Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.
More than ever, Robert Phillips is up against the clock.
The owner and operator of Standard Time Watch and Clock Repair in Port Colborne, Ont., is into the third year of his five-year business plan, but he has yet to earn a dollar of profit. He estimates he has lost $70,000 to $80,000 in his first two years of operation.
Not that any of this is surprising to the former professional musician, who fully expected to take losses in the first few years of his new venture, which draws customers from nearby Welland and St. Catharines, and Buffalo across the border.
Still, after spending two years and about $60,000 to attend Canada’s last remaining horological school, in Trois-Rivières, Que., Mr. Phillips was naturally hoping for more than $40,000 in annual revenue.
While he spends most of his time repairing clocks and watches, he notes there isn’t much money to be made there, particularly with younger people, who rely on cellphones and wearable technology to tell the time.
With that in mind, Mr. Phillips, who runs the business with his aunt and mother, has dabbled in building clocks. It’s a time-consuming undertaking, however, and he thinks he would have to charge $8,000 a timepiece. He also sells clocks as a dealer for Howard Miller and Bulova.
He has also begun selling antique clocks and watches, but he doesn’t have enough capital to keep many of these in stock.
One of the things Mr. Phillips highlights on his website is the sustainable aspect of well-built mechanical clocks and watches, as opposed to the disposable nature of so many timepieces today, though he does stock and replace batteries to draw customers.
He is also exploring the idea of turning his store into a kind of curiosity shop for one-of-a-kind items.
“We’re trying to become the destination for people who are looking for unusual gifts, not just clocks and watches,” he says. “We’re trying to expand that to keep the retail active and healthy.”
The Challenge: How can Mr. Phillips create a profitable business in the shrinking field of fine timepieces?
THE EXPERTS WEIGH IN
Sunil Mistry, partner at KPMG Enterprise, Toronto
It’s a very high-end market, and if you’re able to become a dealer and do the repairs on some of the older and more unique watches and clocks, it could be a very lucrative business.
What is he doing to build that network up? In this market they’ll keep coming back to you. A lot of the 1 per cent who can afford $100,000 watches don’t make one-time-only purchases, they want to have other watches. They have 10, 15, 20 types of these watches, and they sometimes sell some and usually try to go through their dealer. They know who the dealers are and always go back to them.
Stuart Henrickson, I.H. Asper executive director of entrepreneurship at the University of Manitoba, and founder and CEO of Red Leaf Capital Corp., Winnipeg
The fatal mistake he has made is he hasn’t established what his target market is. He said, “I’m in anything I can really do to make a buck,” and I understand that. But most entrepreneurs get to the point where they have to make a tough decision. So, No. 1, he has to establish a target market.
He’s in Port Colborne. If he wants to specialize in high end, he needs to dramatically upgrade his website, make it significantly more user friendly, more interactive, more marketing-focused. Secondly, he needs a search engine optimizer so that anyone in Canada or North America who types in “high end or Rolex or Cartier watch repair,” the browser immediately goes to his site. Because if I’m going to put my watch in a box and mail it I don’t care if I’m sending it to Port Colborne, New York, Texas. He might think his market is Port Colborne, but if he wants to be high-end-focused, then his market is North America.
Asaf Zohar, associate professor of business administration and chair of sustainability studies, Trent University, Peterborough, Ont.
If the predictions about wearable technologies are correct, this is going to be absolutely massive. Credit Suisse came out with a study in 2013 that said the market could hit $50-billion by 2017. The question is: How could he reposition himself for this radical reinvention of the business? The biggest downfall of this technology so far is that the devices have limited battery life, and people are going to require somebody like Mr. Phillips to change the batteries. Also, we might see hybrids of new and old technology. There might be a new kind of Rolex that that is some combination of the two and he’d be perfectly positioned to jump into that.
There’s also a huge opportunity for him to rebrand what he does as being a green, sustainable product. He writes about it in his blog, but it’s completely absent in terms of his brand identity. One of the remarkable things about green cars is that their market research said that people don’t necessarily look for a super attractive green car, they want it to be distinctive and they want it to be known as a sustainable product. So what could be more visible than to wear sustainability on your wrist? I think that’s a huge opportunity and it’s a wonderful reframing away from “this is a dying industry.”
Barry Carter, owner and operator, Victoria Clocks, Victoria
The one place that people do very well in this market is changing batteries. The average watch battery costs about 35 cents, so there’s profit to be made. You can change a watch battery in three to five minutes and the customer is out the door, so that’s good money.
I think he needs to do some research on watch sales in general. If he can get a watch line like Omega or Tag Heuer and be able to sell a watch that’s worth a few hundred dollars, he could get a decent profit out of it. One way to go might be to become an agent for one of the bigger companies, but a lot of that has to do with your storefront and a bunch of other things, because they want you to be successful and they want you to look good because you’re selling their watches.
THREE THINGS THE COMPANY COULD DO NOW
1. Cast a wider net
Although it’s based in Port Colborne, the shop needs to look beyond Southern Ontario and market itself throughout North America.
2. Green is good
Play up the sustainability angle on mechanical watches and clocks, which can last for upward of 60 years if properly serviced.
3. Embrace the future
Explore the wearable technology trend and look for opportunities.
Interviews have been edited and condensed.