How much money do you need to start dealing watches?

"How much do I need to start?" usually gets answered with a round number. The better answer comes from working backward from the watches you actually want to deal in, because the biggest cost of starting isn't paperwork. It's the money that sits in watches between the day you buy and the day you're paid.

Two kinds of startup money

• Setup costs: registrations, licenses, and a few tools. Usually modest, and paid once or yearly.
• Working capital: the cash tied up in stock, prep, and shipping until each watch sells. This is the large and ongoing number, and it's the one that decides how many watches you can hold at once.

Most new dealers underestimate the second and overthink the first.

Setup costs to plan for

What you'll pay depends on where you are. Some examples from our research:

• Sales tax registration: Texas's permit is free to apply for.^[1]
• Forming an LLC, if you choose to: $300 in Texas^[2] or $50 in Arizona.^[3]
• City licenses, where required: Phoenix charges a $130 application and a $30 annual fee,^[4] Houston $385.98 plus a $32.16 administrative fee,^[5] and Dallas $245 a year.^[6]

Add basic tools such as a loupe, a timing machine, and a way to photograph watches well, plus insurance for stock in your care. The licensing article explains which registrations apply where.

Working capital: size it from one deal

Pick a watch typical of what you want to deal in and run it through the calculator. The cash you need per watch is roughly what you'd pay plus what you spend before it sells. Then think about how long that cash is gone.

A watch you expect to sell for $6,000 through a channel charging 6% plus 3% processing, with $200 of prep, $40 to get it in, $100 to ship and insure it out, a 15% margin target, and about 60 days to sell at a 10% annual cost of money.

Most you should pay

$4,147.87

Prep

$200.00

Shipping in

$40.00

Cash out before the sale

$4,387.87

When it sells, $5,360.00 comes back after selling costs, a profit of $900.00 after all costs including carrying. Until then, that $4,387.87 can't be used for anything else. Hold three watches like this at once and you need roughly three times that in cash, before any buffer.

Run this deal in the calculator and swap in the watches you want to deal in.

Figures are illustrative, not market data or verified fees. Run your own numbers in the calculator.

Turnover matters as much as the amount

The same amount of capital does very different work depending on how fast it comes back. Money that returns in a few weeks can be used again and again; money stuck in a slow watch for months does one deal. That's why many dealers start with liquid references that sell quickly, even on thinner margins, and grow into slower, higher-value pieces later. The carrying cost article shows how holding time changes what you can pay.

Keep a buffer

Plan for things going sideways: a watch that needs an unexpected repair, a sale that falls through, a slower month. A cash buffer on top of your working capital means one bad deal doesn't stop you buying the next good one.

Ways to start leaner

• Deal in lower-priced references while you learn your market.
• Sell fast, even at a slightly lower price, to recycle your cash.
• Take consignments, which let you sell watches without buying them up front, as the consignment article explains.

When your own capital is the constraint, financing inventory covers the alternatives, and buying watches that sell quickly covers making the capital you have work harder.