16 weapons esb_entrep_presentation_9-26-03

16 Secret Weapons for the Successful

Jewelry Industry Entrepreneur:

-ESB PRESENTATION VERSION--Presented by:

Edward S. Balian, Ph.D.GIA School of Business and Q-STAT

Entire contents © 2003 Gemological Institute of America and Edward S. Balian, Ph.D.

(c)2003 GIA & E.S. Balian, Ph.D. 2

Edward S. Balian, Ph.D.Bio, At-A-Glance:

• Q-Stat started 1977 • Owned numerous companies; corporations• Started, maintained, bought & sold businesses• School of Business professor since 1976• Authored: textbooks and software• Consulted with over 60 companies to date; large &

small• Former Dean of GIA School of Business• Over 500 instructional seminars presented, including

Harvard Business School


I Am Here to Assist THREE GROUPS That Are

Present Before Me:

• 1: If you are NOT (YET) a millionaire…

• 2: If you already ARE a millionaire…

• 3: If you already are a MULTI-millionaire…

• My promise: BIG MONEY Available to YOU, TODAY


I Promise You…..

• BIG MONEY—TODAY!

• No tricks—it takes:

• Hard work, YES, but also:

• Spending your time efficiently, on the “RIGHT STUFF!”


So, You Want to Be Your Own Boss.

Are You SURE?

• The UPsides?• Autonomy• Quick decisions• Flexibility• Expense account• Tax benefits• Lease benefits• You LOVE your “Boss”

• The Not so UPsides?(Downsides…)• Numerous

Responsibilities• Constant “Juggling” of

Activities• Intermingling of

personal and biz lives• Never “away” from the

biz• The 3:00AM “idea”


The Dallas Cowboy’s Quarterback (Quincy Carter)

and YOU…

(Hint: It’s all about CONFIDENCE)


Are YOU a Strong Retailer- Entrepreneur?

• SECRET WEAPON #1: The Good: Self-starter; self-motivated; self-reliant; creative: CONFIDENT

• The Bad: Stubborn; “my way or the highway” approach

• SECRET WEAPON #2: The Ugly: In “blind love” with your business idea or concept


UNIQUE to the Jewelry Industry:A “small, closed,” YetInternational Business All At the Same Time!

• Very closed industry; cliques; “everybody knows everybody”• International nature of the product chain: mining; refining;

designing; manufacturing, distributing; NOW: even selling!• “Emotion” from consumer is the major essential element for

BUYING jewelry products• SECRET WEAPON #3: “Trust” from consumer is a major

essential element for buying FROM YOU• Potentially strong new competition from multi-sources:

– Wal-Mart– eBay– Numerous jewelry.coms


UNIQUE to the Jewelry Industry:Critical Inventory Turn, Cash Flow, & Paper Trails Issues:

• SECRET WEAPON #4: Inventory turns, cash flow so critical;

GMROI; inventory software use• Keystone mark-ups • For merchants: Accounting practices

vary; lack of strong paper trails


UNIQUE to the Jewelry Industry:Not a Typical Funding or

Ownership Pattern:

• Not a traditional funding situation (VC money, bankers)

• Happily, tends to be one of the last hold-outs of independent family businesses in the U.S.: Result? Family-funding sources tend to dominate.


OK, Is It Really All About MONEY?

• Yes and No.• Don’t get too altruistic: Money DOES

Matter; it separates a “love of gems” hobby into a long-term career.

• If you can’t make money at it, you can’t survive.

• SECRET WEAPON #5: ENTHUSIASM (V. Lombardi); passion; dedication.


Take One of the Biggest Trips of Your Life—

But Without a Map?

WHY?????


The USA Today and Nextel, 9-18-03

“The DO-ERS and theDON’T-ERS”


“I Never Ask for Directions.” The Roadmap That No One

Wants: The BP • DO-ERS VS. DON’T-ERS• Would you take a complex trip, involving many

different cars, trains, boats and trains without a specific ACTION PLAN and MAP?

• SECRET WEAPON #6: Create a BP for…– Bank?– Family members for a loan?– Venture Capitalists?– BEST PERSON? YOU! Your guide and roadmap– Revise the BP each year even AFTER your business has

started.


The BP: What’s In It, Anyway?

• Major components of BP:• This is a SELL-JOB, in fancy terminology:• Your Mission; Purpose; Goals; Vision• SECRET WEAPON #7: Marketing Plan

(PPPP) Price, Product, Placement, Promotion• SCERET WEAPON #8: SWOT Analysis• Competitive Analysis (part of “Threats”)• SECRET WEAPON #9: Financial Plan (pro

forma, 5-years)• Funds needed and terms


“I Don’t Need to Know Accounting---I Hired My CPA for That Stuff…”

• SECRET WEAPON #10:• Four critical stages leading to potential disaster:• 1) It starts innocently: A common starting comment

from many entrepreneurs.• 2) As time goes on, tax complications set in. Eventually,

your CPA is asking you questions you can’t effectively answer: You ask CPA: “Well, what do you think?”

• 3) By default, your CPA begins making critical decisions about your business.

• 4) Over time, your CPA is, in effect, running your business


“I Don’t Need to Know Biz Law—I Hired My Attorney for That

Stuff…”• Another common starting comment from

entrepreneurs.• SECRET WEAPON #11: The relationship

between your CPA and lawyer is critical; you need both for many issues

• EXPENSIVE to run to your lawyer for every day-to-day legal question

• You need to know basic liability, contract, and business structure laws


“My Parents/Rich Uncle/Brother-In-Law Will Lend Me the Start-

Up Ca$h, No Problem….”• This usually starts out innocently enough, but

eventually, almost always leads to problems later.• Unrealistic expectations from family members• The above commonly due in part to lack of tight Biz

Plan requirement (vs. banks or VC people)• Family can be harshest critics when things go not as

well as “expected”• Constant “second-guessing” your decisions• Long-term resentment upon your failure• Jealous upon your success• SECRET WEAPON #12: Never “fully” paid back

sentiment: the Never-Ending Guilt Trip


Problem:How to Get a Banker

to Listen to a Jeweler ?• For reasons discussed earlier: not a traditional

business environment, so hard for bankers to relate. You’ll need:

• A banker RELATIONSHIP• A strong Biz Plan• Emphasis on Financial Plan• Input of your own capital as show of faith• Willingness to put up significant collateral

(your home?)


The SBA and You: “Your Tax Dollars

(Actually, Really) at Work!”

• Good programs available from the SBA

• Favorable loan terms

• SECRET WEAPON #13: Check website: www.sba.gov for forms and advice

• Preferences to women and minorities


How to Get VENTURE CAPITAL $$$$$---and Live to Tell About It.

• Main types:– Business Angels– VC Groups

• You’ll need strong Biz Plan AND strong presentation skills.

• Do your homework before your presentation• SECRET WEAPON #14: Use MINIMAL

PowerPoint---sell YOURSELF instead of just using “slides” (CONFIDENCE (#1) + ENTHUSIASM (#5))= #14

• Provide a Q/A session with depth


Hey, What’s Happening, Kid???

• JCK

• Modern Jeweler

• Rappaport Reports

• InStore

• New York Times Business Section

• Biz section of your local newspaper

• Internet update sites (www.GIA.org)


Today’s Jewelry Business Environment---

What You Must Know:• SECRET WEAPON #15: YOU *MUST* KEEP

UP WITH THE INDUSTRY• Retail: New forces are formidable; don’t just

“brush off” the Internet, Wal-Mart, or eBay– Suppliers, your credit rating, inventory turns and

cash flow are your key success elements

• Wholesale: Margins are getting tighter; volume plays a larger role today

• International: The world has gotten smaller; be open to international partnerships and contacts


Is Your Business “DRIVING” You Crazy?

• Where to go?• How to move forward & at

what speed? (ACC PEDAL)• When to slow down?

(BRAKE PEDAL)• Efficient operation (OIL)• Blowing your cool (RAD)• Glancing back, but keeping

up with future trends (MIRROR)

• Panic-stop(s)? (EMER BRAKE)

Note: Size, type or $ value of “car”(your business) doesn’t really matter---basic biz ISSUES are always the same !


Beware the Common Pitfalls for Aspiring Jewelry Industry

Entrepreneurs:• Stubborn; won’t listen to other ideas; your energy overwhelms

your logic---this is a paradox: you need BOTH!• “Know-it-all” about this industry and the biz idea• False sense of “uniqueness” in the jewelry product or service to be

provided• Understanding your competitors business models• Not up to speed with current jewelry industry trends

– An occasional glance is fine, but too much looking into the industry rear view mirror---could drive your business into a ditch

• Cash flow importance underestimated• Personal and business credit line importance underestimated


Warning Signs: When Not To Launch

SECRET WEAPON #16:With apologies to David Letterman’s “List of 10”:• 1) No Biz Plan• 2) Weak Biz Plan• 3) Weak supplier chain• 4) Unclear target market identity• 5) Vague or inconsistent signals from funding sources• 6) You are very uncomfortable with prospective terms of the funding• 7) Pro forma looks either:

– too good (pie in the sky)– or not good enough (defeated before you begin)

• 8) Three people that know you very well tell you it won’t fly (get their specific reasons)

• 9) You feel your business will have no competitors• 10) You are ahead of yourself: your emotion is way ahead of your logic


Today: The GIA School of Business

• Founded in January, 2001

• Focused courses in all major aspects of jewelry business operations:– Entrepreneurship

– Retail & Sales Management

– Finance & Accounting

– Marketing & Merchandising

– Inventory Control

– Business Law and Trade: Domestic & International


Your Questions….


THANK YOU!

• Please exchange business cards with me, if you wish.

• For a copy of my presentation notes in PowerPoint, please e-mail:

• [email protected]

• This presentation was my pleasure---on behalf of the GIA School of Business and Q-STAT, thank you for your attention and participation.

• GOOD LUCK IN ALL YOUR FUTURE ENDEAVORS!

16 weapons esb_entrep_presentation_9-26-03

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