08182017Fri
Last updateTue, 15 Aug 2017 9pm

24 Karat Corner: Who cares about overhead?

Recently I visited a mall far, far away. I was desperately searching for the food court in a mall that had clearly seen better days. Many of the store fronts were empty, and the retailers that were open were down-market and tired looking. As I turned the corner, I saw a small jewelry store. “Bonus!” I thought, someone to point me in the right direction and maybe even have lunch with.

I walked in to find most of the showcases were empty. The jeweler looked up from his magazine and eagerly gave me a smile, which quickly turned into disappointment as I introduced myself and told him why I was there. He directed me to the food court and twenty minutes later I returned with a pizza for the two of us to share.

“How, may I ask, did you wind up here - in this mall that time seems to have forgotten?” I asked.

“Obviously a mistake,” Phillip answered. “Which only compounded an earlier, bigger mistake, which I made and now wish I could take back.”

Realizing that Phil was glad to have someone hear his story, I grabbed a slice and sat back. “So, a couple of years ago, I had a nice job as a bench jeweler for a retailer a few towns over. I was making about $20 an hour. One day, I noticed on the repair ticket that they were charging the customers $65 an hour for my labor. I go to the boss to complain that I deserved a bigger portion of the $65 than I was getting. He started telling me things about overhead, and blah, blah, blah, so I interrupted him and said, ‘You mean if I had my own shop, I could charge $65 an hour for labor and keep the whole thing for myself?’

“‘I guess so,’ my boss said. And with that, I gathered up my tools and walked out!

“A few weeks later, I found this place. It was the only place I could afford. I’m now charging $75 an hour for my labor, but my life is completely different. In my old job, I came in at 9:00 and my box was filled with jobs. Usually 2-3 days worth of work, and I would just plow through them all day long. Here, I have to get up from the bench when the customer comes in, make the sale, write up the ticket, and then a few days later, when they return, I have to get up to deliver it, explain the work, collect the money, and write up the sale.

“Oh, and I’m spending time ordering things like solder, batteries and lobster clasps. These things were always just in stock at my old job. And, I’m spending time writing checks to suppliers and stuff like that. And, the worst part, my in-box is rarely full!”

I finished off a second slice and told Phil to take the rest home. I wished him luck, and he mentioned something about looking for a job when his lease runs out. On the way out, I was thinking that Phil got a very expensive, albeit first hand education in business accounting.

Fixed costs, overhead, or whatever you want to call it, is a major part of everything we do. And, while he was working at the bench in someone else’s shop, it never occurred to him that things like rent, electricity, back office support, etc., were all part of the cost of the sale. If Phil had taken just one business accounting course along the way, he’d still have his old job, probably running the shop by now, and would be a more valuable and effective employee.

The 24 Karat Club offers a variety of scholarships to members of the jewelry trade.  While most recipients use the money for technical training, we’d be happy to sponsor business courses as well. If you or someone you know would benefit from a 24 Karat Club scholarship, ask your favorite 24 Karat Club member to consider nominating you for the appropriate scholarship. You can find a list of 24 Karat Club members at www.The24KaratClub.org. Funds are limited, and the process is competitive, but if you qualify and are awarded a scholarship you could choose to use the money for business courses. You’ll become a more valuable employee whether you work behind the counter or at the bench.

In today’s environment, its not enough to just say, “Hey, I came in, I did my job...”.  You better have an understanding of how your company works, and in particular, how your role ties into the company’s bottom line.

This year, make it your business to get some business training. Let The 24 Karat Club help pay for it.  Or, you could just call Phil and offer to take over his lease.

Howard Kelrick is President of Finger Mate and a  board member of The 24 Karat Club, SEUS.  Finger Mate manufactures and installs expandable ring shanks and sells to retail jewelers throughout North America. Contact Howard at 954-458-2700 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it.This email address is being protected from spambots. You need JavaScript enabled to view it..">.

 


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