How Millionaires Choose New Deals

I recently had a new business opportunity fall on my lap, and I haven’t committed to it yet, but it seemed like a good exercise to walk you through what goes on in my mind when I am considering new deals.

I get new deals thrown at me all the time, so if this is something you are interested in reading about, reply to this and let me know. 

Ok, so the opportunity is in the luxury goods niche, which is an area I have been curious about but know little about personally. 

The main thing to know about luxury goods is that the mark-ups are criminally high and things come and go in style faster than you can say platypus. 

This means the upside is great, but you are a slave to fashion trends…unless you can get your hands on something timeless, which is nearly impossible…

Nearly. 

Here are all the steps I go through when I consider a new business:

1) Is this a big enough opportunity?

Riches are in the niches, but if the niche is so small that there are only 1000 potential customers, this is probably not worth my time at this level. The luxury goods industry is one of the biggest and longest lasting industries in the entire world. It’s also an industry that is catering to the rich, rather than the middle class. This means, the industry can still be somewhat viable during hard economic times, as rich people still have more disposable income even during tougher markets. 

The other element to consider is, the luxury goods niche caters strictly to the emotional side of purchase decisions. It’s not a “needs” business, but it’s a “wants” business. It’s not essential to buy a new pair of shoes or a new watch, but it’s a signal to others that you are significant. Even if you don’t care about luxury things, you notice if someone has a big diamond chain or a gold watch, even if you hate it, you see it. 

Luxury goods feed that inner need to be seen. 

So in this, the pool of potential customers is massive and the industry itself is not a trend, though individual products can be. 

2) What is our unique angle?

While the luxury industry is massive, so is the list of competitors. There is no way you can compete with a big brand that has over 130 years of notoriety without a lot of luck, massive spend or huge celebrity endorsements. And why would someone go to a boutique when there are so many of them around?

Unless there is something they can ONLY get there and nowhere else. 

The unique angle on this business is an official wholesale license from a MASSIVE luxury goods brand. This means that we would be an authorized dealer, something that is nearly impossible to get access to. 

But the cherry on top is the license allowing full customization of these products.

This means the license is much more than just being able to purchase products at wholesale price and sell them at retail, it allows for custom drops, one off pieces or limited production pieces to be created by the boutique (with the limitation being they are approved by the official brand). 

In other words, this boutique’s unique angle is that customers can customize their luxury accessory from the brand they love, instead of going to other stores that only carry what’s popular and on the shelf.

In the luxury goods space, customers pay massive premiums for exclusivity. 

3) Where are we operating/where are our customers?

You need to know where your customers are, whether you are an online play or a brick and mortar store. In some markets, the same products sell for more money than others, because the customers are willing to pay more.

We will be operating this company in the Middle East and Asia, specifically starting with Dubai, and eventually expanding to Abu Dhabi, Doha, Riyadh and Singapore.

Having lived in Dubai for over a year, I know everything there is more expensive, especially luxury goods. A Rolex watch in Dubai is 10-20% more than in the USA, even from the official retailer.

With hand bags, glasses and jewelry, the “Dubai surcharge” is even higher. 

This is because Dubai is exclusively run on “new money” and caters to people that like to spend their money in “show-offy” ways. Dubai is super safe, no one is going to rob you as the security is very high and there are cameras everywhere. This makes it one of the only places, other than Riyadh in Saudi Arabia, Doha in Qatar and Singapore where you can flaunt your money without a care in the world. 

For these reasons, the location is perfect for the customer base we are looking for.

There may be more millionaires in London or New York, but as the years have passed, everyone needs to be more careful about how they signal their money in public. 

The other pro these regions have, is a massive influx of rich people moving to these locations. 

The growth for these areas is unprecedented and doesn’t seem to be stopping anytime soon. This makes the opportunity even more lucrative.

For these reasons, I like the location set for the project. 

4) How will we acquire customers?

Marketing. My favorite part. Arguably the most important part of the business. This is not a company that will do well on basic Facebook ads. 

But here is where the partner pitching the idea really comes in:

Their network of celebrities is massive.

And I mean A-listers.

During the 2021-2022 NFT boom, this person worked with people whose music you have heard, or movies you have watched on their NFT projects.

Here is the play: These people are gifted a custom pair of our products, by my partner whom they already love and trust with no obligation to do anything else. 

Many have offered to post and shoutout on their social media pages (we are talking people with 7M-200M followers) and some will just wear them and be seen with our products in paparazzi pictures. 

We also have connections with local celebrities in the middle east, that can help drive a local hype around the products. 

Having these celebrity connections gives us a massive unfair advantage. 

5) How can MY specific skills contribute?

The last thing I want to do is just be the money guy. One of the ways we want to elevate this company is to also have a local e-commerce option for customers in the middle east. E-commerce is in its infancy in the middle east and as a result many websites are poorly designed or not optimized for a good customer experience. 

I can create the right ecommerce customer journey and is optimized for mobile, ease of ordering, the right upsells being presented at the correct time and continual improvement of the customer experience. 

No boutique of any kind in the middle east has good e-commerce experience and we think it would be a massive edge if customers could order directly online with certain selections and the option to book appointments with ease through an online portal.

Another advantage regarding safety in the middle east, is the ability to send our representatives directly to the customers house and allow them to shop within the comfort of their homes.

This is massive in the Arab nations especially, as comfort and ease of access is an important requirement for customers. At the same time, there is no fear that our representatives could be robbed even with expensive samples as this is not an issue in the Arab nations. 

6) What is the upfront risk?

The last thing I consider is how much capital or time is needed for this to get going. In this case, we can get operational with around $40,000-60,000 as we only need a few samples of products. 

Most orders will be built to order, therefore we don’t need to carry it on the shelf before anyone has purchased it. In addition, labor costs in the Middle East, specifically in Dubai, are very low compared to Western countries.

This means, overall this business opportunity has many upsides with few downsides. 

While I have not committed anything yet, these are all of the thoughts in my mind so far.

I will be doing some more research on the industry, as well as the people pitching the idea to me and I will share my future findings in this newsletter.

If you found this helpful, forward the email to a friend!

- Vessal