It’s really pretty simple math. You can work and work and work to hit your dream sales number, whether that’s $1 million, $10 million or more, but if you aren’t doing anything about your costs, it will never matter. There could be a jeweler who does $1 million in sales and has costs of $1,000,001. Oops. Zero profit (or in this case a $1 loss)! Think about it: isn’t it better for a jewelry or retail store to have $800,000 in revenue with $300,000 in profit than a store that does $1.5 million with $150,000 in profit? The store owner with the lower revenue actually has a bigger bottom line and a healthier bank account!
Do not put your sole focus on gross revenue! That is only part of the equation, and solely increasing gross revenue will never pay off the way you think or dream. If you’ve uttered the typical comment (“If I could only hit $1 million in sales, I’d have it made”), I want you to stop that train of thought right now.
When you focus exclusively on increasing revenue, you will struggle to be successful. I’m not suggesting that you don’t put the pieces in place to increase revenue. What I am saying is that if you work to increase revenue without also controlling or even decreasing your costs, you are not going to drive the business and lifestyle you want.
What I want you to do is hold up a mirror and take a good look at your own focus. There are countless entrepreneurs who boast about their revenue. In reality, revenue is not the key indicator of success. It’s never how much you make. It’s how much you keep that drives success.
Certainly every business has the typical costs, and as a jewelry or retail store owner, you’re no different. If you’re not in the position where you own your building outright, you’ll have a mortgage or will being paying rent. There are plenty of costs that go along with having employees that exceed salary – benefits and insurance. There is the cost of inventory, business insurance, and marketing. Utilities have to be paid every month… and the list goes on. Providing you with steps or even tips to control or reduce these costs goes well beyond the scope of my goal for this article. In my coaching and mastermind programs, I cover every area that impacts a jewelry or retail store owner’s success, including inventory control, better buying habits, staffing, and leveraging your store’s POS system.
I wrote this to help you change your mindset about the focus you may have on total sales or revenue. That is a very short-sighted approach and will never yield the results you want. As you go about building your business or thinking about changing your own business model, you must place as much focus on cost – and then ultimately, net profit – as you do on revenue.
One of the overarching ways to reduce cost is to focus on what you do best (e.g., design via CAD/CAM or milling machine, repair, engraving, etc.). By doing so, you can be much more profitable than your competitor down the street who might be doubling or tripling your sales but failing to control costs with far fewer dollars ending up on their bottom line and in their bank account. When you embrace the “gross is for vanity; net is for sanity” approach, you will be on your way to building your “Ultimate Jewelry Business” so that you may live your “Ultimate Dream Lifestyle!
This is an excerpt from “Diamond” Bill’s new best selling book, “The Ultimate Jeweler’s Success Guide” available on Amazon or www.diamondbillmarketing.com.
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