Deciding to start a business is a big step in a career. If you are wondering how to start a watch business, there could be a multitude of reasons behind that decision. Maybe you are passionate about watches? Have experience in selling watches? Have knowledge of horology?
Whatever the reason is that you want to start your own small business, it is a perfect time to get started. The watch industry in general is advancing every day and is no longer considered a luxury accessory. Infact as per the statistics, more than 56% of the annual sales are in the non-luxury segment.
With the launch of wearable technology products by pretty much every tech and watch company, the industry is booming. According to statista, the revenue of the watch segment is around $66 billion USD and is expected to grow around 7% annually.
Given such an opportunity, there can not be a better time for you to start your own watch business. All that you need is meticulous planning and hard work. And in no time, you can have a successful watch business of your own.
But what exactly do you need to do to get your watch business idea off the ground?
To help you prepare, we've created this seven step guide on how to start a watch business. Read on to learn everything you need to know.
Before you spend time on identifying the watches to sell and starting your business, you need to get clarity on what exactly your watch business will be. The best way to do this is in writing - by drafting a business plan.
You may feel that writing a business plan is taking you away from starting your business, but in truth, it will be worth every second invested. You can always start with a basic version of the plan and add details as and when you are comfortable.
At its core, your watch business plan will help you organize your thoughts about the business, take stock of finances and resourcing, think about marketing strategies and define measurable goals. What you wish to achieve as a result of this step is to have a game plan to achieve your goals in a stipulated timeline.
To get started, start by answering the following eleven questions:
- Are you planning to sell luxury watches or fashionable watches?
- How will you source these watches?
- Will you operate from home or want to rent an office space?
- Do you plan to sell watches online via an ecommerce store?
- Do you plan to sell watches under your brand name or become a reseller?
- How will you price your products?
- Why will customers buy from you? What is your USP?
- Who is your target audience?
- Who are your competitors?
- Where will you sell your watches?
- Will you need help or you think you can do it alone?
As mentioned earlier, your plan will be a work in progress and as you gain more experience, you can edit and make enhancements to it. You needn't have a perfect plan to get started on your business.
Select your watches
The absolute first thing that should be decided is what types of watches you want to sell. Not only does this decision impact your sourcing strategy but will also influence your marketing and financial plan. Some of the watch types that you can consider are listed below:
- Smartwatches
- Luxury watches
- Chronographs
- Kids watches
- Womens watches
- Mens watches
- Sports watches
- Fitness trackers
- Analog watches
If you wish to sell each and every watch type possible, that is also a valid option. But it is logical to start small and diversify as you gain more experience.
Once you have decided on the watches, you need to look at the services you want to offer to your customers.
Select your add on services
Along with sales, if you can include servicing and repair services, it will be a great value add on for your business. Of-course you will have to spend more on this type of infrastructure, but the return on investment will be high.
It will also bring in more customers in your store and help you get a much better customer lifetime value. This also will allow you to create partnerships with watch brands as they can list you as an authorized service provider.
You can also plan to keep accessories such as watch bands, watch batteries, storage cases for an increase in revenues.
As a part of drafting your business plan, you will need to identify the level of competition in your target market. Keeping an eye on who else is doing what you plan to do is just common sense. And it is super useful as well for a healthy and profitable business.
You can do a competition check using the following tips:
- Ask your customers for the other businesses they considered before they chose you
- Search online for the business names that come up in local search engines
- Take a deep dive into the competition’s products and services. Noting details about their pricing strategy, product selection and everything else you can find.
- Look into how they market their businesses. Do they use local newspapers? Billboards? Online ads?
- Look at how they manage their social media accounts. What is their tone with customers? What feedback do they receive from their customers? Is there a gap in their service you can fill?
- Act like a customer and test your competitor’s user experience. Right from discovering to the final purchase. Find out if there is something you can learn from and also the mistakes that they are doing.
Unless you are planning to manufacture your own watches, you can also learn about the top brands that customers love. One thing to note in this research is that you need to first define a price point. Once you know the names of watch brands that are selling, you can approach their local distributors and wholesalers for the pricing.
The more research you do in the beginning, will act as an insurance towards the success of your business. It will help you in making many decisions as you grow - from giving you ideas about what you can improve upon to identifying the gaps or weaknesses that you can fill.
It will also help you identify your competitors’ strengths that you can replicate ( your own way, ofcourse).
When learning how to start a watch business, it is important to understand the legalities of doing a business. You need to make sure that you have any required licenses, permits and insurance to legally start your own small business.
First thing first, you can visit the local chamber of commerce to know more about everything that you need to adhere to. This step is something that many businesses ignore in the beginning but learn its importance the hard way. You can start on this process by considering the following:
Choose a business name
Once you decide on a name, do a quick internet search to see if it is available. If the name is already in use, you can try again with a variation. Once you find a name that is available, you will need to visit the state website to confirm its availability. If the name is already in use by another business in the state, you will need to go back to the drawing board.
If you are thinking of going really big with your business and see it going national in the future, you will need to get a trademark as soon as possible.
Tip: Hire a brand consultant to help you get creative and set you up for an outstanding business name.
Decide on a business entity
As an entrepreneur, you need to follow a certain organizational structure to be compliant with the regulations set by the government authorities. This structure affects tax, compliance and other legal requirements, it is an important step to tick when starting a business.
You need to plan ahead and choose from the following options:
- A sole proprietorship
- Limited liability company (LLC)
- General partnership
- Corporation
Generally, in the beginning a sole proprietorship is an obvious choice and a popular legal entity structure. It is the simplest and easiest way to get started. You can transition to another entity structure as your business grows.
Consider business insurance
Your entrepreneurship journey is going to have its ups and downs and you need to be prepared in advance as things will happen. Rather than putting your business at stake at that point of time, it is always better to think ahead and protect you and your business from any liability that may come your way.
Start by looking at product liability insurance, which protects businesses from liabilities arising from the case when a product causes injury to the customer or a third party. The other insurances to consider are general liability for common legal claims.
If you do plan to hire employees for your watch business, you will need to look at workers compensation, unemployment and disability insurance as well.
Tip: Consider consulting an attorney or a qualified professional for this step, as their experience will be extremely valuable. They will be able to help you with everything that you need to have to be compliant with everything.
Now that you must have set up your watch business legally, now is the time to make sure that the business related finances are separate from your personal finances. This separation helps in many ways:
- Help you keep track of the expenses so that you can determine the financial health of your business
- Protect your personal money from any legal issues with your business
- Helps in simplifying your tax filing
As a part of this step, what you are looking for is that you have a bank account in the name of your business. All expenses related to your business, like paying for supplies, staff salaries, revenue etc should be deposited and withdrawn from this account.
You have an option to start with a business checking account. Once the turnover increases you can opt for a business savings account.
It is a well known fact that while starting a business you will need a lot of money. To make money you will need to spend money. In the beginning you can expect zero revenues while you are setting up your business.
You will need to spend money on licensing, registration, professional fees, store rent and many other expenses. Your own business will start giving you revenues, once the business is set up and the customers are coming in. But until that happens, you will have to cushion these expenses on your own.
As a part of the budgeting process, you can determine what those expenses will look like. The chances are that you will not be able to bear them all from your savings. Worry not, this is a case with almost all of the businesses out there.
When looking for external funding, you do need to understand that the lender will first look to determine the risk of losing their capital. As your business won't have any financial history, it will be tough for you to get funding in the beginning.
In the majority of cases, the entrepreneurs are able to secure funding from their friends and family. As they already know you, the risks involved are completely different and thus they should definitely help you out.
One thing to note is that if you are not able to communicate your business plan to your own friends and family, you should go back to the drawing board and think it through. Your own close network of friends will give you honest feedback and it is great to have an opportunity to see your business plan through their eyes.
Once you are ready with your financial requirements, you can consider the following options for your funding:
- Friends and family
- Business loans
- Business lines of credit
- Business credit cards
- Bootstrapping
- Debt financing
- Crowdfunding
- Angel investment
To start your watch business, you will first need watches that you can sell. Additionally, if you plan to sell luxury watches in a physical store, you will need to invest in secured display cases, lockers and security systems.
Additionally, you will need to invest in packaging, branding and shipping supplies. These are the things that you will be sourcing on a frequent basis.
Because your business profits will be dependent on the input costs, you will need to make sure to keep them as low as possible.
Thus while deciding on a supplier, you will need to make sure that the unit economics gives an overall profit. To make it clear let's consider the following two scenarios:
Scenario 1: You find a supplier (let's call it supplier A), who is based in the US and is ready to sell a certain type of sports watch for $15. You really like the watches and the fact that the supplier is based locally. The shipping time from the supplier to your warehouse is just a few days.
Let's also assume that based on your research, you will be able to sell the watches for $45 and the other costs ( shipping, packaging, branding collateral, marketing etc.) comes to $10.
Thus the net profit on the sale of the sports watches comes to $20 for every sale that you are able to make.
Scenario 2: You find a supplier ( lets call it supplier B), who is based in China and is ready to sell the same (or similar) sports watch for $5. The fact that the supplier is in China and is from a different timezone and speaks different languages may make you a bit uncomfortable.
You also know for a fact that the shipping time from the supplier to you could be a couple of months. Thus before you can ship the product to your customer, you need to plan ahead if ordering from supplier B as compared to a local supplier A.
Given that the product is the same (or similar), you will be able to sell it for $45 as mentioned before. Assuming that other costs are $10, the net profit for every sale will now be $30.
Thus with a little bit of planning in advance, you will be able to increase the profits by 50%. Keeping everything else the same, you can do it just by being smart and choosing a supplier that makes more sense financially.
You can feel that $10 profit isn’t much, and we completely agree with you. But if you look at the bigger picture, say you are able to sell 20 watches daily ( 7300 annually), the gain in profit will be a whopping $73000. Which in a period of 5-10 years will be more than half a million dollars.
All these small financial numbers add up to big numbers in no time, and you need to give utmost importance when it can impact your balance sheet and profits.
Tip: There are a lot of freelance consultants you can find on Fiverr and Upwork, who can help you find the right supplier for your watch business.
Once you have built up the inventory, you’ll want to start selling as soon as possible. Given the recent upward trend in ecommerce, you may want to consider selling watches online to begin with. The ecommerce store doubles as a digital marketing channel as well and is kind of a necessary investment that you need to put in.
Even if you are not technically savvy, you can build your website very quickly using an amazing set of resources such as Shopify, Ecwid, Squarespace, Woocommerce.
You will be able to find an amazing set of templates that you can begin your store with. Don't spend too much time in the beginning towards the bells and whistles of your store. Focus on the selling part and spend that time on marketing and customer service.
Always be ready to take feedback from customers and improve upon your service and products, as needed.
Overall, you can choose from the following sales channel options:
- Your own ecommerce website
- Online marketplaces
- Social media channels
- Neighborhood stores
- Kiosks and store in store
- Dropshipping
Tip: The chances are that you may want to choose all of the above and sell your watches on every possible medium. But in real life, unless you have millions of dollars sitting around, you should move one step at a time. Pick a sales channel and optimize the sales on it first before moving on to the next one.
In order to grow your business and find more customers, you will need to get started on the marketing strategy. A business without customers is no business at all. Thus the marketing plan is an absolute must for your watch business.
You will need a way to tell your brand story to the customers and pull them in your store. As a first step, you need to find a way to reach out to them. Here are some marketing channels to consider:
- Email marketing
- PPC marketing such as Google Ads, Facebook Ads
- Instagram marketing
- Tiktok marketing
- SEO
- Local guides
- Online review platforms
All the hard work you put into the marketing, along with the meticulous planning you have done in setting up your business, will do wonders and you will surely be a proud owner of a thriving watch business.
When you are building marketing plan for your business, consider the following:
- Who is your target audience?
- Where can you reach them?
- What is the maximum cost per acquisition that you can afford?
- Is there a friends and family network that you can leverage?
- How can you bake in word of mouth marketing in your product?
- What will be your USP ( unique selling proposition)?
- How will you measure if the marketing is not working for you?
- What metrics should you track to gauge the success of your marketing strategy?
Tip: When deciding on a marketing plan, do look at the case study of successful watch companies such as Shinola, Fossil, Bulova, Swatch and all other local brands that you possibly can.
When you are learning how to start a watch business, all the steps that you need to get started can seem overwhelming. However if you plan it well and complete each step carefully, it will become easier to finish the process.
One thing you should note is that, being an entrepreneur, you need to be on your toes 24/7/365. The learning curve will be steep, especially in the beginning stages. To make it more enjoyable, try being in the network of other entrepreneurs. Make time to attend exhibitions, meetups and networking opportunities.
Once you become part of a network and have personal connections, you can reach out to them for any help you may need. The chances are that they also faced similar challenges and will be happy to help you.
You can also learn valuable lessons such as how to market your business in the area you are targeting? What are the challenges in terms of customer acquisition and retention? And other specific things they recommend that you should take into consideration?
We hope that the steps above will help you in your entrepreneurship journey. We wish you the best of luck and can’t wait to hear the stories of what you’ll build.
