Start a watch business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your watch business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a watch business?
The startup expenses involved in opening a watch business are manageable. They include:
- Purchasing inventory to sell
- Setting up and hosting a website
- Running advertising campaigns
Because watches are small, businesses don’t need much room for storing inventory. An entire business can be run from a home office.
Business owners who have limited capital can minimize these expenses by opening with a limited inventory, setting up their website themselves and focusing on organic advertising methods.
What are the ongoing expenses for a watch business?
The ongoing expenses for a watch business are manageable. They include website hosting expenses, the cost of purchasing inventory and paying for any warranty claim repairs.
Who is the target market?
The target market for watches tends to be adults who have discretionary income and appreciate style. These customers will use watches to make fashion statements, and they have money to spend on watches.
How does a watch business make money?
A watch business makes money by selling watches. Watches are normally sold individually, but collections can be curated to encourage customers toward buying multiple watches.
How much can you charge customers?
Watches can sell for anywhere from a few dollars to tens of thousands. Most new watch businesses begin with watches priced around $50. This price point isn’t prohibitively expensive yet provides a reasonable profit margin. As a business establishes a customer base, lower- and higher-priced watches can be offered for diversity.
How much profit can a watch business make?
A watch business can make a substantial profit even in its first year. Within one year of opening, Watch Outfitters was bringing in $13,500 in sales each month. That’s an annual gross revenue of $162,000, and a lot of that is profit.
How can you make your business more profitable?
A watch business can increase its profits by designing and building its own watches. This involves more work but gives a business truly unique watches to sell. Additionally, the profit margin on watches is more when the watches are assembled from individual parts rather than purchased as manufactured units.
What will you name your business?
Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your watch business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, and it's easy enough to form by yourself, or check out the top business formation services.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a watch business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a watch business
Almost any online advertising method can be used to market an ecommerce watch business. One of the most effective advertising methods, however, is email marketing. Jonah, owner of Watch Outfitters, generates $500 in sales each week with a single “Watch of the Week” email.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Because of the influx of phones, watches are no longer a functional accessory. Instead, they’re worn for fashion.
Businesses must keep this in mind and create content with style in mind. One anonymous but thorough guide to creating a watch business detailed how to:
- Come up with a brand name
- Create a brand’s story and history
- Show customers how a brand provides value
- Write luxurious-sounding product descriptions
- Use images to show craftsmanship
It’s no accident this list focuses on marketing and leaves out actually selecting a watch. The guide actually refers to the physical watch as “the less important.” While quality can’t be ignored completely, marketing is what drives sales.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Watch Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Anyone who has a passion for chronometers may be well-suited for running a watch store. Successfully running a store requires understanding why people want watches. People who themselves love and want watches already have this knowledge, which is knowledge that can’t easily be learned.
What happens during a typical day at a watch business?
A typical day at a watch business consists of:
- Fulfilling orders
- Ordering more inventory
- Responding to customer inquiries
- Running advertising campaigns
Some business owners may also perform repairs related to warranty claims, but business owners who don’t have technical repair skills can outsource this work.
What are some skills and experiences that will help you build a successful watch business?
Starting a watch business requires a knowledge of both watches and of how to run a business. Business owners must at least have a cursory knowledge of watches so that they can make wise inventory decisions and properly converse with customers. Basic business knowledge is essential to making sure a business is profitable.
Business owners who aren’t familiar with watches can take a watchmaking course, such as those offered by TimeZone Watch School and Learn Watchmaking. Even if business owners don’t plan on building watches by hand, the skills taught in these courses will help when selecting inventory. With the knowledge in these courses, business owners can identify which watches are well-made and which aren’t.
There are also a number of business classes available online. Some popular ones include those offered by Coursera and listed on Open Culture. Business owners without previous experience should focus on classes that teach the fundamentals of running a business rather than courses on complex and obscure topics.
What is the growth potential for a watch business?
A watch business can be a small one-person operation that serves a relatively small number of customers, or it can grow to have lots of sales and fulfill large orders for many watches. One company that started small but then grew is Modify Watches. Modify Watches’ first few sales were only to family and friends. The company eventually has since then fulfilled corporate orders for Google and Sega, both of which gave the watches to employees.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a watch business?
Most watch businesses today are online. While it may be tempting to set up a stand in a high-traffic area, even a small physical retail space invites more risk and offers limited potential.
Businesses with physical locations must pay rent and carry more inventory, and they can only reach customers who pass by. Moreover, customers who are interested in watches likely won’t make an impulse purchase. They’ll instead want to compare options and prices online.
Ecommerce watch businesses come with limited risk, are flexible and have more potential. Therefore, efforts are better invested in an online watch business than a brick-and-mortar one.
How and when to build a team
Most watch businesses are small operations. Jonah, for instance, started his business himself. Business owners typically hire employees once the work becomes too much for them to handle and sales support the cost of bringing on staff.