Selling fashion jewelry or custom jewelry could easily be one of the most lucrative ventures out there. However, the profitability of this venture depends on how much money you pump into the venture, whether you have an eye for fashion or not, and if you have savvy skills. These matter because they influence the amount of capital you’d need actually to set up a jewelry store.
And for you to determine how much you’ll need to set up your jewelry store, you need to carefully and evaluate the cost of starting your store. Here, it’s important to note that the initial capital requirements depend on several factors including:
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1. The cost of your online store
If you’re setting up an online jewelry store, your initial start-up costs will include the design and website development cost. You’ll need a secure e-commerce site with shopping cart options, and you’ll also need to pay a hosting fee. The website setup costs aside; you’ll have to plan for the website’s maintenance and technical support.
Besides the technical bits, you must have in place secure payment systems, perhaps a credit card processing system for the online purchases, as well as the fees to the merchants providing the service.
There are also shipping costs. While charging your clients a shipping fee is an acceptable way of running an online store, you must also take into account the amount of time for packaging and the delivery of the shipments. The delivery of the items to the carrier might cost something, and it should be incorporated into the overheads.
There is also the fact that selling items online means being able to upload images that convert visitors to buyers. For this, you have to invest in a high-quality digital camera. Alternatively, you could hire a professional photographer, and this means adding professional fees to your expenses, and the overall cost of the initial setup.
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2. Home-based party sales
If you need to sell some of your pieces to your friends and family before you open an online store, and as you look for resources for spreading and growing your jewelry business, you might want to start with the home-based party sales.
This is not only one of the best ways for you to reduce your initial start-up costs, but it also eliminates some of the pre-planning and launch activities.
Many retail companies offer training on this, and all you will need is to pay for membership – the membership fee includes the cost of the starter kits. In turn, you receive mentorship, training in sales, as well as business tools, incentives, and contests.
How does it work?
Once you have the tools to start with, you can build your jewelry business by simply having your family and friends to host some in-home sales’ parties. In these parties, the hostess earns some free pieces of jewelry, and earn a profit based on the total pieces sold.
The startup cost, in this case, is about $200.
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3. The cost of designing the jewelry
The cost of starting a jewelry store will largely depend on the cost of designing your pieces. In as much as the cost of setting up an online store will take up a bit of the initial capital, the start-up costs will also cover the cost of raw materials like clasps, beads, wires, stones, and other components. You also have to build or buy a workbench, while also investing in the right tools for a business like files, pliers, wire cutters, as well as specialty hammer used for distressing metals. You also need to account for the cost of the anvil and a tabletop vise for the design work.
Also on the jewelry designs is the fact that your passion and knowledge gained from YouTube might not be enough, and you might have to pay for and take advances courses in jewelry designing. The knowledge gained could help you come up with specialty pieces with a higher price tag, increasing your profit margins.
Then there’s the cost of your rental lease, should you choose to get a leased space. And even after obtaining the lease, you should get a certificate of occupancy. This certificate confirms the zoning laws, the building codes, and the government regulations.
Business insurance and labor costs also affect that cost of starting a jewelry store.
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4. Business Licensing
Since you are starting and running a business, it means that you must have proper licensing. And it doesn’t matter if you’re starting the business from home or rented office/ design space. So check with the local municipality about the type of permit you will need, as well as the cost of the business permit.
The other important consideration is the sales tax. If you intend to sell your pieces of jewelry out of state, you should research the sales tax requirements by these states.
Also on business licensing is the cost of your business name and its registration. This information is necessary for taxation purposes, and it also legitimizes your business.
Speaking of business licensing, here are the steps you should take when you’re ready to start your jewelry store:
- Plan your business – take all the costs mentioned above, look at your target market, then determine how much time you’ll have to work on your business before you break even.
- Form/ register your legal entity – when you establish a legal entity, you protect yourself from being liable on a personal level. The entity will be sued, not you.
- Registering for taxes – once you form your business entity, it’s time to register for the taxes. For taxes, take into account the applicable federal and state taxes.
- Business bank account – next up, set up a dedicated checking account for your jewelry store, to keep your finances well-organized and give the business a serious and professional look and feel
- Set up your business accounting – from the beginning, you have to keep a clear record of your income and expenses to track and understand the performance of your business. Make sure that your records are accurate and very detailed.
- Obtain licenses and permits to avoid fines or force the shutdown of your business
- Obtain business insurance
- Define the business brand and build your web presence.
Finally, if you outsource the jewelry production, you should be prepared to spend money on finding the best person for the job, and the logistics involved aren’t cheap.
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