How to Start a Gemstone Business

by Catherine Capozzi ; Updated September 26, 2017

The gemstone business is easily one of the oldest in the world, and gemstones rarely depreciate in value. In most cases, the value of gemstones is determined based on their supply. Diamonds are low in supply (be it through production or a company’s monopoly), and therefore are expensive. Because you cannot produce natural gemstones, your business will not be immune to the high start-up costs due to the low supply, but selling these precious items can yield a decent profit.

Be willing to invest time, money and patience. Cut or rough gemstones can be quite costly, depending on the stone. Diamonds and sapphires are generally the costliest stones, with aquamarines, tanzanite and topaz on the lower end.

If you wish to travel directly to the gemstone mining site found in remote locations like Madagascar, Sri Lanka and Myanmar, the cost of rough gemstones will be lower. Bring someone who has a keen eye for stones; otherwise you could pay a premium for poor-quality gems. The more parties involved in the shipping and transaction of these stones, the higher the price.

Visit trade shows to purchase stones as well. One of the best known is the Tucson Gem and Mineral Show.

Faceters.com also advises a willingness to invest time and capital in addition to cash. Success in the gemstone industry is not achieved within a month or even a few years. Longevity in the business requires contacts, experience and patience while your business gains a strong reputation. Be willing to reinvest any initial sales back into the business.

Choose the types of gemstones you wish to sell. Do you wish to buy few sapphires at a higher cost, or perhaps buy more tanzanite stones instead? Your decision should be based on how much money you can spend.

Also determine condition of the gemstones you wish to sell. For example, you could buy rough gemstones out of the country at the point of origin, like in Madagascar, and sell them in the United States at a premium. Or, you could buy the gemstones uncut, hire a gemstone cutter and sell them on the retail market. Another alternative is buying cut gemstones, positioning them into pieces of jewelry and selling gemstones as a jewelry store operation.

Selling retail yields the highest profit margins, but the initial capital required may be higher, as you need a gemstone cutter and machinery, and the gems may not sell as fast. Additionally, these gems will need certification from an outside party like the Gemology Institute of America.

Find a quality gemstone cutter. If you sell cut gemstones, find a quality cutter. The cut of your stone could add hundreds or thousands of dollars to the price tag, or it could slash the value of the stone if done poorly. Michael O’Donoghue explains in the book “Gems” that cutting lighter-colored stones like diamonds and pink sapphires requires extra attention than darker stones.

Determine your audience. Will you sell gems to high-end retailers like Tiffany? Or will you choose to sell loose gemstones online? Maybe you will target investors looking for a long-lasting asset. Select your audience and cater to their needs. Retailers will require certification and detailed knowledge of the product. Someone looking for a gemstone for an engagement ring, on the other hand, will require a different sales pitch.

About the Author

Since 2008 Catherine Capozzi has been writing business, finance and economics-related articles from her home in the sunny state of Arizona. She is pursuing a Bachelor of Science in economics from the W.P. Carey School of Business at Arizona State University, which has given her a love of spreadsheets and corporate life.

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