It’s seems obvious we’re headed towards some difficult times for businesses that thrive on clients spending their discretionary income.  It would be a difficult argument to exclude gems and jewelry from that category.  Here are some hints to help you stave off a potentially horrible holiday season.
   First, be prepared mentally for it.  Business will pick up and this holiday season will undoubtedly be your best quarter of the year.  But it is unlikely to be strong enough to match last year and surely not enough to make up for all the thin months in 2008.  You may be equally busy this year with smaller orders. Be happy with the orders you receive and make your customers feel comfortable in spending a little less this year.  Thank them for their business and they will return next year and likely spend twice as much.
   Even though Optima Gem is one of your expenses, I have to advise you to keep your expenses low.  Work off existing inventory as much as you can without making your displays appear empty. Work with your trusted suppliers and see if you can arrange extended memos on some items so you can display some things without having to speculate on their purchase in advance.  Keep in mind this will likely come at a cost but your smart suppliers will “thank you for your business” and do everything they can to help keep the cost to a minimum.  If you make an agreement for an extended memo, be sure to be prompt with returns and payment.  Be sure to keep all the original packaging and labeling so your returns will be easily processed.  If possible, offer to pay by check so your supplier can save the credit card fees.  Believe me, that’s a bonus that doesn’t cost you much but helps your supplier justify tying up some inventory with you.
   Without sacrificing quality, try to order only what you need for your orders.  Use suppliers that you can trust to supply exactly what you need without having to sort out the rejects or mismatches.  Even for a little higher cost per gem, you’ll ultimately save money this way.
   Be very careful on providing terms or payment plans.  In this economic environment even good people have problems.  A sudden layoff could devastate anybody’s budget and although they may want to pay you, they must prioritize their electric bill and put food on the table.  If you do offer terms, make sure you get a good portion in advance. Get enough to cover your costs so the worst case is no profit.  If your sales are down, there’s nothing worse than absorbing some bad debt on top of that.  If someone gives you a bad time when you ask for credit card or checking information to secure the debt, don’t give them terms.  Anyone trustworthy understands your concerns and will willingly provide what you need.
   And finally, consider discounts carefully.  Sales may be the only way to maintain cash flow in this environment, but try to avoid storewide markdowns.  Sale or no sale, some of your customers will simply not be able to buy.  Try to discount items that will attract people that have money to spend and will chose your product over another because of the price.  Try to consider the overall profit margin, not each product.  Try to put yourself in your customer’s shoes and if what you would pay for an item is less than your cost… oh well.