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Investing in a company is not just about ponying up the cash. You’ll also be giving a lot of your time and energy. Also, if things don’t go well, you could even be risking your valuable reputation. However, if you were to invest in a brand new watch company, your chances of success can be excellent.
Watch Industry Sales Are Strong
In recent years, watch companies have become incredibly adventurous. Many a new watch company is experimenting not just with design and materials, but with price tags as well.
Sales of Swiss watch brands took a slight dip in 2016 and 2017 due to the rise of smartwatches from primarily American brands. However, sales in the watch industry are strong right now and continue to travel skyward.
Additionally, many small but promising startups believe they could be the next big thing in watches. This means there is ample opportunity for an investor to get on board. The only question is: Should you?
Longstanding Swiss brands like Omega, Rolex, and Hublot have gotten by for a long time with selling very expensive watches made with high-end materials and complicated designs. While all that is well and good, many customers simply can’t afford these models, and others find them ostentatious.
However, MVMT, Daniel Wellington, and Skagen are new companies that have broken the mold. These companies are marketing to millennials, who want less expensive watches that nonetheless don’t sacrifice materials or design. After all, when a watch looks amazing but you spent $200 instead of $20,000, why wouldn’t you choose the less expensive option?
There’s nothing wrong with a company that sells affordable watches that look good and function well. For example, Swatch has done this for more than 30 years. Moreover, consumers are clearly fans of the inexpensive models that are often sold online.
So if you’re an investor with an eye on funding a new watch company, here’s what you should be considering.
Is This Company Really Different?
Many new companies claim to be innovative and game-changing, but when all is said and done, is the watch company you’re considering really all that different from the others? A new watch company, in particular, will have to do a lot to distance itself from the more established brands.
Even the emerging companies, such as Skagen and MVMT, will present a competitive challenge to a brand new watch company. That’s because their prices are remarkably cheap for the amount of labor and materials that go into them.
Perhaps their watches use an alarm, a speaker, or a light in a way never seen before. However, your new watch company will need to be truly unique compared to other brands. Otherwise, it’s going to get lost in an ocean of competitors.
Does the CEO Have Experience?
If you’re a wise investor who knows a thing or two about how companies should function, then you understand that it’s perfectly normal for a new CEO to ask investors for advice now and then.
However, if it so happens that you’re practically running this new watch company due to the CEO’s lack of leadership and skills in technology, design, marketing, and accounting, then it’s bad news for you.
It can be enjoyable to take on the challenge of mentoring someone toward success. However, you have to feel that your investment in this watch company will be in safe hands once you hand over the cash.
Does This Watch Company Have a Clearly Defined Market?
Some of the established watch brands managed to break into the mainstream by advertising on social media and podcasts long before these modes of marketing became the norm. Tech-savvy millennials lapped up the products because of the engaging ads for products that spoke to their sense of design and fell within their price range.
It takes a really special watch company to be marketable to men and women of all ages and professions. Generally speaking, however, most businesses must aim their products toward particular markets. Will your watch company aim to appeal to businesspeople, fitness fanatics, teenagers, millennials, divers, or another market? Once you know your target market, then you can begin to plan your marketing and advertising strategies.
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Do the Company’s Watches Have Lasting Appeal?
It’s difficult to know how long your watch company will continue to hold your market’s attention, unless you have a crystal ball and can see into the future.
However, as an investor, you need to have a good sense of whether or not the watches your company will be selling will be a fad. Of course, your hope is that your watch company will grow and evolve. And there is a good chance that a well-run watch company can continue to offer watches that people will want to purchase even many years from now.
So does the business have plans for how the model could change over time? Or does it have only one good idea and that’s all? A watch design should be able to stay relevant and marketable for many years. This it can do, if the company’s management remains aware of market trends.
Of course, investing in a new watch company will always hold some degree of risk. But when you have more answers in front of you than questions, the decision-making process will be simpler in the end.