b'ARE YOU READY FOR A BUSINESS TRANSITION?By Bill BoyajianI am often asked to provide thoughts and considerations for retail jewelers who are thinking of making a business transition, retiring, or simply going out of business. There are no hard and fast rules for thisand while there are similarities in many jewelry businessesevery family and every family business is a little different. Family BusinessesAs a rule of thumb, family businesses are challenging because itishardtoseparatefamilymembersandtheirpersonal relationships from the business itself. It requires an abundance of give and take and thoughtful, constructive compromise. Successful family businesses are successful mainly because of the history and relationships that family members have built overmanyyearswiththeircommunityandtheircustomerAdditionally,manypeopledonthavesufficientfundsfora base.Becauseofthis,thevalueofabusinessisstrongestreasonable down payment and most owners do not want the when a family member remains present in the business withrisk of being paid over a multiple of years when the business ownership, such as in a constructive buy-out to another familycouldostensiblyfailthroughnewownership(perhapseven member, or in a business transition from parents to children.ownershiptoanotherfamilymember).Inaddition,jewelry A typical jewelry store does not attract a lot of outsiders to bebusinessesarehighlypersonal,makingthemverydifferent interested in it, and because of how specialized and subjectivethan selling a more generic business that anyone could run. the inventory values can be, a typical retail business does notRelationships with vendors and customers are highly important trade hands easily. In fact, today, it is quite rare. to any retail jeweler. How Businesses Are ValuedWhy GOBs? Most jewelers who want to retire will have to have a Going The value of your business can best be assessed through aOut of Business (GOB) or Retirement saleespecially if there certified professional in the field, usually a CPA who focusesis no next generation to pass the store on towhich is almostexclusivelyonbusinessvaluations.Inthecaseofaincreasingly common today. Many young people have little or jewelry retailer, it is highly preferable to use someone whono interest in their parents jewelry store and may have long understandstheuniquenessofajewelrybusinessandthebefore chosen their own career path. The best (and almost only) extraordinaryimpactthatinventoryholdingshaveontheway to retire or go out of business today with money in your value of the business. Many jewelers have a great deal of theirpocket is to have a major sale event with proven professionals personal wealth tied up in merchandise, much of which maywho have tremendous experience running such sales. These beaged,unwanted,under-performing,andworthmodeststrategic sale events, especially over the Christmas season, can amountsifliquidated.Avaluerwilloftendiscountjewelrygenerate substantial cash flow and simultaneously liquidate pieces significantly for every year they have been on the books.large amounts of inventory. A lot depends on the history of the As a jeweler, you know that your products depreciate in valuestore, its standing in the community, its specific location, the over time if they havent sold, and you are often very lucky tofrequency of past sales, and any number of variables that can get a high percentage of your cost out of the merchandise.help or hurt the end results. If you are considering a business The counter to this is that gold has historically risen in pricetransition of any type, I recommend getting some professional over the years, and if merchandise is quite old, added valueadvice. The cost of such counsel is minor compared to the can accrue, but mainly as scrap value, not as saleable newvalue it can be for your transition to a comfortable retirement.product. Diamond prices have dropped a little in recent years, so there is no guarantee that even diamonds will hold theirBill Boyajianvalue or increase in value over time. Bill is the former long-time president of the Gemological Institute of America, and is currently founder & president of Bill Boyajian The Challenge to Sell a Jewelry Business Today & Associates, Inc. His company consults for a wide variety of businesses in the gem and It is extremely hard to sell a jewelry business today becausejewelry industry, specializing in leadership, most owners think their business is worth much more than itbusiness, and organizational development, family transition, and succession planning. Bill is actually is and because most banks and lending institutionsthe author of Developing the Mind of a Leader wontloanmoneyforthepurchaseofajewelrybusiness. Your Path to Lead and Inspire People. He is a sought-after business coach and speaker, and can be reached at bill@billboyajianassociates.com.12 | The Jewelry Business Magazine'