Valuing a Jewelry Store
While jewelry stores initially took a hit at the start of the pandemic, that soon changed. Because people were not spending money on travel, they started spending money on jewelry. This increased the demand for jewelry at rapid rates. With the jewelry industry being highly fragmented, competition is high. As such, it is very important that jewelry stores stay relevant to consumer demands. This can come in the form of price, design, experience, you name it. Jewelry stores mostly profit from consumers making more than $100,000. As inflation increases, so do consumer salaries. This helps demand for jewelry stay high. Each of these factors a business appraiser considers when valuing a jewelry store.
Whether you plan on buying or selling a jewelry store, it is important to understand key success factors as well as your jewelry store’s fair market value. Below are some of the factors that impact the value of a jewelry store. At Peak Business Valuation, business appraiser, we work with dozens of individuals who are buying or selling jewelry stores. As part of the valuation engagement, we determine a fair market value and identify key factors the appraiser uses when valuing a jewelry store. The factors in this article are only a guide. For detailed information on your jewelry business, schedule your free consultation below with Peak Business Valuation, business appraiser.
Market Multiples for a Jewelry Store
- SDE Multiple Average: 2.95x – 3.91x
- EBITDA Multiple Average: 4.69x – 5.12x
- REV Multiple Average: 0.66x – 1.08x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
The above are average market multiples for a jewelry store. A valuation expert uses valuation multiples when valuing a jewelry store. In this process, the valuation analyst will compare your jewelry business to similar jewelry businesses that recently sold. Then they will apply an applicable market multiple to your jewelry store. This is one way to determine a fair market value. A business appraiser uses a variety of valuation methods when determining the fair market value of a jeweler.
Understanding the value of your business will help you learn how to increase its worth. This will benefit your business whether expanding, acquiring, or maximizing the value of your jewelry store. Here are a few helpful ideas to help increase the value of your jewelry store. For a detailed valuation, schedule a free consultation with Peak Business Valuation, business appraiser.
Key Success Factors
Peak Business Valuation, business appraiser, values jewelry stores on a regular basis. To increase the value of your business, focus on these key success factors. These key value drivers are a great way to maximize the value of a jewelry store. For additional ideas see Value Drivers for a Jewelry Store, How to Value a Jewelry Store, and Valuation Multiples for a Jewelry Store.
World Price of Gold & Metal
The jewelry store industry uses commodity materials such as gold and metal. These commodities are very volatile, which affects the price that retailers can purchase them at. Because of this, the price of the commodity affects the financial performance of the business. While prices are extremely high right now, experts don’t see that lasting. At Peak Business Valuation, business appraiser, we often look at historical price averages. This helps the appraiser to better understand the company’s operations for a normal year. It is generally a better indicator when determining the value.
The barriers to entry are fairly low for jewelers. Because of this, there is a lot of competition. Business owners must compete to remain relevant and successful. One of the best ways to do so is through marketing. A catchy slogan or phrase could remain in someone’s mind long enough for them to bring themselves into your store. While marketing can be pricey, it is necessary for a jewelry store. Consider it an investment. A marketing team that provides successful outreach to the community will bring in customers, which translates into revenue. A valuation expert analyzes the operations and profitability when determining the value of a jeweler.
The Price Factor
As we are all well aware, jewelry can be expensive. A jewelry store must provide a range of products in style, price, and quality. This can be difficult to know what to provide as a business owner. The price factor is especially important to consider. You will have people of all budgets walk into your store and it is your job to provide them with that product. Without financially hurting your business, sell products at a competitive price. This will drive volume and bring in customers.
“A diamond is a girl’s best friend.” That phrase is especially important to a jewelry store. Customers who purchase with your business should be converted to lifelong customers. Because jewelry is expensive, it is bought less frequently. That means customer retention is even more important to the success of your business. A great way to build customer loyalty is through quality customer service. Focus heavily on training your staff to build strong customer bonds. For more ideas see The Value of Customer Loyalty.
Create Recurring Revenue
Recurring revenue is one of the most important sources of revenue for a jewelry store. In a business valuation, a business appraiser at Peak Business Valuation will analyze the types of revenue coming in to determine a fair market value. There are a variety of ways to create recurring revenue for jewelers. Many jewelers are finding success with subscription boxes. Recurring revenue streams will increase the value of your jewelry store as it translates to consistency.
There are many things a business appraiser considers when valuing a jewelry store. Understanding the value of a jewelry store is important whether buying, selling, or growing a jewelry business. Obtain a business valuation to help you understand the fair market value. For more information about valuing a jewelry store read Valuation Multiples for a Jewelry Store as well as Value Drivers for Jewelry & Watch Wholesale.
Peak Business Valuation, business appraiser values jewelry stores across the nation. We are happy to answer any questions you may have about the value of your jewelry store. Schedule your free consultation below. We look forward to working with you.
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