Starting a watch company can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful watch company.
Importantly, a critical step in starting a watch company is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Watch Company:
- Choose the Name for Your Watch Company
- Develop Your Watch Company Plan
- Choose the Legal Structure for Your Watch Company
- Secure Startup Funding for Your Watch Company (If Needed)
- Secure a Location for Your Business
- Register Your Watch Company with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Watch Company
- Buy or Lease the Right Watch Company Equipment
- Develop Your Watch Company Marketing Materials
- Purchase and Setup the Software Needed to Run Your Watch Company
- Open for Business
1. Choose the Name for Your Watch Company
The first step to starting a watch company is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your own watch brand:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your watch company.
2. Develop Your Watch Company Plan
One of the most important steps in starting a watch business is to develop your startup business plan template. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your own brand.
- Company Overview – this section tells the reader about the history of your watch company and what type of watch company you operate. For example, are you a luxury watch company, mid-priced watch company, or a discount watch company?
- Industry Analysis – here you will document key information about the watch industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products or services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your watch company? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your watch company make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Watch Company
Next you need to choose a legal structure for your watch company and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the watch company and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
2) Partnerships
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a watch company together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a watch company include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a watch company is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your watch company, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Watch Company (If Needed)
In developing your watch company plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a watch company to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a watch company that they believe has high potential for growth.
5. Secure a Location for Your Business
To find a location for your watch company, you will need to do some market research to determine what areas have the highest concentration of potential customers. Once you’ve identified a few locations, reach out to commercial real estate brokers to see what office space or retail space is available for lease or purchase.
6. Register Your Watch Company with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your watch company’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your watch company to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
To start a watch company, you will need a business license and a manufacturer’s license. You may also need a permit to sell your own watches depending on your location. Additionally, you will need to comply with all federal and state regulations regarding the manufacture and sale of watches.
10. Get Business Insurance for Your Watch Company
The type of insurance you need to operate a watch company will depend on the type of business.
Some business insurance policies you should consider for your watch company include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Watch Company Equipment
To run a watch company, you will need some basic equipment, including a computer, internet access, and a printer. You will also need to purchase a watch design program to create your design, and have a manufacturing partner ready to produce the watches.
12. Develop Your Watch Company Marketing Materials
Marketing materials will be required to attract and retain customers to your watch company.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your watch company. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional watch company website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your watch company.
13. Purchase and Setup the Software Needed to Run Your Watch Company
To start a watch brand, you will need to purchase a computer-aided design (CAD) software for watchmaking. This software will help you design your watches. Additionally, you may want to invest in accounting software to manage your finances, customer relationship management (CRM) software to track your customers, and inventory management software.
14. Open for Business
You are now ready to open your watch company. If you followed the steps above, you should be in a great position to build a successful business and know everything you need about how to start a watch brand. Below are answers to frequently asked questions that might further help you.
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How to Start a Watch Company FAQs
Is it hard to start a watch company?
There is no one-size-fits-all answer to this question, as the ease or difficulty of starting a watch company will vary depending on your skills, experience, and resources. However, if you follow the steps above, you should be able to start your watch company without too much difficulty.
How can I start a watch company with no experience?
You can start a successful watch brand with no experience by finding a partner who has expertise in the field to help you. You can also research the industry and learn what goes into making watches before starting your own company. Finally, you can start a small watch company and grow it over time. Whatever route you choose, make sure you are passionate about watches and have a strong business plan.
What type of watch company is most profitable?
The most profitable type of watch company is a luxury watch brand. This is because luxury watches are high-priced and have a high margin. Luxury watch companies also have a strong brand image, which helps them sell more watches.
How much does it cost to start a watch company?
It can cost a lot of money to start a watch company. You'll need to invest in manufacturing, marketing, and distribution. You'll also need to pay for watches to be manufactured, and you'll need to find a way to get your watches in front of consumers. Typically, start-up costs for a watch company can range from $10,000 to $50,000.
If you're looking for a less expensive option, you may want to consider starting a watch company online. You can create a website and sell your watches through an online marketplace. This will help you avoid some of the start-up costs associated with starting a physical business.
What are the ongoing expenses for a watch company?
The main expenses for a watch company are marketing, distribution, and customer service.
Marketing costs can vary depending on the type of advertising campaign. For instance if a company pays for television commercials, the cost may be higher than if it only purchases online ads.
Distribution costs will also vary depending on how a company sells its watches. A company that sells watches through retailers has to pay the retailer a percentage of each sale. On the other hand, companies that sell watches online have lower distribution costs.
Customer service costs can also vary depending on the type of customer service. For example, if a company offers in person 24/7 customer support, the cost will be higher than if it only offers email support.
How does a watch company make money?
Watch companies make money by charging a fixed price for each watch they sell. Some common types of watches are sports watches, quartz watches, and digital watches. Watch companies may also sell replacement parts, batteries, and straps. Additionally, watch companies may charge for services such as watch cleaning or repair. Some companies also own the rights to brands of watches and may earn royalties from those brands. Some watch brands make money by sponsoring events or teams, while others make money by partnering with other companies to create limited-edition watches. Finally, some companies make money by selling their watches through retailers.
Is owning a watch company profitable?
Owning a watch company can be profitable. Many people that wear watches see them as an investment and a fashion statement and are willing to pay a premium price point for a luxury watch or a trendy style.
Why do watch companies fail?
Watch companies can fail for a number of reasons. Often it comes down to not keeping up with the latest trends, not creating a strong enough brand, or not pricing their products correctly. Many times, watch companies produce too many models at once, which can overwhelm consumers. Additionally, watches are becoming less popular with the general public as people turn to smartphones, smart watches, and other devices to tell time. For this reason, it's important for watch companies to find new ways to appeal to consumers.
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