New gem cutters ask me this question frequently. The gem business is like any other business. You need to work hard. That means you keep cutting gemstones, because you can’t sell what you don’t cut. You also need to invest in your rough material. Here’s my advice for those just getting started in this business.
No Instant Gratification
I often hear new gem cutters complain that they can’t buy top-quality gem rough and cut it for a nice profit right away.
Well, join the club.
Sometimes, even I can’t buy top rough at prices that let me cut it and make money… at least not right away. You’re going to face a lot of tough competition for that material. You have to work hard at every aspect of the gem business, including buying rough.
So, how can it be done? What do you need to know?
What New Gem Cutters Need to Consider First
Before deciding to get into the gemstone business, think about the following:
It Takes Money to Make Money
In order to buy both quality rough parcels and single stones, you’ll need large sums of money, depending on the gemstone. Of course, you can start small and build, but the bottom line is, “it takes money….”
Making Connections in the Gem World Takes Time
Frankly, not all newcomers are going to make those connections. Many novices don’t realize that the gem trade is a very tightly knit community. Your success will depend on how you do business and how you conduct yourself. This doesn’t just apply to the rough side of the equation. You’ll need connections when you have to sell your cut stones, too.
There is No Overnight Success
You’ll have to pay your dues. Newcomers will be competing with people who’ve built up their businesses for many years. Even if you manage to buy some nice rough parcels at a decent price, your initial profits won’t be very high, especially at the wholesale level. You’ll need to reinvest in your business in order to succeed.
Rough Buying for New Gem Cutters
So, you’ve considered these things and have still decided to take the plunge into the gemstone business? Let’s keep talking about competition and one of the biggest mistakes new gem cutters make.
Avoid the Top Commercial Rough
Novices often want to start off by competing for rough with commercial cutters. More often than not, they won’t succeed. For example, I frequently hear newcomers complain that they can’t buy popular, top commercial rough, like blue sapphire and tanzanite. Well, the large, established commercial cutters have almost all of this rough tied-up. If, by some miracle, you should happen to buy some quality blue sapphire or tanzanite, you still won’t be able to cut it and make a profit.
The established commercial cutters can sell their stones more cheaply. The people who buy this top material might have a profit margin of 10% to 20%, and they have to buy and sell a lot of stones to make a good living. Why bother fighting over 10% to 20% profit? There’s too much competition for these gems, and the deck is stacked against you. Usually, there won’t be enough profit in these stones for you. (Or for me, and I have a lot more access to rough than the typical novice cutter).
Buy Rough You Can Compete With
Don’t go overboard. Going head-to-head with the big cutters over sapphire and tanzanite will only give you a sore head. Instead, buy rough you can cut and make money on.
Cut things like tourmaline, amethyst, citrine, and some varieties of garnets and beryls. This rough is readily available, but stick to top-quality material. Deal with anything less and you’re wasting your time.
Plus, if you cut custom shapes and designs, you’ll minimize your competition. Cutting gems to finished sizes larger than 1.5 carats will also give you an edge.
Selling Your Cut Gems to Jewelers
There aren’t many one-of-a-kind gemstones around. Any jeweler worth anything knows this. When they see your custom-cut stones, they’re less likely to bargain. Top-quality, well-cut gems are easier for jewelers to sell, assuming they deal with these types of stones in the first place.
Types of Jewelers New Gem Cutters Should Avoid
Don’t fall into the trap of trying to cut for “fill-a-hole-in-gold” jewelers. These cheapskates aren’t worth your time and trouble. They won’t pay for unique designs.
Some jewelers may try to show you a “Guide” that says a certain kind of gemstone should only cost “X” amount. Point out that your stones aren’t commercially-cut and are much higher quality. If they still want to quote the “Guide,” move on. Most likely, these jewelers are just trying to force you to sell your gems to them for less. You’re not going to do much business with these types. If they really don’t know the difference between commercial-cut and top-quality gems, they’re just not educated enough for your wares. Educating them might be possible, but it will definitely be time consuming.
A Summary for New Gem Cutters
- Buy parcels and quality rough.
- Cut material that’s readily available, not necessarily what the commercial cutters do.
- Cut unusual shapes and custom designs that commercial cutters don’t.
- Deal with jewelers that are worth your time. Learn to recognize when they’re wasting your time and move on.
These things work for me, and they will work for you.