The Elephant Thread...

Yep, there IS an elephant hiding in the room. (And on ALL the forums)


I only have a few minutes to start this, but I will continue later this evening or tomorrow morning.


Couple things to think about in the meantime:

Well over 4,000 small Mom & Pop jewelry stores have closed across the USA in the past couple of years. These stores will NEVER reopen. Most of my students came from these little stores. Parents sent them to me to learn benchwork and engraving with the idea that one day they would inherit the family business. Not gonna happen now...

Walmart is now the largest retailer of jewelry on this planet.


One more and I gotta go:

Personally, I have lost two large engraving accounts during this time frame. A $25,000 hit.
(I am one of those nasty engravers that does "production" work, not "Art". Yeah, I know, shame on me for doing it, and shame on me for admitting it - but it used to pay very well)

One went bankrupt, but thought enough of me to see that I got paid before he did it.

The other looked around at the metals prices and the general state of the economy and decided to close his business and retire before he too went bankrupt.

I have not been able to find accounts to replace these two... haven't given up yet - but I'm definitely looking in places I never would have looked before.


Anyone else is welcome to chime in about how the depression/recession/escalating metal prices have affected you - and what you are doing to save your @$$...



Brian

Brian: I do some production work, too. It can pay well and I'm not ashamed of it.

Abigail and I were talking to Matt Stuller a few weeks ago and he was saying how the lower end chain-type stores were heavily impacted by the recent crash. He also said that the smaller shops were the ones surviving…struggling but surviving. It seems that those who do custom work are weathering the storm better than those who don't.

In my travels I speak to many shop owners and I always ask them how they're doing. One guy said something that really stuck. He said "We're doing ok…but it's the 'new okay'." The 'new okay' seems to be stores have made big cuts and streamlined operations. Once done they're 'okay', but it's a different okay than a couple of years ago. I'm not hearing much doom and gloom from store owners and that seems good. Show traffic could be better but it's not disastrous…at least not the shows I've attended.

It was a nice run for a long time when you didn't have to market yourself and the work kept coming in. But to be complacent in this market won't work for the most of us. I do a combination of commercial and private work. A couple of years ago, it was 80/20 commercial over private, Now it's 60/40 the opposite. It's more time consuming than benchwork, but it ends up paying about the same and it gives me the opportunity to be a little more creative.

I've lost 6 commercial accounts over the past 2.5 years, but I haven't had the time to replace them. I'll keep my fingers crossed that it remains that way. I definitely spend more time networking, going to local mixers, and Facebooking.

Heck I'll put my cards on the table.

The economy has impacted some parts of my business but has not seemed to touch others.

Classes at the school have been somewhat impacted. A couple years ago classes were running 4-5 students. This past year they have been running 3 and sometimes 4 students. There have been a couple classes I have canceled due to lack of sign up. So I have seen a bit of an impact there. The past couple months that seems to be turning around a bit though.

I still have more bench work than I can handle. The recession does not seem to have affected the higher end of the custom/art market as much as it apparently has the production end of it.

To add to that, Some of my knife purveyor friends have told me that they have noticed the mid range market has just about dried up for them. The real high end pieces are still doing well and the low end market is still healthy but they are having a hard time moving pieces in the mid range.

Ray

costume jewelry

My employment following my air force service in 1967 was in our family owned jewelry findings business in Providence. I left for other pursuits in 1985. the company started in 1939 rolling base and precious metals with engraved patterns. Wire # 1 was an embossed bracelet, the creation of a skilled engraver. The point is that many engravers were employed over the years to create hubs and dies which we used to make larger rolls (hubs being circular engraved from tool steel and hardened, which repeat the design around the circumference and also from side to side, like a textile engraving hub could be used to etch very wide production rolls). Much of this has been lost and so has the wealth that this production produced. However, the much smaller costume jewelry industry still has a heart beat. A good history can be found at:
http://www.guyotbrothers.com/jewelry-history/american-costume-jewelry.htm

More of the same here in Spain... or even worst!

I agree with Ray in the fact that the mid range of the market has been more affected and also the high end is healthy (as usual).
Actually, a wide range in the middle has been affected touching some of the lower high end range and and also some of the higher of the low end range.

I thing that it is a fact that we are involve in a business that produce things that the people really DO NOT need but DO need to pay the mortgage, the food, medicines, etc.

The income have been reduced for many people all around the world impacting in almost all the markets.
Must to wait even a bit more until the money owners decide that is the time to free the money again...

Best regards to all,
Leonardo.

sam said:

Brian: I do some production work, too. It can pay well and I'm not ashamed of it.

Click to expand...

yeah, me too, I wou'dnt say I would brag about it, but it's good value for the money. What with the airgun business, it is hard for me to get my head into a high end art project like i used to do. Got plans for me when I can apply myself thoroughly though!

sam said:

One guy said something that really stuck. He said "We're doing ok…but it's the 'new okay'." The 'new okay' seems to be stores have made big cuts and streamlined operations. Once done they're 'okay', but it's a different okay than a couple of years ago.

Click to expand...

yeahhhhhhhhh, that's a dang good description for where we are at with the airgun biz... less employees, less travel and marketing, sales half of what they were two years ago, but okay.

Like Mark said, only a few years ago it seemed like there was always more work than you could do. I was able to pick and choose more. Now I have to look for economical ways to do jobs I would have passed on back then. Also finding ways to reduce the tire kickers and other time wasters. You can’t “fire” customers as easily as I once did when I got fed up with them. You have to invest more time turning them into good customers – and make them worth keeping.


Cutting shop costs: Planning to weed out a lot of duplicate or currently unused tools, equipment, machinery – and sell it off. Getting rid of old inventory from way back when we had a retail store. Rewired the shop benches so that just the bench being used has the lighting, instead of running all the ceiling lights. Invoicing and shipping only once a week unless there’s a good reason to send just one item.

I try to do all of my shop ordering just once a month now, unless there is a very good reason not to. I keep a list by the bench and write whatever it is I think I need under the name of the company. When the time rolls around to order I often find that I really don’t “need” what I thought I needed…

Whenever possible I look for free shipping or wait until there are enough items from one company to make the shipping cost worthwhile. Shipping costs in 2006 were well over $3,000. Now I’ve gotten that down to under $1,000 for last year.

My shop and personal credit cards are paid off every month (my wife’s are another story) and I use them less and less these days.


Cutting home costs: We’ve done a lot of the usual stuff to cut down on general expenses. Expanded the vegetable garden and streamlined it to produce triple what it once did. Fruit trees are finally maturing, and I’ll do some old fashioned canning outside on an outdoor gas range this summer – freeze the rest.

We rarely eat out. I’m the cook for 3 or 4 of us, so I have to find ways to do it faster and better because it can (and sometimes does) cut into bench time.

Found more ways to cut costs for bulk food, clothing, entertainment, travel, and pretty much quit buying new “toys” for now.

Make one long round trip a week to town – instead half a dozen or more short ones.

And probably most importantly, planning to spend most of the rest of this year and as long as it takes to get rid of “STUFF" in general. I still have a complete farrier shop and saddle shop out in storage containers that I haven’t seen for 9 years. Old vehicles that function but we don’t drive anymore…



I just got in one of those “rush” jobs of more than a hundred pieces and I have a surgery scheduled for Monday, class to prepare on Friday, so I can’t really spend the time I’d like on this thread ‘till the 1st of June.

You guys take it and run with it. My idea was to find ways to save a few bucks, new markets to explore and markets to pull away from – at least for the moment.

I’ll monitor as best I can for the next coupla days.



Later,

Brian

Brian,
On cutting costs. I have the same problems with price shoppers and have pretty much quit working for many of my former customers that took 2 to 3 months to pay what was supposed to be COD.
I was spending more time chasing money and sending invoices than it took to actually letter one guys trucks. So I fired them and have decided to spend more time becoming a better engraver but a little poorer for now.....As this is just a hobby for me.
In my sign business I shop around for a better deal from different suppliers. It doesn't hurt to ask.
Many offer free shipping on orders over a certain amount, So I make a list as you do and order less times in a month.

Get a credit card that gives points or cash back. I charge all my business supplies, food , gas, EVERYTHING and use my Disney Visa card, We go to Disney for vacation with the kids and use the points toward our tickets. One year we got the tickets for free with the points we had. For a family of 5.
The key is to pay it in full every month.

Wear eyeglasses? www.zennioptical.com
I have saved HUGE over the big optical stores and the glasses are good quality.

If you take paypal, you can do "click and ship" through USPS and the postman picks up the packages when he or she delivers the mail, it saves me driving time to the post office, and its cheaper to ship as delivery confirmation is free online.

Hope all is well. I used your transfer stuff today, it worked perfectly Thanks!
Hope the surgery goes well too.
Later,
Keith

I'll add my two cents worth.

Here in Oz we have been told that we have tended to escape a lot of the worst of a bad economy. I am working as a jewellery polisher put on around September last year with another joining the company only a few weeks ago. End of last year we were doing overtime 3 nights a week and again on Saturday - life was good - even earlier this year (Feb/Mar) same again but I'm writing this in an enforced day off (another one tomorrow). We have expectations that in a month or so work will pick up and soon after that the orders will again flood in what with pre Christmas trade shows etc.

I'll start worrying when we get to the stage of "last on - first off" happens.

Good luck all,
Roger

Brian Marshall said:

Yep, there IS an elepahnt hiding in the room.

Brian

Click to expand...

Yep, it sat on me.

After working for a manufacturing company for 22 years, they closed the plant in town and took it to 4 other cities.

800 people looking for a good job in a small town is not good, and it not going to "work".

There is a difference between engraving to the end of having it a work of art, to getting paid enough to make a living engraving. The second one has been the hardest for me to achieve.

This forum is good, because --for what ever the needs may be, somebody will try to help. I hope that it stays that way.

PS If I could talk, [write] as well as I can work with my hands, I would be a salesman and be very well to do. :banana:

I have a one person shop with no employees. When the crash hit in late '08 I had several of the slowest months of my career. Things now seem to be heading back to the crazy busy I was building up to in the years before the crash. I attribute some of the comeback to several of my larger store, local downtown competitors going out of business. Their customers are now coming to me.
It's all custom order with wedding rings being the biggest part. Engraving is the only service I perform for other jewelers and that part of my business actually seems to have been dropping off the last 6 months as I am seeing less wholesale work from the trade.
I think one telling sign I've seen is a local gold chain shop in downtown. It used to have many pounds of gold chains on the walls on hooks in glass cases. The other day I went by and saw one chain on every hook where there used to be twenty chains. They sold way down and haven't restocked. I think people who are used to being around or buying gold are reluctant right now, waiting for the bubble to burst. Gold is usually 1/2 the price of platinum in a balanced market.
In anycase with investors being the only people stocking up on gold right now it's inevitable that one day they will all want to cash out at once and we can expect the bubble to eventually burst somewhat. 90% of all gold has always been held by banks or investors.

For 25 years, I worked as a foreman in a large steel mill. I started engraving as a hobby in 1980. It soon became a part-time job.
By 2002, I was making more from engraving than from the steel mill and I quit working for "them".
I haven't looked back and haven't regretted making that decision.
Every year has been better than the last and this one, so far, looks to be the best ever.
If there is a recession, it hasn't hit here yet.

Since reducing costs are one way of making extra profit, here's one most fail to employ (even those part-timers):
TAKE ADVANTAGE OF THE TAX CODE!
When it comes to taxes, you either lose or win. There's no law that says you are obligated to pay any more than you owe---so why don't you figure out how to owe less?
Make everything you do "Tax Deductible". Run everything through your business as an expense. Keep good records and NEVER EVER LIE ABOUT YOUR INCOME!!!!
An auditor may tell you you can't take this or that deduction, and that may be grounds to argue----but withholding income gets you prosecuted.
You say you're not a business? I say "Why not?"
You can substantially and easily reduce your taxable income to 10% or less.
How would you like to keep 90% of your earnings?
....and the best part is that you are playing by THEIR rules.

One thing to keep in mind though with your income to expense ratio is that if your ratio is higher than average (most businesses take home about 33% of every dollar sold) you will make a ping on the audit radar. I've had two friends audited because of higher than average expenses. I like the "S" corporation model. (The drawback though is an "S" corporations will require a very good accountant to keep you from making costly technical mistakes.) It allows you to claim a part of your income as dividends and then you claim part as regular W-2 wages subject to the huge 15.5% social security tax. Your social security benefits will be reduced substantially but who plans on retiring when you're having this much fun working?

You got about 2.4 million weddings a year in the US.
These go ahead regardless & require 2 rings.

Even a tiny percentage going your way would keep you busy plus all the guests look at the rings ( free advertising )

James as you say the S Corp. is a good way to go. It really is worth the hassle. One thing I would suggest is to pay rent to yourself from the corporation instead of dividends. The rents received are not taxed by Social security (for now). You can set up a nice little health savings account much different from the plans set up by an employer. You can do a lot of thing if you have a knowledgeable CPA guiding you.

Once you know some of the "In's and Out's" of business structure, you can tailor your shop to either maximize deductions,or limit liabilities.
For now, I've remained a sole proprietorship----mainly because I don't have any employees---and as a sole proprietorship, you only pay social security taxes on your profit.
After 25 years in the steel mill, I already have about as much SS as I am going to get---so why pay any more into it? I'd rather stuff that cash into an IRA or a tomato can.
And since I make almost everything I do/buy/use a business expense, I don't necessarily need a HUGE profit.
Here's another: As a sole proprietor, I am the business and the business is me. There's no way to separate the two.
Almost everything I buy, is exempt from State sales tax, another big money saver.
Can you deduct new carpet and furniture for your bedroom? I doubt it and wouldn't even try. Can you depreciate a $20,000.00 John Deere tractor under Equipment used for maintenance? Absolutely. (You have to plow the snow and cut the grass, right?)
With a 10 year depreciation, you can reduce your taxable income by $2000.00 a year just for the tractor alone. That makes the cost of the tractor $0.00, and you've been able to free up $2000.00 per year for "other" things.
When you start adding equipment and supplies to your business and deducting and depreciating them, you'll whittle down your taxable income substantially and increase your disposable income to expand your business.
Expanding your business can make you really happy, and don't you turn out better engraving when you are happy?
Although I agree that the tax code in this country is ridiculous,those tax laws are for you to use to YOUR advantage.
I suggest you take advantage of them.
I was always told, "When in doubt, DEDUCT IT".
As a business, you are going to have expenses. That's just a fact.
I do not recommend that you go out of your way to MAKE expenses just for the sake of "I wonder if I can get away with this?"
This isn't about gaming the system. You don't want to play games with the IRS. This is about taking legal, allowable deductions and depreciations during the course of legitimate business activity.

OK, I got a few minutes...


Retirement: At the moment, we are NOT in good shape. My wife has her teachers retirement - which since she has tenure should still be in place when the time comes - but it's a college funded by the state of California - which is broke. No longer a sure thing. Her stock investments were cut in half by the crash, and have only recovered 5 or 10 percent so far.

My own retirement got slammed by the real estate crash. I have no stocks anymore, and haven't had for 5 or 6 years - lucky me? The rest of my retirement is very liquid, but isn't working at making me more money at the moment. Been hesitating, waiting to see where all this is going before I risk it again...

In a month or so we will have NO major payments outside of the mortgage, cars are paid off, and as I said earlier I finally learned the credit card lesson and mine are zeroed out every month. Wish I could get my wife to do the same. She is getting better though...

Medical: I let my own policy go ten years ago when we married and got on my wife's because it was "free"... Then about 3 years ago things started changing. We are now responsible for 30% of the yearly cost. The total yearly cost for the family runs close to $7,000. We have both been through the cancer thing, and both of us have ongoing chronic medical problems. The tab for my week in the hospital last December was $79,000... My wife's tab for 4 spinal surgeries last year was around $240,000. Without that insurance we would be living under a bridge.

Like quite a few forum members I can remember when my medical insurance was around $600 a year. Those days are definitely gone.

I know a lot of members have little or no retirement put away, and equities in real estate have been chopped in half - so I count myself as being extremely lucky... and that is a fact, it's been mostly luck - and it can change any day.

Financial security for a lot of us is more than a little shaky and I don't see it getting back to solid ground for 5 or 10 years...

What we do about improving it during that time is gonna be critical.

Gotta go get my morning chores done, then back the bench. A full day laying out jobs.


Brian

Same over here in Europe, I think it is a world wide problem.
Still surviving quite good in my real small shop till now.

arnaud

since i was one of the people who encouraged this thread, here's my $0.02:

last year, for several reasons (long time client 'retiring', don't want any mega-time eating projects like i've had in the past, etc.), i thought i'd drum up some jewelry engraving work. in my entire engraving career of almost 30 yrs, i don't believe i have EVER met a jeweler that didn't immediately ask/beg/plead for my services the moment they learned what i do. (i've had jewelers call after meeting my mom -"My son's an engraver!"- on vacation somewhere, more than once.)

i sent info to about 40 of the more upscale stores within a couple hundred miles of home (Asheville, NC). i got back maybe half a dozen polite responses (and 1 or 2 not so polite- "What do you charge?" how do you answer that? whatever the market will bear?) to date, after 8 months i've yet to cut so much as a single initial for anybody.

one thought i've had- do you suppose people are reluctant to personalize an item they may end up having to sell?