Last updateWed, 11 Sep 2019 2pm

David Brown

It’s time you got Lazy

Many of you will be familiar with the 4 quadrants style of management that has developed in the last twenty years or so. In this process it often talks about the 4 types of problems that a business has to deal with each day. They can generally be broken down into 4 categories:

  1. The urgent and unimportant
  2. The non urgent and unimportant
  3. The urgent and important
  4. The non urgent and important

We’ve found over the years that the most successful jewelers have been the one’s who have the greatest ability to avoid being caught up in the urgent but unimportant, and are able to concentrate their time in the non urgent and important.

Let’s give you an example of each type.

  1. Mrs. Smith brings in her watch for a battery and insists on speaking with the owner about getting a new strap fitted while it is being done.
  2. The marketing plan for the next 12 months needs to be completed.
  3. More rubbish bags are needed as you are down to the last three.
  4. The pricing tickets need to be completed for the sale starting tomorrow.

So how did you do matching them up? The urgent tasks are obviously Mrs. Smith and the sale tickets, but it would be fair to say that Mrs. Smith may fit into the category of unimportant (not to Mrs. Smith of course, but if you weren’t there to help her I’m sure she would be quite happy to deal with one of the staff) with the sales tickets being urgent and important.

The non urgent tasks are the rubbish bags (which are not important) and the marketing plan.

It’s at this point where many jewelers fall into a trap. Understandably every store wants to offer that personal service for their customers, that is the point of difference that the chains don’t offer. However, you need to do it in a way that you don’t finish up at your customers beck and call. Mrs. Smith’s strap is important; but not as important to you as getting your marketing plan prepared. It’s important you offer that special service to Mrs. Smith, but you must not compromise your business in the process – if you went out every time a Mrs. Smith asks to have her strap changed you would never get anything else done.

The urgent tasks, by their very urgency, tend to draw attention to themselves. The non urgent and unimportant are either not critical, or eventually become urgent and are dealt with. The great shame is the non urgent but important tasks that get left – such as preparing a marketing plan for the coming 12 months. The consequences of not completing these types of tasks are, on the surface, minimal, however their long term impact can often go unnoticed. Much like the frog that slowly boils to death when the heat gets turned up, these important areas can be neglected until it is too late.

Although these four types of tasks have been a relatively recent addition to management theory, the principles have been around for many years. The German Army over 100 years ago, used to divide it’s officers into 4 different types.

  1. The hard working and incompetent
  2. The lazy and incompetent
  3. The hard working and competent
  4. The lazy and competent

The first category were the most frightening and were effectively isolated. Their incompetence could result in loss of life, but because of their hard working nature they had the ability to cause even greater havoc than the lazy officer.

So which category did they prefer to promote? The German army sought to identify and promote the lazy and competent officer. They saw the laziness as a virtue as they realized a lazy yet competent officer would not waste time on matters that were of no consequence. These types of people had the ability to pinpoint the areas that got them the greatest results for the least effort – and they would conserve resources better as a result.

So take a lesson from the military handbook. Start practicing being lazy and force yourself to only work on those areas that will bring you the greatest results – the important but non urgent.

David Brown is President of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports contact Carol Druan at This email address is being protected from spambots. You need JavaScript enabled to view it. or 877-569-8657.

How are you handling the gold price?

With gold having shot through the $1500 mark at the time of writing, jewelers are increasingly finding the cost of replacing sold product to be a changing game. This month I will discuss the “new gold standard” and how best to deal with this when replacing product.

Profit vs Cash flow - what’s the big deal?

If you are running a business, you better know there is a big difference between profit and cash-flow. Though they seem similar, they are not, and you run the risk of putting your company in dire straits if you can’t tell them apart.

Much as I don’t want to hit you with a lot of accounting speak, there will be some, but I promise I will try and keep it to a minimum!

Let’s start with a simple analogy... say an $800 weekly household budget. Included are likely to be allocations for groceries, cleaning and other similar stuff needed to run your household, plus, that which is needed for utility, telephone and other such expenses.

Suppose you lump the money together and spend as you would without apportioning the amounts. A little extra here and an indulgence there and you are likely to end up overspending on the other household stuff with little left over at the end of the month to pay the electricity, heating and other bills which are due.

This exact scenario can easily play out in your business if you are just as lax. The language used may be different, but the conclusions are the same. If anything, it is riskier as the sums involved are much greater.

So, moving into business mode, and with the help of some terms, we present a similar scenario with a company that has made gross sales earnings of $100,000. The 2 perspectives are presented in the chart for a comparison of how they may play out.

Example 1 (below) shows how the company might allocate and spend the money earned according to standard accounting rules, and which results in a Net Profit of $1,715.

In actual fact however, Example 2 is what has happened in terms of cash flow. Instead of a profit, there is a gaping $13,285 shortfall, which may well require the company to opt for overdraft facilities.


* On average, US jewelry stores break even or lose money 9 months of the year.

** In the US, store annual net profits of 0.9% to 12% are the norm, thus a $500k store will take in $4,500 to $60,000 per year.

Jewelry retailing is especially vulnerable to these sort of situations as it is a cash-based business with settlements not due until 30, 60 or even 90 days later.

The keys to avoid becoming stuck in such business dilemmas is to maintain cash flow projections and to segregate and allocate. This is done by staying ahead of your cash flow requirements and separating the inflows from the get go, into two piles – one for stock and the other for expenses. Knowing what you need to pay for before you go spending on unbudgeted items is half the battle. In other words, plan, plan and plan your expenditure!

By doing so, you will be on top of your profits and cash flow, have a lot less money angst and a lot more cash in the bank for your well-earned creature comforts.

David Brown is President of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports contact Carol Druan at This email address is being protected from spambots. You need JavaScript enabled to view it. or phone toll free 877-569-8657.

The true cost of aged inventory

One of the biggest headaches for most retail jewelers is the issue of surplus inventory and what to do with it. In many cases the majority of this product has become old, and the problem gets compounded by the need to keep adding fresh product – of which around 80% eventually joins the old category as well. Many jewelers see this as an excess inventory problem – in most cases however, I prefer to attack it from the point of view that there is a shortage of sales.

It’s Trade Show Season – so, are you prepared?

The next few months promise to be busy ones for most stores with trade shows and group meetings taking up a good chunk of the calendar. Often, depending on their store location, this presents the only opportunity for some store owners to meet with other store owners and to purchase from vendors.

How are your New Year’s Resolutions holding up?

I’m writing this on the Eve of New Year and, as always, this is a great time to reflect on what has happened during the last twelve months, and set in place promises for the New Year ahead.

By the time this appears in print you will, no doubt, be back into the hurry and bustle of the New Year’s activity. This is the period where the ink has often dried on the New Years resolutions and it’s easy to discover that many of the promises made over a glass or two of wine in late December have largely been forgotten.

So if you have forgotten your promises, or never made any to yourself at all, then I’m here with your 30 day refresher visit to help get things back on track!

New Years Promise No. 1 – I will spend less time at work

We’ll cut to everyone’s favorite first! Not too many jewelers wish they had spent longer at work during last year. There are plenty however, who would like to spend more time with their partner, family, or just enjoying things for themselves. Spending the festive season with family reminds you of why you are here, but that desire to make changes can easily disappear when you are back to the grindstone.

If you haven’t put this one in place it’s time to take steps:

1. Do the $100 tasks and give the rest to somebody else. If you want to free up your day spend the time on the stuff that matters and stop spending it on the stuff that doesn’t. It doesn’t mean Mrs. Watson’s watch battery shouldn’t get fitted when she needs it done – just that you shouldn’t be doing it. Contrary to popular opinion you can work less and earn more provided you do the stuff that increases your profitability. That means focusing on staff development, product lines, marketing and the other areas of your business that don’t involve trading time for money.

2. Schedule “your time” first. By this I mean put the activities that are most important to you to the front of the To Do list and fit the rest around it. Need to plan next month’s marketing? Then schedule this first. Plan to attend the gym everyday? Then schedule this first. This includes going through and booking your holidays for the year. You need to take time to sharpen the axe.

New Years Promise No. 2 – I will cut my level of inventory back

This one takes action – on two fronts

1. Make a plan to reduce your aged inventory and to work on it every month. Aged inventory is like grass – it just keeps growing. You can’t mow the lawn once and think it is done. You need an ongoing plan to rid yourself of those old products. This may involve:

  • Reducing products via specials (sale or ongoing)
  • Melting product down
  • Exchanging with vendors
  • Other options

2. Improve your buying. Prevention is always better than cure.

  • Take advantage of the software available that can show you product that is proven to sell elsewhere.
  • Reorder your own good sellers. You’ve just been told by the customers that they like it so don’t ignore the feedback by failing to reorder.
  • Discuss whether new product bought from a vendor can be exchanged. They are usually more willing to discuss this at the time of purchase than later when it has become old.

New Years Promise No. 3 – I will increase my sales and profit this year

Any plan has to have a strategy. If you think wishing it to increase will work, then think again.

Make a plan as to what areas you will improve in your business and how you will do it. The steps above regarding inventory will help but you need to look at other things too:

- Have I got enough margin on my product? Too often I see businesses whose sales are strong, but they are giving profit away needlessly by not asking enough for what they sell. There is plenty of information available regarding what margins are being achieved by other stores. You have no excuse for being the lowest in this area.

- Is my marketing effective? The old habits of throwing money at various media and hoping it sticks will no longer work. If you want more customers to spend more you need to develop your database and concentrate your efforts in areas that get results.

- Invest in training for your staff and for yourself. If you aren’t selling enough bridal get some help with selling bridal. If your staff need training with diamonds then get them some diamond training. Remember, nothing changes if nothing changes.

New Years Promise No. 4 – I will deal with that problem staff member

Are they still there? No one likes dealing with problems. It can be easier to sweep them under the carpet. But an under-performing staff member will take money from your business and prove disruptive to the rest of the staff. Take the steps to train them if that will solve it. If the problem is more permanent then you need to take the advice of a former colleague of mine who believed that it was best to “free these people up to pursue other opportunities!” Then if you replace them you need to make sure you don’t make the same mistake again (contact Carol below if you need to know more about how to avoid making those bad hiring decisions).

So there’s your New Year’s Resolution refresher. How many did you have on your list? How many of them have you taken action on so far?

Now’s the perfect time to recap and put your 2011 back on track where it belongs.

David Brown is President of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports contact Carol Druan at This email address is being protected from spambots. You need JavaScript enabled to view it. or phone toll free 877-569-8657.

Getting back to basics

This month, we want to talk about two KPIs (Key Performance Indicators) - mark-up and stock turn which combined produces your Return on Investment (ROI). This is a measure of how much you get back for every $100 invested in stock. It is a multiplier of mark-up and stock turn – in other words, how much profit you make on each item you sell, times how often you can sell it.