Diamonds aren’t just a girl’s best friend. From diamonds to statement pieces, people from all walks of life are embracing accessories, fueling a booming industry. If you’ve ever thought about stepping into the world of jewelry, this might be the time.
Global revenue for jewelry is expected to continue growing over the next several years, reaching an estimated $446 billion by 2029. And the U.S. average annual salary for freelance jewelry designers is $99,230, with some earning as much as $275,000. Owners of jewelry businesses may generate even more revenue.
The barriers to entry are relatively low as well. Many jewelers learn on the job. You could also complete a trade school program, take community college or online courses, or educate yourself through YouTube tutorials.
As promising as the jewelry industry may seem, though, you need to understand what’s required to succeed before you jump in—because all that glitters isn’t gold.
Choosing your business model
A business model is basically how you’ll earn revenue. Below are some jewelry business options.
Design and production: You design and produce your jewelry to sell to customers. The jewelry can be custom-made or produced in batches.
Curator/retailer: Perhaps you’re not a maker, but you still want to work with jewelry. You can curate pieces from designers, manufacturers, or wholesalers and sell them to customers in your online or brick-and-mortar store.
Wholesale: Wholesale jewelry businesses sell jewelry in bulk to retailers or other companies, but not directly to customers.
Dropshipping: You could take online orders for non-custom pieces and pass them to a dropshipper, jeweler, or wholesaler to fulfill on your behalf.
Planning your jewelry business
The foundation for every successful business is good planning, starting with identifying your target audience. Focusing your business on a particular niche can help you define your target audience. Potential niches include:
Fine jewelry
Custom jewelry
Costume/fashion jewelry
Items for special occasions
Sustainable materials
You can drill down further and specialize in specific types of items, like earrings or necklaces.
Once you’ve determined the target audience, you can begin your market research. Their buying habits are critical—the frequency of their jewelry purchases, their budget, and where they shop (for example, online, at brick-and-mortar stores, or markets). You also want to know their demographics (age, gender, income level) and psychographics (attitudes, values, lifestyles), as well as where they congregate online.
Your research should also include a competitive analysis. Go to potential competitors’ websites and social media to learn what they’re selling, where, and to whom. Check their online reviews to see what their customers love and where they fall short.
Proper pricing of your jewelry is another vital part of planning. Your competitive analysis should include their pricing, which can provide guidance, but shouldn’t be the last word. Instead, consider your cost of materials, the time invested, the market hourly rate for jewelry makers, overhead, and a reasonable profit margin. You can adjust your prices further based on the degree of creativity, quality of craftsmanship, and the amount your target customers have historically been willing to pay.
All of the information above should be included in your formal business plan. A business plan is essential for helping you stay on track to achieve your goals. Your plan should consist of these components:
Executive summary (the introduction to your jewelry business)
Company description (greater detail on your business’s set-up and history)
Market analysis (data and research on the viability and profitability of your business)
Financials (budgets, expense and cash flow projections, funding sources, revenue sources, etc.)
Products and services (descriptions of your offerings)
Marketing strategy (how you will build a customer base and sell your products and services)
Ensure your financial plans are specific and fact-based, rather than what you hope for in an ideal world. You should budget for both your startup and ongoing costs, including:
Business registration, license, and/or permit fees
Equipment and supplies
Materials inventory
Production costs
Packaging and shipping supplies
Fulfillment costs (if applicable)
Insurance
Marketing expenses
Technology
Accounting and payroll software
Payment processing system
Inventory management system
Design software
Wages and benefits (if applicable)
Facilities (if applicable)
Track your costs closely in the first year to ensure a more accurate budget for the future. Once you’re out of the startup phase, your budgets should also include a salary for yourself, a profit to invest further in the business, and taxes.
New entrepreneurs sometimes underestimate their tax obligations. Consult with a professional to reduce the risk of unexpectedly high tax bills, plus penalties and interest for noncompliance with the numerous tax rules for businesses, such as the mandatory quarterly payment of estimated taxes and withholding requirements for income, payroll, and sales taxes.
Funding your jewelry business
Your upfront funding needs will vary significantly based on your business model and the type of jewelry you sell. If you lack the resources to “bootstrap” it, you must find some other sources.
The U.S. Small Business Administration has several loan programs, and you could qualify for grants from other federal or state governmental agencies, nonprofits, or corporations. The U.S. Chamber of Commerce has compiled a list of grants, loans, and other financial programs available to small businesses. Your chances of qualifying will improve if you have a detailed and viable business plan that you can present to potential funders.
Satisfying the legal requirements
Another critical issue is your choice of a business structure—or business entity. A jewelry business is typically formed as a sole proprietorship, partnership, C corporation, limited liability company (LLC), or S corporation.
Your choice directly impacts your legal and tax liability. For example, while a sole proprietorship is usually easiest, you’ll be personally liable for all business debts and liabilities, and you’ll have to pay self-employment taxes. With an LLC, you can avoid personal liability for the business and pay less in taxes, but it’s more complicated, and you must satisfy certain ongoing formalities.
You may also be required to register your business with the local government, city, and/or state and obtain specific licenses or permits. You generally need to obtain a “doing business as” (DBA) if you conduct business under a name other than your own. And you’ll probably need a seller’s permit.
You must comply with applicable federal and local safety requirements if your jewelry production involves the use of certain chemicals or tools. The hazards in a jewelry business are covered by the federal Occupational Safety and Health Administration’s (OSHA) standards for general industry, including those regarding the handling and disposal of hazardous chemicals and materials, as well as requirements for personal protective equipment (PPE). State health codes and safety regulations can vary from federal and may be more stringent.
You should also familiarize yourself with your intellectual property rights. Original jewelry designs are protected by copyright law from the moment they’re created, but you may want to register your work formally.
The U.S. Copyright Office recommends registering it to make a public record of your ownership, qualify for additional legal benefits (for example, the ability to bring an infringement claim), and seek certain types of monetary remedies. Jewelry designs may also qualify for design patents, although the requirements are stricter than those for copyright.
Comprehensive insurance coverage, although not legally mandated, is generally a wise choice. A jewelry business may need some or all of the types of business insurance listed below.
Commercial auto: Your personal auto coverage doesn’t apply to accidents that occur while you’re driving to get supplies, make deliveries, or for other business purposes. Commercial auto also covers theft, weather damage, and vandalism.
General liability: This provides coverage if someone sues your business for bodily injury, property damage, or personal injury, such as defamation or invasion of privacy.
Commercial property: Property insurance applies to losses to your owned or rented building, tools, furniture, and equipment that result from fire, burglary, theft, wind, or lightning (you may need riders for some of your equipment and materials).
Workers’ compensation: Your state likely requires workers’ compensation if you have employees. It covers expenses stemming from work-related illnesses or injuries, including medical expenses, lost wages, disability, rehabilitation, and job retraining.
Business owners’ policy: This policy bundles general liability, commercial property, and business interruption insurance into a single policy.
Product liability: This coverage protects you from liability arising from defects in your jewelry, helping tooffset legal fees, judgments, and settlements.
Setting up operations
Your space requirements depend on your business model. You might get by with a workspace in a spare room or your garage, or work out of a dedicated studio (shared or individual). Eventually, you may require a commercial or industrial space.
Regardless, you should weigh factors such as:
Layout/maneuverability
Available storage
Ergonomics
Light
Safety requirements (for example, proper ventilation for chemicals).
For a retail space, location is paramount. Relevant factors include foot traffic, parking availability, types of nearby businesses, and zoning regulations.
Your equipment needs will depend on the type(s) of jewelry you make. At a minimum, you’ll probably need a jeweler’s bench, a variety of tools, and appropriate PPE. You can often find decent used equipment on Craigslist, eBay, or through jewelry markets. Consider renting the pricier items initially, so you can try different options and determine what you like. Either way, read reviews and get input from other jewelry businesses.
Sourcing materials is another issue to address in advance. You must stay on top of the items you keep in stock so you don’t run low or risk them becoming out-of-style and unsellable.
Depending on the materials, you might have luck with craft stores, eBay, or similar outlets. Especially for higher-end materials, such as gold, silver, and gemstones, it’s helpful to network with others in the industry and attend trade shows to identify reliable sources.
Expanding your team
When you reach the point of adding staff, several key considerations should be taken into account. For example, should you hire full-fledged employees or independent contractors? Contractors generally are cheaper, but the tests for contractors are strict, and misclassification can prove very costly. You could owe back pay, along with penalties, and end up liable for withheld employee benefits.
You’ll need to write a job description that details the responsibilities and requirements for each position. Post them where your ideal workers will see them, whether online or off.
It’s advisable to run background checks for all employees, especially if they’ll be working in your home or around valuables. Check references, as well.
When you hire your first employee, you must obtain an Employer Identification Number from the IRS and may need to register with the state department of revenue. You’ll be expected to withhold and deposit income tax withholding and each employee’s share of Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA). FICA is a federal tax that is split between employers and employees. You’ll also be required to pay unemployment insurance taxes and satisfy a range of federal and state reporting obligations.
Those obligations are among the many administrative headaches that come with most businesses. B2B vendors and software can ease your administrative load dramatically, though, so you can concentrate more on the parts you enjoy.
Producing jewelry
For aspiring jewelry business owners who plan to make their own pieces, this is the fun part. You probably have lots of ideas for jewelry designs, but do some legwork to confirm there’s a market for those designs. You can research trends by checking:
social media and influencers
fashion magazines
fashion shows
focus groups
Google Trends
When it comes time to move a design from your head to reality, you can draw it manually or use design software. The latter is the best option if you won’t manufacture the items yourself.
Do-it-yourself assembly can work well for certain kinds of jewelry, particularly fine jewelry or one-of-a-kind pieces. For costume or batch jewelry, it may make sense to outsource to a local or overseas factory or a print-on-demand (POD) manufacturer.
Marketing your jewelry business
Effective marketing of a jewelry business begins with branding, which starts with devising a strong brand name. Your name can reflect not just what you sell but also your vision, values, and quality standards. The best names are catchy, clear, and timeless, and leave no question about your type of business. When you’ve crafted some options, check with the U.S. Patent and Trademark Office and your local secretary of state’s office to ensure they’re available for a jewelry business.
You can design a logo that reflects or incorporates the name, or hire someone to do so. Include your branding on your website, packaging, promotions, and other communications. Be consistent with the visual aspects, including color scheme, logo, fonts, and other elements. You want your brand to be instantly recognizable to your target audience.
With the branding nailed down, you’re ready to sell your jewelry. You can focus on one sales channel or take a hybrid approach.
E-commerce stores are a popular option for jewelry businesses to sell directly to customers. You can open your online store through a platform like Shopify or build your own. Marketplaces like Etsy and Amazon are other options, but you can get lost among the numerous other sellers.
Regardless of the route you take, invest time in developing your product pages. Buyers expect high-quality photos from various angles, as well as detailed information about each piece, including materials, sizing, and care instructions. You may think the latest iPhone is sufficient, but jewelry, with its small details and shiny surfaces, can prove challenging to photograph well. Professional photographers can help. It might also be worth hiring models to display your jewelry in “lifestyle” photos. They may work for free or at a discounted rate to obtain photos for their portfolios.
Retailers are another possible channel. If you sell on consignment, you receive payment when items are sold, and the store assumes minimal risk. Selling wholesale to retailers is riskier for them, making it more challenging for new suppliers to establish themselves.
Or maybe you dream of opening your own store. Your costs will be significantly higher, including staff and commercial property rent and insurance. It’s wise to test the waters first by selling at, for example, pop-ups, local markets, or craft fairs. Jewelry businesses with studio spaces sometimes open up their studios for events where they sell their work to the public. This could give you an idea of whether you can sell enough to support your own store.
Such events are an excellent way of creating word-of-mouth, an integral part of promotion for new jewelry businesses, especially. Digital marketing is another common avenue for promotion these days.
A mobile-friendly website is the bare minimum, even if you don’t have an e-commerce store. A professional-looking website gives you credibility in a crowded market. It also lets you share your brand story. What inspired you to go into this business?
An active social media presence is also a must-have. You can interact with customers and share sales, new items, and fun and informative videos. Show your personality and inspirations to foster a connection with the target audience. Some platforms even allow you to establish a “storefront” within the app, so users can make purchases without leaving the app.
You can also use social media to reach out to influencers who can share your jewelry with their followers in exchange for a complimentary item. Depending on your target audience, this can be the most effective form of advertising.
One thing is for sure: when you start a new jewelry business, your hands are going to be full. Gusto’s affordable payroll, employee benefits, and HR solutions can free you up to focus more on the aspects that first drew you in.
