By Bill Boyajian
I remember playing basketball against a team in junior high school that was superior to my team in both coaching and players. After they made a basket, they would shout SCORE and put on a full court press. After stealing the ball they would score again and by half time, they were always well ahead with a sure win in front of them. In the second half of the game, their coach would call off the full court press and not pile it on just to run up the score against us. As a player, I appreciated that.
There is a lot of discussion in sports about whether it’s okay to run up a score when an opponent is clearly defeated. Once in a while teams make miraculous comebacks, but almost never when the opponent is vastly superior. Still, a lot of coaches will never be satisfied unless their team goes all-out for the whole game to win by a huge margin.
Sports and Business
I find a lot of corollaries between sports and business. Successful businesspeople have their game face on even when things are going great. They have an insatiable appetite for success, so they keep pouring it on. There’s nothing wrong with wanting to be more successful or to make more money. Too often, jewelers feel they make enough money or can’t charge customers more for their products or services. I tell them that customers vote with their pocketbooks and will surely let businesspeople know if they charge too much by walking away from their store.
I think it’s okay for a coach to have sympathy for a team that is clearly defeated, but I don’t think it’s okay for businesspeople to be afraid of charging a fair and reasonable price for their products or services. What I have found is that owners tend to charge less than they could in mark-up for fear of losing business without realizing that they are losing necessary profit by charging too little, or worse, by discounting products when they don’t have to.
As an entrepreneur, you take risks each day in business. You support numerous staff and their families who depend on you to be successful. You purchase hundreds of thousands of dollars of new products every year not knowing what will sell and what won’t. You sign a multi-year lease that commits you and your business to tens of thousands of dollars of future payments. Discounting your products or failing to focus on the margin you need to be profitable is the kiss of death for every jeweler. Discounting and losing margin may be keeping you from making what you deserve. And it also keeps you from being able to pay employees what they deserve in salary and bonus.
You Need Balance
Balance is needed in business as much as it is in sports. Just like you wouldn’t run up a score to build your own ego, you wouldn’t charge more than is fair and appropriate for your products or services. But neither should you charge too little, which would keep you from achieving a fair return on your investment and a reasonable standard of living.
Many jewelers are approaching retirement age and don’t have the resources outside of their business to retire comfortably. Sometimes it’s too late to reverse course and make up for lost ground. But most often it’s not. Take some time to review your margins and increase them on a consistent basis.
About the Author: Author, educator, speaker, and business consultant, Bill Boyajian was President of the prestigious Gemological Institute of America (GIA) from 1986-2006.