By PHILLIP?M. PERRY
Will “Obamacare” batter or bolster your bottom line?
The federal Affordable Care Act comes at a time of rising health insurance costs for small business owners. Annual premiums for employer-provided family coverage grew to just under $16,000 in 2012, a rate some 4 percent higher than 2011, according to a report from the Kaiser Family Foundation .
Will the new federal law help put a cap on rates? If you have 50 or fewer employees you have a good chance of turning the new federal law to your advantage.
“Generally speaking the law is more favorable to smaller businesses,” says Shawn Nowicki, director of health policy at Northeast Business Group on Health, a coalition of 175 employers, unions and health care providers.
Nowicki points to a number of advantages geared toward the smaller operators. These include competitive state wide insurance exchanges, premium reform, and tax credits.
Here’s a rundown of how you may benefit from some of the law’s provisions:
Competitive exchanges. Competition is good. That’s the theory behind the new state wide health insurance exchanges, designed to allow small businesses to shop for plans from competing carriers. These exchanges will be available for employers with 50 or fewer people in 2014.
“To understand how the exchanges will work, imagine navigating to a travel website that aggregates airfares,” says Karl Ahlrichs, benefits consultant for Indianapolis-based insurance broker Gregory & Appel. “You type in your parameters and the site sorts your options and you pick what you want. That’s what employees will be doing with the exchange sites.”
Under the best of conditions, the new exchanges will also help trim the human resources overhead, by providing a host of robust administrative services.
“Businesses that send employees to the health insurance exchanges will be getting out of the health insurance management business,” notes Ahlrichs.
Premium reform. Small businesses have long been the targets of prohibitive premium hikes when one employee is hit with a costly illness. The new law levels the playing field.
“Starting in 2014 insurance carriers will not be able to set premiums based on health status, sex or claim history,” says Julie Stich, director of research at the International Foundation of Employee Benefit Plans, a research organization based in Brookfield, Wis.
“That will help small group plans where one catastrophic claim can cause health costs to go up.”
Penalty exemption. If you have 50 or fewer full time employees you will be exempted from penalties for not providing health insurance.
If you have more than 50 employees and your employees purchase insurance from the new state exchanges, you will pay a fine of $2,000 per employee who does so, excluding the first 30 employees from the assessment.
Tax credit. The law provides for a tax credit for businesses with 25 or fewer employees if the company pays at least half of the employee premiums.
Downward pricing pressure. The law may also encourage more transparency in the area of fees for medical services, says Ahlrichs.
In consumer-driven health plans, people will be given a set amount of money with which they can shop for services. They will be able to go to a Web site, enter a service such as an “appendectomy” and get a list of physicians that perform that procedure, a quality rating and a cost.
“Comparison shopping should put downward pressure on prices,” notes Ahlrichs.
Transparency. Do you know how much your broker is being paid for arranging your insurance? Today such commissions are buried in your premiums.
This may change under the new law as pressure mounts to reduce administrative costs. Brokers may start charging fees for their services, which may well dampen overall costs while promoting accountability and performance.
There is another hidden benefit the new law may provide smaller businesses: access to higher quality personnel.
“Today at larger employers there are many high quality, mid-career professionals who are frustrated because they cannot be very entrepreneurial,” says Ahlrichs.
“They would love to join a smaller organization where they can try things out, or they might want to band together and start something.”
In the current system, says Ahlrichs, if such people quit their current positions they are uninsurable.
“They may have a daughter or wife who is a diabetic or cancer survivor. Or they themselves may have some chronic condition. As a result, they are handcuffed to their desks because of healthcare.”
When the exchanges come online, the handcuffs come off. “There will be a significant shift in high performing talent out of the larger organizations and into smaller ones,” says Ahlrichs.
“This could be a huge benefit to small entrepreneurial organizations which position themselves as places where talented people can exercise some freedom.”
Many business owners are upset about the minimum level of benefits required by the new law. In some cases, those levels are higher than what is currently being offered in the workplace. That means greater expense in the form of higher premiums.
By DAVID GELLER
So many pawnbrokers treat the repair shop as something other than what it really is, another profit center. It’s often looked upon as:
• A customer service necessity
• A must-have department to compete with other stores in town
• Customers don’t like to have their jewelry sent out so we have to have an in-house shop
• The store owner is a bench jeweler so we’ll continue to have a shop
The repair shop should be just like any other department or profit center in your store. It must be a profit center and you should demand as much.
I’ve had so many talks with jewelers who either brag or complain about different departments in the store:
“Our bead department makes almost keystone and brings in customers.”
“We’re doing great in selling diamonds.”
“Our Rolex department is 25 percent of sales.”
“Silver is bringing them in the door.”
“Buying gold has kept us alive.”
“It takes too long to sell a bead and the company demands too much so I changed brands.”
“This supplier wants me to carry too much inventory and won’t take back old stock, so I deep-sixed them.”
“There’s no money in watch repairs so we don’t even take them in any more.”
So what’s your complaint or brag about your repair shop?
Do you consider your shop as an orphan who’s always a pain in your side?
Would you change your mind if your Little Orphan Annie came with a $500,000 trust fund? That would change your tune, wouldn’t it?
Start demanding that the shop be like your bead, diamond or any other department in the store — demand performance!
Charge more than you’re charging now. You charge too little. Customers will pay as repairs are not price sensitive, they are trust sensitive.
You also must demand that it runs on its own.
You must immediately start ongoing in-house training sessions to teach the staff how to take in, sell and price the shop work.
A large majority of jewelers in America use my Geller’s Blue Book to jewelry repairs. But you just can’t hand an employee a 300-page book and say, “Start using this today.”
They must be trained in using it and convinced that we need to charge these prices. My Web site has training videos on the whole book. Your employees should start there.
You should incorporate bi-monthly sales meetings for your store, and out of an hour’s training devote 15 minutes to shop training for the staff.
The shop should keep its word on promise dates. This means besides having a jeweler that you “hope” will perform, you must have systems in place that will give reports of jobs due in the next three days as well as waiting on parts.
A jeweler is not just an employee who sizes rings any more than a sales person is just someone who waits on customers.
Besides being nice, you demand the sales staff perform by selling a certain amount of dollars each month. The repair shop should meet the same expectations.
The bench jeweler has several areas of performance.
You expect fine work, that customers always happy, that the jeweler doesn’t chip or break stones and impeccable craftsmanship.
Too many store owners are afraid to discipline or fire an employee, thinking they can’t find anyone else. You can’t let one person ruin the store and tarnish customer service or your reputation.
If they have a hard time with good workmanship, and you aren’t able to train them yourself, invest the money and send them to one of the many one-week jewelry schools to fix repair and setting problems they might have.
Here the jeweler has less impact on profits than you think. The sales staff and what they charge has the greater impact.
But you can demand that the repair shop be more efficient with its time. A bench jeweler should produce about $100 to $150 per hour every 8 hours a day, meaning more than $800 a day in shop sales per jeweler.
Again, the pricing has a lot to do with that but the jeweler can affect this number as well.
So how do you get the jeweler to produce $100 to $150 during any hour?
The only time a jeweler produces dollars is when he/she does work where we charge the customer.
When you size a ring or retip a prong, do you charge extra to polish the ring? The answer is no. Hire a separate polisher to polish the jeweler’s work.
For the first 10 years we hired a high school or college student to come in after school to polish the jeweler’s work, and taught the student how to engrave, invest, cast, change showroom light bulbs and take out the trash.
Since most jewelers are male, stores usually have them do grunt work. They are supposed to produce $100 between 3 p.m. and 4 p.m. They can’t do that if they polish, go to the bank or take out the trash. They are a money machine and they only do real work for 5.5 hours out of an 8-hour day anyway!
Do you charge the customer to call and order a lobster claw for them?
No. Jewelers should not be calling or ordering their parts and supplies. Give them an order pad, let them write down what they need, and have the office staff order the parts.
When the box arrives the office distributes the parts and hands it to the jeweler.
If you add up total shop costs, along with the jewelers wages as shop costs, and compare that number to total shop sales, you should be expecting shop sales to be double shop costs (keystone). Now that’s a trust fund!
You expect that of other departments, don’t you?
David Geller is the author of Geller’s Blue Book to Jewelry Repair & Design (a pricing book for making money in repairs and custom design for jewelers and pawnbrokers) and a consultant to jewelers on store management. You may reach him at David@Jewelerprofit.com, (888) 255.9848 or (404) 255.9565, or through his Web site www.JewelersProfit.com. Our repair pricing book is made for the counter at take-in. It’s put together to make it easy for the staff to use but we also have some free video training on our Web site that you should use. There is training for each chapter of our book and I also train your staff how to sell repairs. Just go to our Web site www.jewelerprofit.com/trainingvideos.html The password is geller.
“A fast nickel is better than a slow dime.” I’ve heard this over and over, as no doubt, have many of you. So tell me, why are so many pawnshops overflowing with inventory?
Do that many of us have the slow dime mentality with the hard goods for sale in our shops? We certainly don’t think that way with our jewelry, but seem to forget about everything else.
For those in need of an explanation, “a fast nickel is better than a slow dime” means that a smaller profit (with greater volume) can be better for business than a potentially larger profit (with less volume).
No one wants to make a slow dime. We all both want that dime and for it to come quickly. But what many of us do, is price our goods for sale in the slow dime price bracket.
What does this mean? With luck, you’ll eventually make that dime, but it will take you much longer. Your goods will sit and take up space and may become obsolete — then you’ll be lucky to even get a nickel.
On the other hand, the fast nickel will allow for a quicker turn of your inventory and more cash flow to come through your business to loan out or buy new inventory. This ultimately means more money in your pocket.
For example, would you rather earn $1,000 a month, or $500 a week? $500 a week is double the amount of money, even though it’s only half of the profit. It all has to do with volume.
Let’s face it, for the most part our investment in our inventory is at a considerable discount to the retail values of the same products. We can afford to price it slightly under market value and turn it quickly.
Yes, I know there are some exceptions, like gold and AR-style rifles. There is no reason to sell your gold for less than your refiner will give you without any work involved in refurbishing and selling it. And certain firearms are bringing nearly twice their MSRP at the moment.
Albert Einstein is rumored to have said, “The most powerful force in the universe is compound interest.” If you made a fast nickel (5 percent profit) every month for 10 years and reinvested that into your business, your initial dollar would have grown to $349. However, if you made a slow dime (10 percent profit) every other month, your initial dollar would have only grown to $304. Still a good return, but the fast nickel earns you 15 percent more over the time period.
A wise man once told me you make your money on the purchase/loan/ acquisition, not the sale. So you need to buy/loan/acquire right.
Of course, another wise man once told me you make your money on the finance charges and you should loan out as much as possible.
And yet another wise man once told me if you don’t buy it, you can’t make any money — a small profit is a lot more than no profit.
Sometimes it is hard to determine which wise man is the wisest.
But I think they would all agree that the faster you turn your cash over, the faster your business grows.
Tip No. 199
Over the years, I’ve touched on refurbishing your used jewelry to make it appear as close to new as possible. Better looking jewelry is easier to sell.
However, with the price of gold where it is, many pawnbrokers just take their forfeited jewelry and put it directly in their recycling container for a quick, easy and profitable return on investment (fast nickel vs. slow dime — I’ve heard that somewhere before).
I’m one of those pawnbrokers who still have jewelry for sale in his showcases. I don’t recycle (scrap) every forfeited jewelry pawn or OTC purchase. But if it is old or worn out, broken or ugly, damaged in any way, or maybe an odd size, chances are it’s going in the recycle bin.
My jewelry refurbishing arsenal includes a magnetic finisher, two tumblers, three ultrasonic cleaners, an ionic cleaner, a steam cleaner and a bench top polishing unit with a double shaft polishing motor and dust collector. Not to mention my fully equipped jeweler’s bench with Foredom flexible shaft machine and all those jeweler’s files and saws.
But today, we’re just concerned with the polishing machine and the dirt and dust it creates.
A few years back, I custom fit a large, rectangular plastic tub over my polishing machine with a 2-inch space in the back for a Shop Vac hose to come up through the table on which it sits.
The front is still open for access to the polishing machine’s polishing wheels, but the sides, top and back are loosely enclosed in a secondary container to allow for a vacuum to draw the air from the polishing machine’s exhaust fan and to also catch any dirt and dust which escaped into the room.
When we turn on the polishing machine, which has its own internal filter, we also turn on the (used) Shop Vac with dual filters.
This dedicated Shop Vac is also used to vacuum out the polishing machine and all around the polishing area, including the floor.
All dust, and I use this term very loosely (it really means polishing compounds and polishing wheel material), and debris which is removed from the polishing machine by the Shop Vac is then transferred to a 14-inch x 16-inch (10 gallon) fiber drum provided by a refiner.
We also throw in used polishing wheels, polishing machine filters, used golf gloves (Bonus Tip No. 4) and anything else that comes from the refurbishing area.
When the drum gets full, we call the refiner and they arrange for shipping of the drum to their facility.
Now I know the percentage of return on sweeps is a lot less than that of actual metal. It also takes longer for refining. But it is a necessary by-product of the actual work performed – refurbishing jewelry for sale to the public. I also know that I haven’t sent in a drum of polishing material for a while — it takes time to fill the drum. What I didn’t realize was how much this dirty material is worth.
Three weeks after I sent in my drum, I received a check for more than $13,000. So if you aren’t taking extra care to collect your dirt and dust from your cleaning and polishing station, you are literally throwing away money.
Bonus Tip No. 4
I would probably be safe in assuming that most of us have had to polish a piece of jewelry at one time or another. And we all know how difficult it can be at times to hold onto the item, especially if it starts to get a little warm. Not to mention how black your hands get.
Have you ever tried wearing golf gloves? Whether they are leather or nylon, red or blue, matching or not, they work very well for polishing jewelry.
If you have a full-line pawnshop (that means you take golf clubs in pawn), you should have an ample supply of used golf gloves coming from the golf bags of the sets of clubs that are forfeited.
If your shop doesn’t deal in golf clubs, ask friends for their old gloves or just go out and buy some. They are not very expensive and if you buy them, you can even make sure they fit.
Tip No. 200
I am really not a fan of All-in-One computers. I’m not a notebook or tablet lover either. I like a full size keyboard (so I can make big typing errors), a large monitor and a trackball instead of a mouse. But each of the above has its benefits.
In Tip No. 96, I recommended a desk/wall mount arm for computer monitors. Well, recently my mini HP desktop computer that sat in the right-hand corner of my desk, next to the wall, died and went into cyberspace. As an experiment, I replaced it with an AiO because I really could use that 4-inch x 14-inch foot print that my old HP took up all those years.
Now, being a pawnbroker, I typically use what I have, not what I need. (That means what has come out of pawn recently.) Sometimes that works out in my favor. I happened to have this very nice HP AiO that I had just restored. But this particular model wasn’t VESA compliant. VESA is short for Video Electronics Standards Association, a consortium of video adapter and monitor manufacturers whose goal is to standardize video protocols.
The VESA standard defines dimensions of a display’s four-hole attachment interface and the screws used to fit those holes. It also dictates the placement of the hole pattern on the back of the display. For attachment to VESA mounts, this invariably means the hole pattern should be centered on a display’s back (denoted in a VESA label with the letter “C” as in VESA FDMI MIS-D, 100, C).
Most sizes of VESA mount have four screw-holes arranged in a square on the mount; with matching tapped holes on the device, the horizontal and vertical distance between the screw centers was originally 100 mm. A 75 mm layout was defined for smaller displays. Later, variants were added for smaller and larger screens.
Of course, as many of you regular readers of my Tips column know, I have trouble leaving things alone. I often find I need to “improve” their functionality.
For the most part, the majority of AiO’s are not made to be mounted to a monitor arm – probably because most inexpensive arms won’t support their weight. I actually found a company that made a retrofitted mount to attach to my AiO in order to make it monitor arm mount-compatible. The only issue I had was the price — they wanted $150 for this mount — I’m not sure I even loaned $150 on this computer!
I also found another company (iversal.com) who sold a more reasonable VESA mount adapter kit for $50, just not for my model AiO.
So I thought if they could make one, so could I. I removed the base/stand from the back of the AiO and looked at the three recessed mounting holes. It didn’t look too difficult.
I went to the local home center in search of the elusive AiO mount. My first stop was in electrical. And there it was — I bought a 4-11/16 x 4-11/16 inch square metal electrical box cover. Next, I went to hardware to gather up a handful of assorted length metric screws, nuts and metal spacers.
Once I had all of my raw materials, I cut some paper to make a template, marked the electrical box cover with the three-hole pattern of the AiO’s base/stand mount, and started drilling.
Next I marked the four-hole VESA pattern (100 mm x 100 mm) on my electrical box cover and drilled some more.
The final step was to attach the electrical box cover, with screws and spacers, on the back of the AiO and then attach it to the arm’s monitor plate. My homemade AiO mount cost less than $5.
HP and others do make a few wall mount adapters for certain model AiOs. I believe the trend in future AiO design will be to make VESA mounts a standard feature.
Bonus Tip No. 1
I also added a wireless keyboard and mouse.
Tip No. 201
What does “tax included” really mean to your bottom line?
I consider the cost of every sale discount, i.e. ‘$97.50 – tax included’ to be 10 percent.
OK, so what does that mean? To me, it is 7 percent (Ohio state and county) sales tax and up to a 3 percent fee for accepting a credit card.
How do I get 3 percent for credit cards? Well, those rewards cards, business cards and American Express can easily cost you 3 percent or more in fees.
I also assume the worst case scenario, that everyone is going to pay with a credit card — and I’m usually correct. Even if it’s a debit card, the customer often wants me to run it as a credit card.
I know your credit card processor is getting its cut because it takes it out first and then gives you the difference. And I’m assuming you’re forwarding the state and local government their share of this sale.
So that $495 widget that you agree to sell for $450, tax included, actually only nets you about $405, which is almost a 20 percent discount.
OK, often we do what we have to in order to move some merchandise out the door (fast nickel vs. slow dime). But when you or one of your staff makes this sale, are you thinking $450 or $405? And that is before all the other expenses to make the sale are considered.
Sometimes you really need to think it through before you quote a discounted price. Especially on gold jewelry. If you’re not careful, you might be selling it for less than scrap. Most of us just aren’t charging that much over melt to be able to take off 20 percent.
Tip No. 202
I recently read some discussion on a computer network forum about something called the Knox Box. For those unfamiliar with it, the Knox Box is a secure box mounted to the outside of a business (or residence) in which the owner/tenant places a key (or keys) to his business for the local fire department. The discussion was started by a jewelry store owner who was being forced to install a Knox Box by his local fire department.
What? Leave your pawnshop keys in a box outside your door for everyone to see and access? “Ain’t no friggin’ way.”
Yeah, I know, it’s a very unsettling thought. However, more and more jurisdictions around the country are requiring this type of system.
If a fire department is forced to enter your business after hours, it may not be done with the most concern for your property. And they won’t know if it is a false alarm until after the damage is done.
This is the real reason for these boxes — to let emergency personnel in, without causing severe damage in an unknown situation (false alarm). If flames are coming through the roof, they don’t let a locked door get in the way.
Knox Box Program
If your local fire department does not participate in the national Knox Box program, it might in the near future. The Ohio Fire Code (and I’m sure many others) provides the local fire department the option to require a key box on the property of a business. This is to allow the fire department access after-hours to check on a fire alarm or sprinkler water-flow alarm without having to break in.
The Knox Box system is a secure key box that you purchase and place on your building at a location acceptable to the fire department. The local fire department is the only entity with a key to the box. If needed, they can enter your building to check on an alarm without causing damage.
There are Knox Box key boxes for residential occupancies also. The key to the box is secured at the local firehouse or in the fire engines and can only be accessed with a passcode which logs the time and name of the person who has opened it.
How the System Works
Knox Boxes are constructed of ¼”solid steel with a ¼” steel door, a reinforced locking mechanism and they are UL listed. The high security key is strictly controlled and is manufactured only by the Medeco factory under direction from an authorized fire official’s signature.
A property owner who wishes to join the system should contact the local fire inspector for information on how to acquire a Knox Box, as the property owner must purchase them directly from the company. Once installed near the entrance to your property, the department locks your building entrance key inside the box so that it is available for emergencies.
A few years ago, a local pawnbroker was up in arms because his township fire department was transitioning to the Knox Box system. There was not much he could do. Remember, this requirement doesn’t affect your alarm system as a backup for intrusion security.
Last year I acquired a pawnshop in an area where Knox Boxes were in use. Even though I had an alarm system, I too was not thrilled with the concept of my key sitting in a box outside my business. After having the locks rekeyed, I did the right thing and called the local fire department to come out and put the new key in the Knox Box.
Much to my surprise (not really), the key presently in the box was not the key to the building’s door. For that matter, the building had a door and a steel gate, each with their own respective key.
As I said once before, locked doors and a secure looking building may cause the police to turn away, but the fire department has their own attitude and usually the persuasiveness to show a door who’s boss.
When faced with this issue, you may try to get a variance from your local governing body, but if that fails, you may need to enhance your security system.
Ric Blum is a vice president of Ohio Loan Co. in Dayton. He has served as president of the Ohio Pawnbrokers Association, secretary/treasurer of the National Pawnbrokers Association and as a member of the board of directors and the board of governors of the National Pawnbrokers Association. Please feel free to e-mail your comments or tips that you would like to see included in this column to RicBlum@att.net or mail them to Ric Blum, Ohio Loan Co., 3028 Salem Ave., Dayton, OH 45406.