Prospects of the gun business...


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Fedaykin
April 5, 2007, 12:13 PM
I live in Kansas and I am considering the idea of opening a gun shop and possibly a shooting range or something along with it. I'm looking for input from anyone who is already in the business on whether or not this would be a decent business to get into in the long run. I know it's probably not a great way to get rich, but I wouldn't want to get into a business that would keep me struggling to maintain a living. Thanks.

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glockman19
April 5, 2007, 12:18 PM
I have looked into it and It is very expensive. Insurance, EPA (lead), Setup, Guns, location, monthly expenses. I was told by a local indoor range with 14 lanes it would need a capital investment of $500,000-$1,000,000 depending on location. Return does not justify investment for me. As more ranges close the remaining ones might get more customers. most are empty durring the days and busy from 4:00pm to close and on the weekends.

ken w.
April 5, 2007, 12:25 PM
I personally think if you don't have enough cash at least one years rent for a store front,your chances of making it are slim.After that you have utilities and inventory.Inventory adds up so quickly.It's very hard to compete with the larger stores on new guns.Where I am there are guy's selling guns at 5 % over their cost out of their homes.Used guns are where the money.Selling add ons are good money makers too.Clips,scopes,rings,etc.It's the start up costs that kill most new shops.You need cash on hand to buy used guns and collections when they walk in the door.If you let it walk out the door chances are you just lost it.Just my opinion struggling in this buisness.

Trebor
April 5, 2007, 12:26 PM
Running any sort of retail business is hard. Running a gun shop is even harder due to the extra regulations and paperwork.

It *can* be done. There are successful shops out there and new shops that open and become succesful. There are plenty of failed shops as well though.

What is your previous business experience? What is your previous retail experience? How much money do you have to invest to make it a success?

What is your business plan? What is your local market like and what is your niche in that market?

You'll need to do a heck of a lot more research then just asking on-line. Research the regulatory end first and see if it's still something you want to do after learning about all that.

Fedaykin
April 5, 2007, 12:34 PM
I'm about a year a way from finishing college, which means I have no actual retail experience other than my part time jobs and my classes I've taken(accounting, econ). And I do realize there is an extremely large amount of research ahead of me. Would it be possible and cheaper to run the business out of my home? or perhaps a building on my own property? That seems like it would cut out the rent. Thanks for the help so far!

glockman19
April 5, 2007, 12:37 PM
I'm about a year a way from finishing college, which means I have no actual retail experience other than my part time jobs and my classes I've taken(accounting, econ). And I do realize there is an extremely large amount of research ahead of me. Would it be possible and cheaper to run the business out of my home? or perhaps a building on my own property? That seems like it would cut out the rent. Thanks for the help so far!

First suggestion is get a job @ a local gun shop or range and get the inside scoup. You may change your mind.

DogBonz
April 5, 2007, 12:42 PM
Would it be possible and cheaper to run the business out of my home? or perhaps a building on my own property?

I think, and I could be wrong here, but I think that the AFT can "inspect" your "store" at anytime, for any reason, and without notice. that means that if you run your "store" from your home, your home can then be subjected to ATF rules.

As I said I might be wrong on this one, but my uncle was looking to do the same thing about 10 years ago and decided not to for a reason like the above.

Bubbles
April 5, 2007, 12:45 PM
I think, and I could be wrong here, but I think that the AFT can "inspect" your "store" at anytime, for any reason, and without notice.

Yes, you're wrong. ATF gives 24 hour notice for compliance inspections.

So, if you're happy having ATF over at your house...

Trebor
April 5, 2007, 12:50 PM
Would it be possible and cheaper to run the business out of my home? or perhaps a building on my own property? That seems like it would cut out the rent.


The ATF will not issue you a FFL unless your business location complies with all local zoning rules. You can't run a "kitchen table" business out of your house, for instance, if zoning laws prohibit home based businesses. There are other good reasons to seperate your business address from your home. There are also certain security requirements you have to meet.


My advice is to get a job at a gunshop for six months or so. You won't learn *everything* you need to know, but you'll learn enough to know if this is something you want to pursue. (Don't tell them you want to open your own store though. Just get the job and keep your mouth shut while your their).

Any knowledge you gain working at a gun shop will help you in your planning.

Fish Miner
April 5, 2007, 12:50 PM
LEave your personal life apart from the buisness, not only for the ATF comments above- but you want a clear line of distinction regarding liability and the ability to have your personal assets taken (like in litigation for a slip and fall in the range, let alone someone getting really hurt). Get an attorney first to explain the set up process for running a LLC of LLP or INC. In the end it does not matter what you sell- guns or lemonade, you have to get your buisness plan and all buisness stuff taken care of prior to even thinking about selling or opening a door to the public. My .02

DogBonz
April 5, 2007, 12:59 PM
Yes, you're wrong. ATF gives 24 hour notice for compliance inspections.

I told you that I could be wrong... So, doesn't that mean that I was right?:p

Thank you for the correction, though.

Fedaykin
April 5, 2007, 06:01 PM
thanks a lot. i was trying to get some opinions on the matter and this is very helpful. i would very much like to pursue this in the future(when i'm done with school) and it looks like i have a lot of research ahead of me.

strat81
April 5, 2007, 11:28 PM
Dan, I admire your enthusiasm. I finished my BS in Business Admin 3 years ago and currently work as an accountant and am going to school for my MBA. Running a small business is not easy. Running a business that is heavily regulated is difficult.

But, let's say you want to open a store that sells something innocuous... like paper. Inventory is expensive, not matter what your business line is. So is rent, utilities, trash removal, telephone and internet access, web hosting, furniture & fixtures, repairs & leasehold improvements to the property, accountants, lawyers, insurance, and wages. If you're anything like I was out of college, you don't have a dime to your name. So, you go to the bank for a loan, right? Wrong. The old joke is that banks loan money to people that don't need it. Your mom and dad say they're willing to help. Do they realize that their investment could evaporate? If it does evaporate, will they still invite you over for Christmas Dinner? Let's say mom and dad are millionaires and astute business people: they ask to see your business plan. Do you have a business plan? Do you have store layouts, inventory plans, projected financial statements? How will you finance the startup of the business with debt or equity? Will it be a partnership, corporation, or sole proprietorship? What say, if any, will shareholders have in the business? Who is going to work there, 9-5, everyday? Are you willing to be the bookkeeper, garbage man, cleaning lady, salesman, purchasing agent, and warehouse guy?

Now, on top of all that, add the ATF, federal licenses, NICS, lunatics, the Brady Campaign, Mayors Against Illegal Guns, tire-kickers, and dangerous and valuable inventory to the list. Are you willing to do internet sales through a website and gunbroker? Will you go to gun shows? Who is going to open the store when you get the flu?

Go to amazon.com and buy a copy of Small Business For Dummies. Read it cover to cover.

Running ANY small business is not easy. Retail is more difficult. Firearms are even more difficult than regular retail. The best thing to do is find a GREAT (not just good) CPA. They know the ins and outs of business types (corps vs. partnerships vs. proprietorships) as well as many of the legal issues you'll need to handle such as licenses, permits, taxes, and insurance. They also know the financial part too.

Good luck, and feel free to PM with any questions.

Fedaykin
April 6, 2007, 01:19 AM
strat81: That was one of the best answers I could have looked for. You seem to have summed it up quite well, and I definately appreciate the suggestions. I think I actually may know a CPA, and I'm going to check out that book as well. My thought so far was to go into the business with my brother. So I'm hoping to avoid hiring much more help than that(however I realize that more help would probably be needed). I was also considering starting it out as a sort of specialized sporting goods store(firearm accessories, paintball, perhaps even fishing and archery) and dealing a small number of firearms along with that. To me that seems like it would increase the customer base and take my inventory costs down a little bit(initially). I could then start off by just carrying a few firearms, and building my way up from there(buying and selling as I go to increase gun inventory) while using the other non-firearm products to help with income and eventually becoming a higher volume gun dealer. Maybe this idea would help my chances of survival in the gun business? Thanks again.

hit or miss
April 6, 2007, 09:26 AM
Think seriously about location. The best business in a bad location will be a loser eventually. I've always thought a gunshop close to a scrapbooking store would be a fantastic idea. Give the guys something to do while the wife shops.

strat81
April 6, 2007, 10:43 AM
Be very careful about going into business with family. Nothing destroys families quite like money. Will you and your brother own it 50/50 or 49/51? That makes a HUGE difference when it comes to decisions. Also, your wives (if/when you have them) will essentially have a say in the business too since the performance of the business impacts their taxes and well-being. Also, family-run businesses are also more likely not to be run "by the book." Cash is skimmed from the drawers, personal expenses are paid through the business, etc. Most family members are okay with that and it puts money in your pocket (ethics and legality aside).

Partnering with someone outside the family can mean the business is run more strictly since, if it screws up and goes south, you have someone else to liable for. However, if the business tanks, you won't cause an internal family feud in the process. It sure would suck when your kids ask "Why can't we see Uncle Bob?" and you say "Because he killed daddy's business." Christmas dinner would be awkward like that. Also, an outside partner might have more to offer than your brother. For example, you might be a numbers guy. You'll need a sales/marketing type of guy to complement you. If both you and your brother are salesman-types, your bookkeeping will suffer. BOOKKEEPING IS EXTREMELY IMPORTANT.

Your initial start-up costs will be huge for inventory. You mentioned buying and selling and reinvesting the profit into the business to grow it. Great, that's how businesses are run. But, think about how much profit you'll generate. Many posts here on THR mention many dealers sell guns at cost + 5%. So, let's say your cost was $400. 5% is $20. That $20 must then contribute to rent, utilities, and wages. Then what's left (is there any left?) is profit. But, let's say that $20 you made is free and clear profit. You'll have to sell 20 guns at that price to be able to have 2 guns to sell. Your location said Kansas... I'm in Nebraska. Short of Omaha, Kansas City, or Wichita, do you really think you'll be moving 20 guns a day? A week? A month?

Also, you said you're opening a hunting/fishing type of store. Are you knowledgeable about all of these products? Or are you just a 1911 guy? Do you know the best powder to reload 30-06 for a vintage M1 Garand? What about the best drop-forward for a Tippmann A-5 using a 12oz tank? And the best bait for catching the most common type of fish in your area? If the XYZ load doesn't cycle someone's 11-87, what load do you recommend instead? Why should someone buy that Lee Press instead of the RCBS? How long will it take to get a Glock 26 in stock? What's better, 9mm or .45 ACP? Which of these bows is best for hunting turkey? For competition?

Oh, if you do start a shop, don't charge a lot for FFL transfers!!! It kills me to hear about dealers that charge $40 or something for a transfer. Charge $15 or $20... something low and reasonable that will get them in the store. Maybe they'll pick up a holster or box of ammo while they're there.

With all of these potential negatives that loom, nothing beats doing what you love. If you have a head for business and love guns, a gun shop might be nirvana for you - even with the headaches.

Fedaykin
April 7, 2007, 02:01 AM
I will probably relocate after I'm done with school. I have no idea where although Colorado Springs has been in the back of my mind. The fact that I'm open to location will give me room to pick a strategic spot for my business.

As for the FFL's I'm right with you on the cheap transfers. I think a lot of dealers have ridiculous fees.

I see your point about needing to be knowledgeable about all the products I would sell, and with my brother and I combined, we have a broad knowledge of firearms in general, as well as the fishing. I have basic knowledge of black powder and bowhunting. I could definately use more in depth education in all those areas, but as I am a very motivated self-learner, I should be able to learn enough to help my customers get what they want, and know how to use it. I'd probably own the business and my brother would work under me initially. Mostly because I'll be the one getting it set up, and I'll most likely be keeping books and taking care of finances. I would just like him in it with me because I know I can trust him and he is knowledgeable.

I know this is probably impossible to accurately guess with how vaguely we've discussed my plans, but anyone have any ballpark figure on how much initial financing might be needed for a business dealing a medium to small volume of firearms, along with various other outdoor accessories and goods(paintball, archery, ammo, blackpowder)? I saw that someone posted 500,000 to 1,000,000 earlier in the thread but I'm assuming that was for a store and shooting range. I'm just thinking store at the moment.

strat81
April 8, 2007, 10:29 PM
As far as inventory goes, think about buying cheap stuff to stock at first. These are guesstimates, so bear with me:
10 S&W Sigmas @ $300 = $3000
5 Taurus 357 Revolvers @ $250 = $1250
10 Remington 870s @ $250 = $2,500
10 Remington 700s @ $250 = $2,500
10 cases of misc. handgun ammo @ $175 = $1,750
10 cases of misc. long gun ammo @ $200 = $2,000
5 paintball markers @ $200 = $1,000
10 cases of paintballs @ $30 = $3,000
12 months rent at $500 = $6,000
12 months misc. elec., gas, phone, inet @ $500 = $6,000
Minimum wage ($5.25) for 2 people, 40 hr/wk, 1 yr = $21,840
Health insurance for 2 people, $300/mo = $7,200

That comes to over $58,000. Like I said, those were GUESSES. I'd imagine you'd be carrying more than Sigmas and 870s so this is just for point of reference. However, Bushmasters, Wilson Combat 1911s, etc etc are not cheap to stock. This also does not include store fixtures like display cases, merchandising racks, and cash registers. It doesn't include a computer, gun racks, security enhancements, insurance, fishing/camping inventory, general supplies, advertising (very important!), etc. Rarely do stores come into your possession in perfect condition. Count on doing repairs, even if it is just paint. Have you priced paint and primer lately? I bought enough paint and primer for 4 rooms in my house and it ran me over $400 (and I didn't by the fancy stuff either).

Don't forget the wages. Even if you and your brother are the only employees at first, you have to subsist on SOMETHING. Health insurance is of course optional, but I think you're crazy if you don't have it. Even something like a broken arm or kidney stone can bankrupt you very quickly.

Coming out of college, credit limits on all of my credit cards combined was about $30,000. Financing a business on credit is EXPENSIVE and just generally not a good idea since it can ruin your personal credit score which will linger with you long after your business has died.

Also, this is contingent on renting (at a low rate, mind you) not purchasing a building.

glockman19
April 8, 2007, 11:24 PM
daniel.schwindt,

I think strat81's estimates are on not enough in many areas. I'd say to have an inventory worthy of bringing in customers and turning them into buyers is low. I'm not sure of the dealer cost of firearms but your other estimated costs are way to low and some are missing completely:

12 months rent at: $1.25 per Sq. Ft. store 20"x50" = $1,000 = $12,000
12 months misc.
elec: Interior lighting for 12 hours + Exterior signage = $500 x 12 = $6,000
gas: $100 per month = $1,200
phone: 3 lines + dedicated Fax $250 per month = $3,000
inet: $50 per month = $300
Not to mention Computers, Registers, Letterhead, Business Cards, sales reciepts, paper, Licenses, permits $10,000
Minimum wage ($7.25) for 2 people, 1 yr 2,080 Hrs = $30,160 just in wages
Payroll taxes, = 7.65 of payroll = 2,307.25 based on 2 abocve employees
Health insurance for 2 people: $350/mo = $8,400
Liability insurance: 1,000,000 minimum = $3,200
General Business insurance Theft etc. 10% of COG.
Advertising: $500 per month = $6,000

So far I'm up to: $82,567.25 without inventory.

Inventory:

Pistols: 3-5 of each Kimbers, Glocks, Springfields, Colts, Para's, Taurus's, Sigs, S&W's. Glock alone has 21 models.

Revolvers: 3-5 of S&W's Rugers, Colts. Smith & Wesson alone has 19 J frame models, 7 K/L Frame models, 12 N frame models, and X frame not to mention pistols in the 1911 , metal, polymer catagory.

Shotguns: 3-5 of Remington, Browning, Marlin, Mossberg, Wilson, Ithica, Beretta

Rifles:
Semi Auto: AR's Rock River, Bushmaster, Ruger, Springfield
A-Bolt: Remington,
Repeating: Henry, Marlin, Savage

So many I can't even take the time to list them all I figure you'll need at least $50,000-$100,000 in firearms and another $25,000-$40,000 minimum in Ammo.

Will you be selling accessories? Mags, Scopes, Rings, mounts, Belts, Slings, Targets, Bage, Cases, Safes, Cleaning supplies, Clothing Etc... Add in another $50,000.

I figure to do it right and have a chance to stay in business you'll need $250,000-$300,000 just to open your doors. minimum add in other things I might have missed and I'd say $500,000. want to open a range? add in another $500,000 for additional taxes, insurance, fees not to mention all of the zoning and construction costs etc.

Also want to sell fishing & other hunting supplies easily add in another $100,000-$250,000.

strat81 is correct, Do a business plan. Talk to others in the business who are successfull.

Again I'd recommend working in a Sporting goods/hunting/Fishing Store for at lease one year or more before taking on your own operation. Learn what works and what doesn't.

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