Do you want to start a diamond jewelry business? If YES, here is a detailed guide on how to start a diamond trading business with no money and no experience. Do you know that you can make good money from diamond trading? Diamond trading business is one business that is not common in most parts of the world, but it has a very high profit margin. People that are involved in the trading of diamond would admit that they are making huge returns on their investment.
If you intend starting your own diamond trading business, then you must make out time to learn the trade because the truth is that it only takes someone who can differentiate between various grades and quality of diamond to be able to make it really big in this line of business.
It is important to state that starting a diamond trading business requires a reasonable startup capital, and the ability to network and market high profile clients in the society. Sincerely, diamond is considered to be a luxurious commodity and the people that purchase it are those who are well to do. That is the reason why you must be prepared to target this class of people if you truly want your diamond trading business to succeed.
So, if you want to start your own diamond trading business, all you need do is to read this article and you will be well equipped to start the business.
19 Steps to Starting a Diamond Trading Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Iron-clad Competitive Strategies to Help You Win
- 18. Brainstorm Possible Ways to Retain Clients & Customers
- 19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
The Diamond Trading industry sorts, values and sells rough and polished diamonds by value to end users or businesses that are involved in the diamond business value chain. The diamond trade industry brings hundreds of thousands of people together from all around the globe.
From individual diamond miners cutting up rocks in search of the indescribable gem, to the corporations that employ them, to the dealers that amassed the diamonds, sort them, and ship them to dealers and jewelry shops who turn them into classic artifacts of beauty before reaching their final destiny to the people who buy them.
Some diamond trading companies source their diamonds from mining fields in south africa, Canada, and other parts of the world where there are active diamond mines. These diamonds are sorted into approximately 12,000 different categories based on size, shape, quality and color and the selection process is based on the outcome of the Supplier of Choice (SoC) Sightholder application and assessment process.
If you are conversant with the diamond trading market, you will agree that diamond traders analyze diamond rough from an economic perspective, with two basic objectives steering decisions made about how a faceted diamond will be cut.
The first objective of players in this industry is to maximize their return on investment for the piece of rough diamond purchased. They also ensure that the finished diamonds are sold as fast as they can. Scanning devices are used to get a 3-dimensional computer model of the rough stone. So also, inclusions are photographed and placed on the 3D model, which is then used to find an optimal way to cut the rough diamond ‘stone’.
Another trend is that the diamond trading industry has galloped ahead in recent years as a result of the rapid technological developments in our world, and the growing number of financially comfortable people who are looking towards owning diamonds. In the coming years, demand for polished diamond is projected to continue growing.
One factor that encourages entrepreneurs to start their own diamond trading business is that there is a global market for diamonds. In as much as the market for diamond is growing all over the globe, you must adopt a workable marketing strategy to be able to make good sales and huge profits. You can go into contract agreements with those who mine diamond or those who are also into trading diamond.
Lastly, the diamond cutting and polishing industry is still going to be dominated by operators who have succeeded in positioning their company in cities that are notable for this trade, or in locations that are considered diamond mines.
You can grow the business and maintain diamond mines and operate labs in a number of different countries, including Angola, Australia, Botswana, Indonesia, Lesotho, and the Democratic Republic of the Congo where we have rich diamond deposits.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who purchase rough and polished diamonds cut across all genders who have the financial means, hence the demographic composition for the diamond trading business is all encompassing.
So, if you are thinking of starting your own diamond trading business, then you should look beyond people in your city, to also people across the united states of America and other parts of the world especially if you have an online store with international shipping option.
3. Decide Which Niche to Concentrate On
If you are considering starting a diamond trading business, you can choose to only retail rough diamond directly from diamond mines or you can choose to only retail cut and polished diamonds directly to end users or you can combine both. The bottom line is that you can choose to carve your niche idea in this line of business.
The Level of Competition in the Industry
The competitions that exist in the diamond trading business goes beyond competition in your city or country; it is both national and international because major diamond trading brands in China, United Arab Emirates, South Africa, Botswana, Saudi Arabia, France, India, Italy, united kingdom, etc. can sell their products all across the United States of America via online stores. So, it will be right to say the competition in the diamond trading business is tough.
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or business properly, you will always make headway in the industry. Just ensure you have what it takes to identify and purchase both rough and polished diamonds at good rate and you know how to reach out to your target market.
4. Know Your Major Competitors in the Industry
These are some of the leading diamond trading companies in the United States of America and in the globe;
- The Diamond Trading Company (DTC)
- Rockwell Diamonds
- Anglo American plc
- Gem Diamonds
- Petra Diamonds
- Dominion Diamond Corporation
- Debswana Diamond Company, Ltd.
- Rio-Tinto Diamonds
- JBE Diamonds Inc
- De Beers
- Bay Area Gold & Diamond Buyers
- Signature Estate Diamond Buyers of Massachusetts
- Meridian Diamond Buyers
- Ralph Mueller & Associates
- 8th Street Gold & Diamond Buyers
- D and G Buyers Inc.
- Diamond Jewelry & Coin Centre
- Diamond Syndicate, Inc.
- Los Altos Diamond Broker
If you are looking towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic and cost analysis right and try as much as possible to adopt international best practices in the industry you choose to build a business in.
The diamond trading business dates back to the days of trade by barter. So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey of the amount needed to go into buying diamonds and other equipment or facility needed to successfully run the business.
In analyzing the economic cost of starting a diamond trading business, you should also include the cost of travel and securities. Please note that you can leverage on a network and enjoy economies of scales. The bottom line is that if you are new to this type of capital – intensive business, then you should engage professionals who will help you with a comprehensive economic analysis.
5. Decide Whether to Buy a Franchise or Start from Scratch
Diamond trading business is one of the businesses that has not fully embraced franchising for obvious reasons.
So, if you are looking towards starting your diamond trading business, then you have no other option but to start from the very scratch. You need not be afraid to start from the scratch because you can actually understudy someone who is already into the business so as to learn the rope and invest wisely.
6. Know the Possible Threats and Challenges You Will Face
A major threat you are going to face with your diamond trading company especially if you are just starting out on a small scale is competing with major players in the industry; players such as a mine-to-market companies, meaning that a diamond can go from sitting in the ground to sitting in a jewelers’ display case, all under the supervision of a single company.
Other threats that you are likely going to face is economic downturn and unfavorable government policies. It is a fact that economic downturn affects purchasing power especially for luxury products and services. Another threat that you may also face is the arrival of a new diamond trading store in same location where yours is located.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
If you are considering starting a diamond trading business, the legal entity you choose will go a long way to determine how big the business can grow.
You can either choose a general partnership, limited liability company, or a sole proprietorship for your diamond trading business. Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale diamond trading store especially if you are just starting out with a moderate start-up capital and adopting the mom and pop model of retailing.
But if your intention is to grow the business and have clients across the United States of America and other countries of the world, then choosing the sole proprietorship model is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the Limited Liability Company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your diamond trading business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to study the various legal entities to use for your diamond trading business with the ability to take on the international market, you will agree that limited liability company is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or ‘S’ corporation especially when you have the plans of going public.
Interestingly, you can choose to upgrade the business to a ‘C’ corporation or ‘S’ corporation and that will give you the opportunity to grow your diamond trading business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.
8. Choose a Catchy Business Name
If you are considering starting your own diamond trading business, here are some catchy names that you can choose from;
- Ante & Flora® Gem Stones Merchandize, Inc.
- Irene Hector® Diamond Traders, LLC
- Taffy Grant™ Diamond Trading Company, Inc.
- Precious Teddy® Diamond Trading Group, Inc.
- Tina Herrera® Diamond Trading Company, Inc.
- Bronx Noel® Diamond Trading Company, Inc.
- Olly Landers® Diamond Trading Company, LLC
- George Milton® Diamond Buying and Selling Store, LLC
- Jaures® Diamond Trading Stores, Inc.
- Kingston Johnson® Diamond Trading Company, Inc.
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your diamond trading business.
Here are some of the basic insurance cover that you should consider purchasing if you want to start your own diamond trading business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own diamond trading business, you may not need to file for intellectual property protection/trademark because the nature of the business makes it possible for you to run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
11. Get the Necessary Professional Certification
When it comes to a diamond trading business, you do not need to have any formal training or special certification before you can be allowed to start selling and buying diamonds. All you need is informal training that will expose you to the in and out of the business, how to identify real diamonds and perhaps how to cut and polish diamonds.
On the other hand, you come across any form of certification that can aid you to conduct your diamond trading business, then by all means try and pursue such certification.
So also, in order to actively run a diamond trading business in the United States of America, you must pick up membership with the Diamond Manufacturers and Importers Association of America (DMIA), The organization was established in 1931, it is the leading organization of America’s premier diamond manufacturers, importers, and dealers.
The DMIA’s membership also includes numerous companies servicing the diamond trade such as banks, shippers, insurers, and diamond grading laboratories. The DMIA is a “Not for Profit” corporation.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentation.
If you do, it won’t be too long before the long hand of the law ca ches up with you. These are some of the basic legal documents that you are expected to have in place if you want to legally run your own diamond trading business in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Apostille (for those who intend operating beyond the United States of America)
- Company Bylaws
- Memorandum of Understanding (MoU)
13. Raise the Needed Startup Capital
On the average, starting a diamond trading business is capital intensive especially if you choose to start a standard diamond trading business that will be involved in operating a diamond mine and a diamond lab. Securing a standard and well – positioned facility and stocking your store with a wide range of diamonds are part of what will consume a large chunk of your startup capital.
If you don’t have the capital saved up, then you would need to go source for funds to finance the business because it is expensive to start a standard diamond trading business.
When it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your diamond trading business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
14. Choose a Suitable Location for your Business
When it comes to choosing a location for your diamond trading store, the rule of thumb is that you should be guided by the demand for such the products you intend selling and easy access to getting the products from the manufacturers. Of course, if you are able to secure a central location for your diamond trading store, it will make it easy for people to locate your store.
If you are new to the dynamics of choosing a location for your diamond trading business, then you should feel free to talk to a business consultant or a realtor who has a full grasp of the city.
Most importantly, before choosing a location for your diamond trading business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out.
These are some of the key factors that you should consider before choosing a location for your diamond business/store;
- The demography of the location
- The demand for diamonds in your location
- The purchasing power of the residents of the location
- Accessibility of the location
- The local laws and regulations in the community / state
- Traffic, parking and security
15. Hire Employees for your Technical and Manpower Needs
There are no special technology or equipment needed to run this type of business except for secured safes, shelves, and retailing software applications. You will also need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst other and all these can be gotten as fairly used.
As regard leasing or outright purchase of a store facility, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent / lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and search for another location.
When it comes to hiring employees for a standard diamond trading business store, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Store Manager, Diamond Cutters and Polisher, Merchandize Manager, Sales and Marketing Officer / Sales Girls and Sales Boys, and Accounting Clerk. On the average, you will need a minimum of 3 to 6 key staff members to run a small – scale but standard diamond trading business / store.
The Service Delivery Process of the Business
When it comes to buying and selling stuffs, there are no hard and fast rules about it. It is the duty of the merchandize manager to help the organization / store purchase rough and finished diamonds. They source for good purchasing deals and they also ensure that they do not only purchase at the right prices that will guarantee them good profits, but also purchase the type of diamonds that are in high demand.
This is important because if you make the mistake of purchasing diamonds based on your discretion as against what the people need, such diamond will stay long in your store thus tying down your capital longer than required.
Some diamond trading companies focus on exploration (finding new sources of diamonds), and production of diamonds (the mining and cutting of rough diamonds) and then trading it. They are known to be involved in changing a diamond from a rough stone into a faceted gem.
Cutting and polishing diamond requires specialized knowledge, tools, equipment, and of course techniques because of its extreme difficulty. Once the diamonds are bought, they are properly arranged in the store for customers to see and purchase. On the other hand, they are expected to also purchase diamonds from customers who want to sell to make quick cash.
16. Write a Marketing Plan Packed with ideas & Strategies
Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a diamond trading business, then you must employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for the diamond trading industry.
Your marketing strategy should center on quality and pricing, and above all excellent customer service. The truth is that if you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers.
These are some of the marketing ideas and strategies that you can adopt for your diamond trading business;
- Introduce your diamond trading business by sending introductory letters alongside your brochure to corporate organizations, households, socialites, celebrities and other key stake holders in the diamond business value chain throughout the city where your business is domiciled.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business so as to give your business an online presence
- Directly market your products.
- Join local buying and selling retail store associations for industry trends and tips
- Provide discount days for your customers
- Advertise your business in community – based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of Word of mouth marketing (referrals)
17. Develop Iron-clad Competitive Strategies to Help You Win
The quality and uniqueness of your diamond, your business process and of course your pricing model are part of what you need to stay competitive in the industry.
Another possible competitive strategy for winning your competitors in this particular industry is to build a robust business network and ensure that the diamond you retail can favorably compete with the some of the best in the industry.
18. Brainstorm Possible Ways to Retain Clients & Customers
If you can continue to make available a wide variety of quality diamonds, and your customer service delivery is top notch, then you won’t struggle to maintain loyal customers.
In order to retain your customers, you must make sure you go out of your way to reach out to your customers especially when they are celebrating their birthdays or anniversaries, You can track this by purchasing a standard CRM software.
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.
If your intention of starting a diamond trading business is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.
Here are the platforms you can leverage on to boost your brand awareness and create a corporate identity for your diamond trading business;
- Place adverts on both print (newspapers and jewelry magazines) and electronic media platforms
- Sponsor relevant community – based events / programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
- Install your Billboards in strategic locations all around your city or state
- Distribute your fliers and handbills in target areas
- List your diamond trading business/store in local directories/yellow pages
- Advertise your diamond trading business/store in your official website and employ strategies that will help you pull traffic to the site.
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.