All that glitters doesn't automatically lead to gold. Though it appears to be a glamorous industry, the jewelry business, like any other, requires a serious time commitment on behalf of its proprietors. When starting out, care should be taken to scope out the competition, to study your target market, and to learn every bit that you can about your own product.
We spoke to several business owners who've taken different paths with respect to launching their successful jewelry endeavors. This guide will explore the intricate details of starting an operation, from the capital investment needed based on the scope of your business to deciding whether or not a physical store is right for you. Read on to learn how to successfully make your mark in this area of a luxury industry.
How to Start a Jewelry Making Business: Jewelry Education
Pamela Doyle, co-founder of Doyle & Doyle, a high end boutique in Manhattan's Lower East Side that specializes in estate and antique pieces, stresses the importance of receiving a strategic education about your product, be it formal or informal. She apprenticed with a dealer, and her sister and co-founder Elizabeth Doyle, studied at the Geological Institute of America.
David Gandy of Ecowrist, a New York-based company that he co-founded in 2007 with his wife Marquerite Hamden, says, "it's nice to do a study of the market to see what kinds of trends are out there. We didn't. We did it from gut instinct."
A merchandising expert can aide in the education process. Paola Delgado, founder of the New York based company Mujus, hired a professional to help her learn more about marketing jewelry and to show her how to organize items for display purposes. After this, she decided what her main materials and products were going to be (iconic pieces produced with biodegradable materials), and began assessing her competition worldwide. "Then I defined my market - who I wanted to be my customer, what was their price range, how I was going to create an experience for her to buy my jewelry," she says. "And based on that, I actually started working on what would be a collection to satisfy my market."
After educating yourself about the type of jewelry that you want to sell along with pinpointing your target market, take heed of other factors before diving in headfirst. What will your startup costs be? What are your materials costs? If you aren't handcrafting the product yourself, what will manufacturing expenses cost you? Is it more cost effective to manufacture your product in the U.S. or to outsource to another country? Should you open a physical store or are markets your best bet? Finally, are you prepared to handle vendor fees, licensing expenses, and other unforeseen costs along the way?
How to Start a Jewelry Making Business: Pinpoint Your Start-up Costs
Jewelry can be made from a wide range of materials, from the most precious of stones to found objects. Thus, materials expenses will vary greatly. Likewise, some people may choose to aim for an expansive operation from the get go, while others will choose to build their businesses bit by bit along the way. Gandy, who is a voiceover artist and actor by trade, initially invested $2,000 into Ecowrist. This investment supplied his company with their first 100 custom made watches.
Carmella Ricciardelli, co-founder of the steampunk jewelry business Mama Can't Sing, started her business in Brooklyn in 2008 with nothing. Ricciardelli, previously a homemaker, says that she grew her inventory of jewelry built with watch parts and antique typewriter keys by frequenting tag and estate sales. Initially she only allowed herself a weekly budget of $30 to spend on materials. From the jewelry that she sells at the Brooklyn Flea, she reinvests the profits to replenish her inventory.
Doyle & Doyle also began as a scaled-down operation. During their first three years in business, the Doyle's were operating as dealers, not yet selling to private parties. "We were basically raising capital by selling and rolling it back into the business. Even after the store started, I had a second job for three years," says Doyle. "We didn't draw any salary from the business or anything like that. We rolled everything back into the business."
Of course, some designers will aim to enter the market at full-speed, thus requiring a much larger capital investment to get the ball rolling. Delgado, a former financial analyst with Goldman Sachs, estimates that $20,000 is a conservative estimate for the amount that one will need to open a jewelry business, even without a brick and mortar store. "I'm talking about setting up your website, setting up your merchant account, buying your machines, taking [the] risk[s] of selling inventory, [putting together your] stationary packaging, paying a photographer…," she says. In addition to these expenses, along with the possibility of employing additional help, jewelry sellers also need to have a budget and plan in place for the costs and travel associated with manufacturing the product itself.
How to Start a Jewelry Making Business: Manufacturing Expenses
While some designers like Ricciardelli both design and craft their own products, more often than not, jewelry designers leave the work of building their physical product to other artisans. However, that expense in and of itself can make or break your profit margin.
Due to the high costs of manufacturing inside the United States, many jewelry companies, even smaller operations, choose to utilize foreign labor. But, the use of that labor begets travel expenses and a time commitment that may or may not be beneficial to your business in the long run.
Ecowrist is currently produced out of two facilities in South America. With respect to production costs, Gandy says that the cost of producing Ecowrist overseas is probably "400-500 percent less" than it would be back home. "We tried to do some stuff here, but it became so expensive that it didn't make sense for us," he says. "It would have been a hobby for us."
Although manufacturing costs are undoubtedly cheaper at the South American facility that the company uses, traveling to monitor the production process, which averages around once every other month for up to a week at a time, incurs hefty travel expenses. As a result, Gandy and Hamden are looking to bring Ecowrist's production back to the U.S.
Delgado, a native of Peru, handles her manufacturing operations in her home country. "Although it's relatively 'cheaper' to make it in South America, there is a lot of ground you have to break in terms of quality control," she says, describing how she often has to train her Peruvian team in rudimentary aspects of business, including sending emails and opening PowerPoint presentations. "Those are a lot of man hours that translate into costs."
How to Start a Jewelry Making Business: Is a Store Necessary?
In 1995, Stacey Ford opened her sterling silver and fashion jewelry store, Amaya Designs, in Philadelphia with a partner. Eleven years later, she closed her doors for good. "In 2006, we really started noticing a drop in sales. People were really, really struggling, trying to make ends meet," she says. Since then, she has chosen to focus her attention on selling at outdoor markets and jazz festivals. She is currently based out of New York City and continues to supply businesses in Philadelphia with her products. "I would say, in today's climate, I would do more markets [instead of opening] a store. The cost of renting a space, especially in New York, is outrageous," she says. "I don't see how anyone sees a profit when you're paying $5,000-$6,000 a month for rent only."
While a brick and mortar institution is undoubtedly more expensive, markets and fairs carry their own respective price tags. Ecowrist's booth in Manhattan's Columbus Circle Holiday Market set Gandy and Hamden back about $4,700 which, explains Gandy, averaged out to about $200 a day.
Delgado says that at certain markets the location of your booth depends on how much you will have to pay, if your application is even accepted at all. "If you're doing street fairs, for instance, it's much, much more competitive because there is a lot of jewelry. Sometimes you can't even be allowed a space because it's like, 'we don't have [anymore] space for jewelry.'" With respect to trade shows, Delgado says that space to showcase in the handmade division is very competitive in New York City due to the high amount of vendor applications.
Delgado has chosen not to open a store for Mujus. She intends to create an enterprise based on selling at fairs while focusing on catering to the wholesale market. "The marginal dollars that you get on wholesale, I think, is a little bit more reliable [in terms of] business, and you don't have so many little running costs on a daily basis," she says.
Doyle, who has maintained her store for 10 years in one of Manhattan's most expensive real estate districts, cautions entrepreneurs about opening a store outright in today's economy. "I think that you need to keep your fixed expenses as low as possible. The rent is a huge fixed expense. You have to learn what your market is, which you don't necesarily just know," she says. Doyle partially credits the success of her storefront to the fact that rents were cheaper when she first opened her doors, and that the cost of gold was less than half of its current going rate.
In absence of a storefront, having a strong online presence becomes essential for entrepreneurs. Mujus's website is currently under construction due to Delgado's desire to craft a unique online image. "My challenge with my website is that I wanted something perfect and my quotes were around the $10,000-$15,000 range."
Ricciardelli has purchased a domain name, but her Etsy store, which was free to setup, is currently the go-to spot for Mama Can't Sing online. Ford maintains a website for Amaya Designs along with a Facebook page and says that those two web entities facilitate roughly 20 percent of her total sales.
Although Ford's business has fared well without its former storefront, she thinks that a real store should be the ultimate goal for jewelry store owners. "My suggestion would be to do markets and get your name out there and develop your email list and customer base," she says. "Then jump into a store and let people know, 'I'll no longer be [at the fair]. I have my own brick and mortar.'"