diamonds 20-30 gemstones.

settings - local benchman who does awesome work to start with.

margins %25+

terms = 15 day return. 90day 85% buy back on the diamond, 2 year upgrade at sale price and after 2 years wholesale price - 10% max depending on condition.
Must buy a diamond at least 25% more than the exchange value to upgrade.

First years sale goal 100 diamonds and 100 gemstone rings.

Pricing: ags0 princess price range.

Value add: yea like im going to give everything away :}

Average sale of $10000 to $14000 with setting for diamonds.
average gemstone sale $2500 with setting.

gross sales goal:
gemstone rings $250000.00
diamonds rings $1000000.00
total: $1250000.00

expenses:
stock. $1000000
merchant fees: 3% $37500
Advertising: $20000
Phone: $3000
Website: $300
.............................................
$1060530

Before tax profits of: $189470
..............................................

Start up costs of around $200000.00


5 year goal stock of 50-75 diamonds with sales of 500 per year and a line of custom settings and 4-5 employees.


edit to clarify > all diamonds and gemstones will be in stock that are offered.
 

Regular Guy

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Date: 6/25/2005 8:14:57 PM
Author:strmrdr

Contact: email, 1-800 number.

advertising: local Christian radio station, pricescope and google, but mainly my web site.

Product: super-ideal cut SE/asscher diamonds and mid-range gemstones, other shapes available.
Questions:

cut: SE?
advertising..why Christian radio station
tele:...you''re missing a digit; number_

Thanks for thinking this through out loud; I think you might want to at least explore the model employed by DCD & WF and others...where, while you''re at it, setting up a signature line, you can also provide lots of other options to individuals you have a relationship with, by way of the equivalent of the Quicksearch that''s broadly available to those in the trade.

Best,
 

strmrdr

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square emerald = SE aka asscher.

thats get a one eight hundred number not the actualy number :}

Local Christian radio station because its an underserved and fiercly loyal customer base with a lot of money.
And they are my kind of people :}

security: have a safe, have a .45, just need a dog.

insurance .. yea need that.

Its an underserved market that no one on pricescope seems to want to fill.
GOG comes closest with some fairly decent to very nice asschers but custom cutting could do them better and he doesnt offer upgrade service on them.
Pretty much the rest are just plain bad to fairly decent.

The only real option in super-ideal asschers are the royal asschers at outragous prices.
It leaves a lot of market space open in the middle for a high quality S.E. at a profitable price.
 

Kaleigh

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My hats off to you and wish you well. I'm sure you would do an awesome job, but wonder how you will have the capital to start?? Not being nosy, just asking is all. And how much is insurance??? Have you the resources and I'm sure you do to get these stones in?? You will not house them obviously, but usually you have to have been in the business to establish yourself with wholesalers. I think it's fascinanting and wish you all the best. If I were to buy my dream asscher, I would buy from you storm. I have been studying them like crazy and you definitely have a handle on them. Good luck!!!!!!!!!
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strmrdr

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This isnt something I have the resources at this time to do.
Just something I day dreamed about a while back for fun.
It was a pleasant dream :}


Crankydave challenged me to post a business plan so i dragged it out of memory and posted it.

Hearing you would buy one from me did make me smile :}
Thank you that is a huge compliment :}


edit to add > all diamonds and gemstones will be in stock that are offered.
I will add that to the first post.
 

Mara

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since it''s web based and by appointment, i was thinking this could be an out-of-home business to start? in which case, it wouldn''t be a store to hit...maybe less of a target?

strm...if you do this...i think it would be great...and i would also definitely buy from you if the price and the cut was right, esp an asscher! i would LOVE one that had more steps like the RA...definitely hard to find!!
 

perry

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I think your average sale price is high.

I would estimate perhaps $7500.

Selling 200 rings your first year? That''s 4 per week. Perhaps by the end of the year. I suspect it would start at 1 per week.

Getting several hundred really great cut diamonds in that shape may be a problem unless you contract with Paul.

Security. Normal safe is not secure at all (just stops the relatively honest amature), and you will need that 45 - and another partner to cover you working from home. I can see people slitting your throat if you are in the way.

I would add: Proper safe & security system: $20,000 - $40,000. This assumes that your windows and doors are decent. I''m not sure if your floor will support a proper safe. Note that I would also put in Thermal Guard windows on the house as well (especially the ground floor). They are highly secure compared to many other consumer windows on the market. I have half of my house done. I need about $12,000 to finish the house.

Good secure doors would be needed as well. Figure $2500-$3000 per door (Thermal Guard has those as well, but there are other commercial doors availabe for similar prices).

The windows and doors are usefull anyway - but you will not have anything close to a secure place without them.



Perry
 

Kaleigh

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Storm,
I worked in a very high end jewelry store and was the victim of two smash and grabs. The second one was at gunpoint. I feel very lucky to have survived both of them. I actually I dentified the culprit of the second robbery and had to testify in court against him. That was just the scariest thing. This man had no regard for human life and was ready to pull the trigger at any moment. He is still behind bars, because after he robbed us, he hit another store and carjacked a car to make his getaway and in the meantime threw the occupant of the car out onto the street and she was 6 months pregnant. The judge threw the book at him and I pray he doesn''t know where I live. But having to face him in court and tell my story was just the worst. Now you know why I don''t do it anymore.
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strmrdr

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Date: 6/25/2005 11:29:41 PM
Author: Mara
since it''s web based and by appointment, i was thinking this could be an out-of-home business to start? in which case, it wouldn''t be a store to hit...maybe less of a target?


strm...if you do this...i think it would be great...and i would also definitely buy from you if the price and the cut was right, esp an asscher! i would LOVE one that had more steps like the RA...definitely hard to find!!

yea would be from home to start.
 

perry

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Storm:

I encourage you to persue your dream, there is a way - and a way to do it safely.

I have personally modeled 4 different business ventures. With the exception of the last one (the one I am in) there were some similarities. 2 of these would have involved the need for appropriate security and the very real possibility of theft - although not as much as diamonds would probably involve.

I belive that cheapest one I identified of the first 3 required about $200,000 to get up and running and for the first year (including my salary), with the hope (but no guarantee) of breaking even on the second year. Of course I modeled these years ago - and inflation has probably pushed it closer to $300,000 today.

Somehow, with diamonds and security I would be thinking along those lines (If you are going to sell 4 rings per week from on-hand stock- you had better have 40 diamonds or other jewels on hand).

The fourth one could be started for several hundred without specific security issues, and I suspose that several thousand would max you out on what you could reasonably spend $ on in the first year.

Now I admit that my little side business is not growing in leaps and bounds - but it is growing and has a potentiall for income just as large as anything else I had modeled.

Best of luck with your idea.


Perry
 

Garry H (Cut Nut)

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Shipping costs - there will be stones called in for assessment not purchased and sent back.
Stones sent to appraisers, rejected, and customer does not pay for return shipping
Rapnet, poly, IDEX subscriptions - $3k
Bank charges
Accountancy
1-2% fraud - lost in mail etc
Mounts made and not accepted
Travel & Hotel costs to trade fairs, buying centers
Gem instruments
Stationary, business cards, letter heads
Branded packaging
Giveaway's like gem instruments etc
Chipped gems while setting
Donanations
Trade -ups = inventory = reduction from disposable income, but income tax still applies.
(i.e. you make $200k, but $100k is in increased inventory - tax is still based on $200 - say $50k - leaves $50k to live on)

You will find many pricescopers to be customers from Hell.
You may sell to 1 in 5 contacts after 5 to 20 communications. Doing 4 sales a week will take time.
Imagine you will be worse after 2 years experiance? No, of course you will improve.
So consider this - you will be bad at it to begin with and you hope you can afford to stay at it long enough to get good enough at it to survive the learning curve.

I wish you luck Storm. My negativity is what i throw at anyone considering a new venture.
Read the E Myth. NOW!

I think you will need to sell a lot more in your first year to break even.
Consider another source of income for the first 2-3 years.
 

strmrdr

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Good points everyone.

Garry I dont think id find pricescope customers to be that bad.
I know what they are looking for and can have it ready to go ahead of time.
And would have a very detailed website to answer a lot of questions.
Its been fun playing with my day dream a little more.
Thanks :}
 

elmo

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Date: 6/26/2005 7:38:27 AM
Author: Garry H (Cut Nut)
I wish you luck Storm.
Is the virtual inventory starting to sound better strm?
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perry

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As an interesting comparison I once sat waiting for another store to open and watched the traffic going into both a local independently owned high end "stand alone - surrounded by lights and parking" diamond store and a low end independent diamond store a block or so away that was wedged between other buildings on a business street.

The high end store was just that; and does in fact have some super ideal cut stones. The low end store only carried 14 K gold (yellow & white) rings and not the best diamonds, and had no large diamonds at all. Lots of engagement rings below $1000 (tops might have been $3000-$4000). They did not claim to have the best diamonds, They did not carry platinum, or 18 K gold, and told you that they were selling the best value for the moneyl; and that you were not paying extra for the store to stock top of the line diamonds and exoctic metals. Given that many people do not have $5000+ for an engagment ring (or even $2500), they have an honest and appealing pitch to many people.

After watching the traffic, and noting my memories of my time spent in those stores (many of the people who went into the low end store were buying...). I am convinced that the low end store was the more profitable of the two.

What is interesting from a security standpoint. The low end store would be less likely to have a smash and grab. It had less security and I am sure less insurance cost as well (the high end store reaked security).

So should I enter the diamond business. My thoughts is that I would need to cover more bases than the top of the line. It would be best to give the consumer a choice (instead of asking for the sale - ask which one they want and assume the sale).

Perry
 

fire&ice

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Nay sayers - the lot of you.
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Things can be done on a shoestring. You buy one stone. You sell that stone. You buy another & you keep investing the profits. Before you know it, you have a full fledged inventory kept in a safety deposit box w/ detailed paper knowledge and the ability to get in your car and pull one stone or a few that are being considered.

Advertising - word of mouth. Sell something unique at the very high level or the very low level. No MIDDLE market. Yes, you can be schizophrenic. The low end pays the bills. The high end makes you money. KNOW each market.

Insurance - expensive - but if you get a policy that is "catastrophic" loss only, it's not so bad. You have to be able to absorb a "loss".

I think you can take baby steps into a business. BUT - you've got to have a cushion & a steady source of income aside from the business. Not really a daunting task if you love your "side" job. The "side" job that can become your full time job.

REPUTATION, REPUTATION, REPUTATION. Edited to add: Leonid would probably call this "BRAND".
 

fire&ice

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Date: 6/26/2005 11:46:13 AM
Author: Feydakin
I''ve boot strapped businesses.. It sucks.. For a very long time.. There is no substitute for start up capital, it can cut years even decades off of your growth into a real business.. Buying and selling diamonds, or an anything, one at a time is not a business, it''s a hobby..

Also, I''m not a naysayer.. I love startups.. But I love realistic startups even more when all of the details are thought out first.. Hence all the ''negative'' comments that point out things that have not been thought of yet.. I wish someone had done this for me with my first real bootstrp business in retail.. We lasted 9 months, lost 10 grand, and learned more about business than I think I have in any of my successes..
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Thing is I was a start up. I had no business plan except to invest & reinvest. Your right, it was a hobby at first. It grew into a 6 figure business before my eyes - within a few years. I''m semi retired now (burn out) so it''s back to being a hobby. It was a huge snowball reinvesting profits. But, I have to say - I did have huge profit margins as I had LITTLE to NO expenses. But, knowledge (free except for hard work, reading, digesting & investment into books) was my "investment".

Perhaps my business is unique. But, hubby started with nothing except himself. My business partner did the same while doing free lance writing as income.

I think their is a plan in not having a plan. Many successful business were just happy accidents whilst persuing a hobby.
 

diamondlil

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I wish you the best of luck Strmrdr. Starting a business is scary and unpredictable. Many business start up with little capital and no business plan and take off. Many more flop. If you are passionate about it, you should listen to your instincts. Little steps can lead to big success.

On a personal note, my husband has been encouraging me to take the GIA distance classes. I hesitate because I can''t see a goal for myself at the end. I had a business once (not jewelry). Owned and operated for 4 years. Made a decent income but worked my butt off. I eventully decided to get out as I wanted a family and knew I could not give my business the focus it required. Those 4 years in business were a great education for me. I use that knowledge over and over in everyday life when it comes to making decisions of all kinds. I don''t regret having my business or letting it go.

My point is, even if your business does not lead you in the same direction you have laid out on your business plan, you can still find success. I say go for it!!!
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DiamondLil
 

perry

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Fire & Ice:

I don't consider myself a nay sayer. I am in fact bootsrtraping into another business. However, the difference is that I do not have to stock multithousand dollar items in order to show someone.

I actually think that a decent living could be made with diamonds.

But; I would want to have the diamonds in a proper safe, and a reasonably secure building. $5000 gets you a decent small jewelry safe which allows you to buy reasonable jewelry insurance (I can't imagine an insurance company selling you insurance if you don't have a proper safe to store the gemstones in).

I also think that you would need more than 1 diamond to start. It could be a long time before you sell that one..... I probably would not try it with less than 5 diamonds, and 10 would be better.

I do not spedifically object to starting in your home depending on the layout of your house, the neighborhood, and how secure it is (or can be made). I will note that Todd & Robin of NiceIce worked out of their house for years.

((Edited to add: This was when Todd & Robin stated their business in California. They opened a normal B&M store when they moved to Oregon))

I would not want to be dependent on running to the bank to access the safety deposit box for the business.

However, having run in detail all of the expenses and bills for 3 other businesses, and operating my own "boot strap" thing right now tells me that I would realistically want several hundred thousand dollars to cover the first year or so. The vast majority of businesses fail not because they are not a good idea - or not because the person is not capable of running a business: but because they run out of money before they learn enough and build up enough business to break even and pay their salary.

At least what I am doing can be supported with extra $ to sustain it from my full time job during bad months if needed. Yes, the tradeoff is in the time it takes to succeed.

Perry
 

strmrdr

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Feydakin,
Your right the privacy issue would be a big thing if I was to ever do this.
But like a lot of things in life its all about trade offs.
 

Capitol Bill

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Strmrdr,
Thanks for the interesting post. I say go for it! But be aware that there are major potential pitfalls, several of which were mentioned in some responses. There are many things I could think of suggesting, but the two that jumped out at me were the following:
1) I think you''re way too optimistic with 25% margins. The retail diamond market is intensely competitive and it''s only getting to be more so.
2) A home-based business may work for selling most things, but NOT for diamonds. You do not want to put yourself and your family at that kind of risk. And an at-home diamond business will be very difficult if not impossible to insure.
If you really get serious about making a go of it, please feel free to contact me and I''d be more than pleased to give as much advice as I can.
Good luck!
Bill Scherlag
 

fire&ice

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The more you invest (start up). The more you stand to loose. I don''t believe that you have to have a full inventory up front because you don''t have a shop to stock. Case in point, look how many "virtual" stones are traded. And, look at many of the vendors on PS & how they have evolved - gradually.

I think many of successful business''s start in someone''s garage. I think niche markets are the way to go. You can live and die with a niche market; but, the smart business people will evolve into the NEXT niche market. Asshers are hot - maybe another shape is next.

Security is an issue. And, probably the only reason why I wouldn''t deal in "precious" stones.

Diamonds are something of interest because there will always be someone getting engaged. Though, if 25 % profit is ambitious, I think I''d think of other ways of making VERY profitable revenues.

Most business''s fail because of poor business practices, wrong market/wrong time or not enough vision for the long term. Or, biting off more than you can chew.
 

strmrdr

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Date: 6/26/2005 9:40:58 AM
Author: elmo
Date: 6/26/2005 7:38:27 AM

Author: Garry H (Cut Nut)

I wish you luck Storm.

Is the virtual inventory starting to sound better strm?
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No it isnt I couldnt sell that way.
I would not sell a diamond , gemstone or anything else I hadnt personaly inspected if it has my name attached to it.
 

strmrdr

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That sux Dave.

If this was more than a dream I could probably find office space pretty reasonable in this town.
There is a lot of it available cheap.
 

mepearl53

Shiny_Rock
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I''d also ditch the idea of a 45 unless you are highly trained with it and prepared to use it. I have a former Marine MP working here who is trained with such weapons. Otherwise don''t!
 

niceice

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Perry mentioned that he received a little heat from some people here on PS for mentioning that Robin and I used to work from home so I''m going to take a moment to respond to that regard:

The fact that Robin and I initially operated our business from home is public knowledge and the disclosure / discussion of that fact does not bother me in the least. I would advise against operating this type of business from home because doing so is extremely dangerous and tends to make it difficult to sleep at night. No matter how careful you try to be, one of your friends and/or customers will eventually tell the wrong person everything about how you operate, how cool your alarm system is, how many cameras they detected and the size and name of your dog. Most insurance companies aren''t willing to issue a jewelers block policy on operations run from home and the fact of the matter is that at one point or another, you''re likely to discover why first hand. It is far easier on the nerves and not really that expensive to open a small store, install a reasonable alarm system and operate from there... The current store is 2700 square feet, at present I am operating the front end by appointment only and primarily operating the internet portion of the business from there using the premises as a vault and shipping depot. This enables me to operate my business safely from a secured environment and enjoy my home as the refuge that it is intended to be. If the bad guys show up at home, they''re going to be more than a little disappointed because as with most of the industry, I realized a long time ago that it is smarter physically and emotionally to keep everything related to the business at the business.
 

Paul-Antwerp

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Date: 6/25/2005 8:14:57 PM
Author:strmrdr
Product: super-ideal cut SE/asscher diamonds and mid-range gemstones, other shapes available.

Source: Talk a certain cutter of ags0 princess cuts and super-ideals diamonds into cutting storm worthy SE diamonds for me. Contact 2 custom gemstone cutters I know about supplying products for side stones and center stones.
Hey,

Now I know why my ears were zooming for the last three days. My fault to not check out the café constantly.

As for storm worthy SE diamonds, it could well be that AGS launches cut-grading for square emeralds soon, and you can bet that we will be hopping on that wagon again.

Live long,
 

strmrdr

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Date: 6/28/2005 6:04:18 PM
Author: Paul-Antwerp
Date: 6/25/2005 8:14:57 PM

Author:strmrdr

Product: super-ideal cut SE/asscher diamonds and mid-range gemstones, other shapes available.


Source: Talk a certain cutter of ags0 princess cuts and super-ideals diamonds into cutting storm worthy SE diamonds for me. Contact 2 custom gemstone cutters I know about supplying products for side stones and center stones.

Hey,


Now I know why my ears were zooming for the last three days. My fault to not check out the café constantly.


As for storm worthy SE diamonds, it could well be that AGS launches cut-grading for square emeralds soon, and you can bet that we will be hopping on that wagon again.


Live long,

That would make my day :}
This thread is just a day dream but SE diamonds cut to the same standard you cut the rest of your diamonds to no matter who is selling them would be a dream come true for me.
I want to see and be able to recomend awesome SE diamonds I dont need to make money on them to be happy.
The market is out there if you chose to fill it.
 

AsscherGirl

Brilliant_Rock
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Can I be the first to sign up for one of these super-ideal square emeralds?!?!
35.gif


Ahh, to dream!
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Garry H (Cut Nut)

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I lived in the first house round the side street from the main store.
Until a police man came in with sketches and floor plans of home and shop, sketches of inside safe and various lines from front and back doors of home to front and back door of store.
They were found in the hands of a murdorous hit man who was reputed to have seen off more than 20 souls.
The source turned out to be ''friends''.
I moved.
 

hoorray

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Date: 6/28/2005 9:18:09 PM
Author: Garry H (Cut Nut)
I lived in the first house round the side street from the main store.
Until a police man came in with sketches and floor plans of home and shop, sketches of inside safe and various lines from front and back doors of home to front and back door of store.
They were found in the hands of a murdorous hit man who was reputed to have seen off more than 20 souls.
The source turned out to be ''friends''.
I moved.
Wow strm... I think your plan is a great vision. But, I have agreed with those who said you should move it away form your house, and this REALLY makes me say don''t make it a home based business. Build the cost of a small place off site into your business model. It''s worth it. Wink doesn''t have a storefront, but he has office space outside of his home. Probably a very smart move...
 
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