making a little money in a side business...


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SSN Vet
April 28, 2008, 03:22 PM
I have a regular 40 hour a week job and my wife and I have a little side business that she primarily runs from our home office (computer type stuff).

I'm very interested in making some supplemental income in a firearms related endeavor and am looking for some ideas.

Resources I have.....

I could put a few thousand dollars into the start up cost.
I have a decent basement shop (~500 s.f. with good tools)
I have a decent home office.
I could recruit my wife to help some in the office/customer service end.
I'm a born gear head and have a solid background in manufacturing and engineering.
I know a lot about woodworking and am proficient with a lot of tools.
I'm pretty knowledgeable of metal working and can get around a lathe and end mill.
Iím a proficient CAD designer and can program and run CNC machinery.
I know a lot about packaging (cases and foam fabrication) and have a lot of connections in that world.

here's some of my ideas.

1. Get a type 1 & type 7 FFL and do Saiga conversions and AR builds.
perceived downside....these may be banned in a year or so.
limitation....I'm not interested in maintaining a store front or having strangers come to my house, so all items would have to be shipped.

2. Sell cases with custom interiors for use with firearms.
limitation....this conflicts with my present employment and though I might get away running such a business under my wifeís name, it could get me fired....

3. Get a type 6 FFL and sell re-manufactured ammo.
perceived downside....liability and low margins.

4. Get a type 1 FFL and buy and sell on Gunbroker, Auction Arms, etc... I could process FFL transfers as well and do rudimentary gunsmith work, but the same "store front" limitation as in idea 1 applies.

5. Set up to manufacture holsters. I know a fair bit about plastics and molding processes and can do the design work and modeling and have contacts to work with for proto-types, tooling and contract molding.
perceived downside....I don't know a lot about leather working....could be very hard to break into.

6. Other ideas?

thanks in advance for any thoughtful replies....especially those that reflect personal experience.

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33rowdy
April 28, 2008, 03:55 PM
I had many thoughts like that myself. But here is what I see that hurts these business of this sort.

If you put all of those ideas on the market, your customers, and/or your competition will take it away from yea. If I see and like your product that you have a few thousand invested in, I myself will get my own equipment to do such a thing but might be a smaller size scale.

But anyway; I hope you can get something going for yea. Not to be negative about it but that is what I see that is going on around here.

243winxb
April 28, 2008, 04:37 PM
Type 1 you need a store front. Insurance. Fed. and county license. Tax stamp to collect sales tax.You should be incorporated, because when you are taken to court you dont want to loose your home. As a parttime weekend job, you would make out better working at a burger joint. Shipping of guns is very expensive these day. Selling online sounds like a great idea, people will say they will buy the gun, but the check never comes, you just told 3 other people the gun is sold, they loose interest. Yes you can buy guns cheap from people that need cash quick. Some will need repair when you test fire them, and you must test fired to make sure they are safe. You will be sold stolen guns soon or later, or a convicted felon will slip past on the paper work, both can have you sitting in a court room to testify. You have a good chance of being robbed at your store front, or by mail order, guns, powder you send a check for sometimes that is never shipped. Or the wholesale company you do business with goes bankrupt and you just send a check for a large order, try to get that back. The large volum dealers get the newest and latest guns that everone must have at the moment. You wont get any of them. As for making ammo, the loading machines are very costly, you have to find a market for what you produce, insurance very high. When the primer feeding tube explodes and just misses the wife upstairs, that will be the end of reloading in the basement shop. (happened to my buddy) Then you will have to deal with the ATF person that comes to inspect you paper work, you better have all the T's crossed and th I's dotted. The the firearms laws always seem to be changing, maybe not so much these days, but at one time you had a hard time keeping up with each new law. I remember the years of "son of sam" Record keeping of every primer, bullet, power had to be kept in a log book. Lots to think about. Dont forget you also have State gun laws to go along with the fed's laws. http://usgovinfo.about.com/library/weekly/aa092699.htm

243winxb
April 28, 2008, 05:32 PM
To make money in the gun business today you have to have a large inventory that you turnover 1 or more times a year, volume counts. Availability is more important then price to some people. If they can get there hands on it, they will reach for the credit card. I see a store front as a must have. A lot of money is made in buying large collections of firearms. When you have a store front, people that need cash fast will sell cheap. If you become a great gunsmith you will do well. Only drawback is most people need the gun fixed 2 days before the season opens. Custom work is where the money is at. Stay with the design and running of CNC machinery and it doesnt have to be with firearms. CAD designer and can program and run CNC machinery

luckylogger6
April 28, 2008, 06:50 PM
I think there is a market for custom leather or kydex holsters. Any one try buying one lately…every one has a 4-6 week turn around. Not to mention the big names with 6-9 month wait and a 100-dollor price tag.

kennedy
April 28, 2008, 08:14 PM
you could build parts for collector guns. I collect rasheeds, and the rear sight slides break, I found a guy that makes them. he also makes replacement mags since there are not any extras out there. one part needed is the disconnector, they break and there is no replacement avalible unless you find some one parting one out. They only made 8000 of these guns so parts are hard to find. just a thought

SSN Vet
April 28, 2008, 09:44 PM
Believe me guys, I have no illusions that selling guns is going to be a get rich quick scheme.

I've known a case manufacturer who's wanted me to broker for him for years. There's definately money to be made in cases for industry and defense. Maybe catering to the tacticool or competition crowd as well.

Hard work and some smarts can pay off though...

There's lot's of little guys who seem to be chugging right along. You've got a couple bullet lube guys like the BullShop. You got the guy making bullet guides for Saiga conversions. Several small time holster guys. Maybe some little re-loading gizmo like the possum hollow guy.

I tend to think that accessories would have a lot less liability involved.

Any other ideas out there?

oldgold
April 28, 2008, 09:51 PM
Optic sight mounts for off the wall guns. Some are out there but the price is usually more than the gun costs. A little engineering and innovation might bring you something a bunch of people just have to have. Same goes for iron sights , such as a high quality low cost tang sight for cowboy action shooters. Might recreate some of the older Marvel sights.

trickyasafox
April 28, 2008, 10:22 PM
cylinder throat jobs. quick & easy and room in that market I think.

custom grips would be nice- grips that aren't easily found- like for 150 prefix security six rugers. . . .

cut slides for after market sights. (I'm thinkin 1911s)

I feel like these are high profit quick jobs. could take off for you. if so- I want all of these services at discount! :)

freakshow10mm
April 28, 2008, 10:47 PM
Get a type 1 & type 7 FFL
Just get the type 07. You can do everything a type 01 does AND manufacture firearms. The 07 is even cheaper than the 01. I'm getting an 07 with an SOT 2

Get a type 6 FFL and sell re-manufactured ammo.
perceived downside....liability and low margins.
I am a licensed type 06 FFL. I sell commercial ammo, make cast bullets, and sell ammo to LE for training. All my ammo is new manufactured. I make $90/hr with loaded ammo. Liability insurance starts out at $2100 per year.

SSN Vet
April 28, 2008, 11:32 PM
I've thought about the grip thing....

sat in on a CNC software seminar where the instructor told of a shop making custom grips, etc...

Here's another thought....

Custom wood display boxes with custom velvet lined foam interiors. The covers could be CNC routed with an artwork image of the handgun, the owners name and/or military/police insignia. Guys who drop $2k on a custom 1911 might like a $75 display box to show it off in.

I've also been thinking about shadow boxes with integral gun displays.

People seem to like nice hardwood furniture on their AKs, but most of what's available is imported and can't be used for 922r compliance.

I could set up to do all three of these with a small CNC router.

Claude Clay
April 28, 2008, 11:48 PM
your talent/equipment seems directed to wards custom cases. the Internet makes your meatspace irrelevant and your home satisfies your production/office needs. add some leather working equipment ( and a class at Tandy Leather :) ). custom grips can come later, if at all....making from a blank is a lot of work. so is modifing an existing one for self or another; but i find it fun & rewarding.

local customer base can be expanded by getting a NRA teaching certificate for handgun carry that is recoginized by your state. teaching yields great tax right offs for ~all your guns & ammo & etc.

good luck

TexasSkyhawk
April 29, 2008, 12:20 AM
Custom stocks.

Gun safes.

Jeff

hoptob
April 29, 2008, 12:37 AM
How about good old revolversmithing? They are few, far apart and seems like all retired. Last time I wanted to do moonclip conversion wait time was 3-6 month!

Considering the quality of current production revolvers this one may actually get you rich quick.

Mike

Otto
April 29, 2008, 01:04 AM
Or maybe fabricating after-market-parts for Dillon presses.
Two that come to mind are the 'aluminum roller handle' and the 'strong mount'.
I figure Dillion's markup for those two accessories is at least 800%.

Sir Aardvark
April 29, 2008, 01:17 AM
Good Luck!

The Internet has opened a Pandora's Box of competition.

You would have to find some sort of niche market to succeed well enough to earn a decent living, and even then it would probably be pretty shaky.

If you were to approach it as more of a "Hobby" than a "Business", then at least you'll be happy about losing money every year until you go broke and have to quit.

Sorry... I don't mean to break your spirit, but when you look at the overall picture, it would probably be better to spend your money on a Starbucks franchise, then roll your profits from that into your "Gun Hobby" - at least this way you'll still have a livelihood.



I love giving Business advice on the Internet, it is almost as fun as giving Medical advice and Legal advice!

freakshow10mm
April 29, 2008, 01:33 AM
On a positive note, I started my business hoping for $200-300 per month for extra cash for the mortgage, etc. I've averaged over $2200 per month in sales!!

WildeKurt
April 29, 2008, 08:27 PM
+1 on moonclip conversions for revolvers.

How about wood cases for reloading turrets? A nice hinged thing that holds maybe four assembled turrets (with dies). Oak, maple, that sort of thing.

strat81
April 29, 2008, 09:54 PM
Freakshow may be able to weigh in on this... as an ammo FFL, you might run into zoning issues. You might also have to get the state fire marshal involved, OSHA, EPA, etc. I know and you know a Dillon 1050 or two won't cause the next Chernobyl, but .gov types are nuts.

I'm surprised ammo liability insurance is only $2100 per year. I suppose that varies with production.

IMO, if you do manufacture ammo, don't look to compete with WWB or Blazer. What the market needs is quality match loads at a price lower than Black Hills or Federal Gold Medal.

If you don't have any business skills, consult with your local chamber of commerce about entrepreneur classes. Nothing tanks a business like poor management. Be sure you have a business plan.

How about wood cases for reloading turrets? A nice hinged thing that holds maybe four assembled turrets (with dies). Oak, maple, that sort of thing.

Simply brilliant. I'd buy.

scrat
April 29, 2008, 10:30 PM
check out bigbadguns on the black powder forums. he makes holsters for a lot of guys on THR. has a lot of experience and does good work. His turn around time is about a week.

sadlsor
April 29, 2008, 10:40 PM
SSN Vet - sounds like you're on the way to the idea part. I second the mention of having a business plan. There are templates online, and books at the library.

I'm getting a business off the ground, too. Marketing can not, must not, be overlooked. Look for paperback titles by Jay Levinson, author of the Guerilla Marketing guides. There are several, including Guerilla Marketing for the Home-Based Business, and his advice is lauded by corporate types as well as entrepreneurs. Again, your library is your friend, but these are not $35 tomes. Best luck.

As an aside, I did 4.5 years on the Richard B. Russell-fish, SSN 687. Last of the 637 class before the 688's / Los Angeles.

freakshow10mm
April 30, 2008, 01:09 AM
Freakshow may be able to weigh in on this... as an ammo FFL, you might run into zoning issues. You might also have to get the state fire marshal involved, OSHA, EPA, etc.
There are EPA forms you have to fill out with the FFL app. For an ammunition manufacturer, most of it is "N/A". Never had to get the state FM involved. The state of MI has no regulations for ammunition manufacturers nor firearm manufacturers.

My advice if you are going to start a legitimate business is this: Get a FEIN (federal employer ID number) and a sales tax license for your state. If a sole proprietorship, register with your county. It cost me $10 to do so. Include copies of these with your FFL application. This helps to legitimize your intentions of doing this for a business. "Hmm, he's got a registered DBA, sales tax license, and an FEIN. This is for real." It isn't required, but is very helpful according to the ATF agent I worked with.

Deliver the CLEO copy of the application in person to the chief or sheriff. Make an appointment if necessary. Tell them you are going to manufacture ammunition for law enforcement training, with some local sales at the local gun stores.

This will open doors. I have a two year contract with a local LE agency for training ammo. The contract is for tens of thousands of rounds. The terms and actual count I cannot discuss in detail, to comply with the contract terms. Let's just say I'll make over $10K profit per year from this one agency. I have about a half dozen sniffing around me now with demos scheduled in the next few weeks.

I've only been licensed since January of 2008.

I know and you know a Dillon 1050 or two won't cause the next Chernobyl, but .gov types are nuts.

The ATF doesn't give a flying **** what press or equipment you use to load ammunition. The ATF's main concern is compliance with the GCA and if your paperwork in order. Also, if you manufacture and sell taxable goods, the Tax and Trade Bureau of the ATF, which collects the Federal Excise Tax on firearms and ammunition (LE is tax exempt, but just the DoD and Coast Guard are exempt for Federal LE agencies) will check your papers.

Wanna hear something funny? The ATF agent that handled my application investigation had NO FREAKING CLUE what "cast bullet manufacturing" even was!! He had to ask my CLEO what it was. The chief said to me "them f-ers have to have a 4 yr degree to get the job, but they don't even know *** bullet casting is??? Good luck with the ATF, Adam."

I'm surprised ammo liability insurance is only $2100 per year. I suppose that varies with production.
So was I. If you load for LE, you will most likely need it.

IMO, if you do manufacture ammo, don't look to compete with WWB or Blazer. What the market needs is quality match loads at a price lower than Black Hills or Federal Gold Medal.
I answered something similar to this in a PM to the OP. Set your price for what you want to get paid. People will pay for quality. You see each and every round that is loaded. The big factories have people sucking down coffee bitching about gas prices while watching machines run. The quality check of a small commercial loader is vastly different and better than a huge factory. Mass production is a MFer. A contact of mine, another ammunition manufacturer, sold some ammo for a .45 Colt with Swift A Frame bullets to a customer for an African hunt. The price? $60 for 20 rounds. The guy bought 500rds at one time. That's $1500 at the drop of a hat. The manufacturer probably made $1K on that sale alone. Profit.

If you don't have any business skills, consult with your local chamber of commerce about entrepreneur classes. Nothing tanks a business like poor management. Be sure you have a business plan.
This is good advice.

Hutch
April 30, 2008, 11:24 AM
Custom gun safe interiors. Space-making racks for handguns in safes. Reproduce the S&W presentation cases.

strat81
April 30, 2008, 02:38 PM
If a sole proprietorship, register with your county.
Absolutely, positively, do NOT run any business (especially one related to guns) as a sole proprietor.
1) As a sole proprietor, your personal assets (house, car, dog, TV) can be seized to settle claims against the business.
2) As a sole proprietor, you will fill out a Schedule C and pay self-employment tax (SSI & Medicare).

Speak to your CPA and have him/her set up an S-corporation for you. S-corps are not "double-taxed" like C-corps but they have limited liability. Only the assets of the business (factory, machinery, equipment, computers, etc.) can be seized to settle claims. Your personal assets are shielded. Additionally, S-corp profit is reported on a K-1 which flows through to your 1040 as regular income and is NOT subject to self-employment tax.

I'm not a fan of LLCs since they require self-employment tax. Lawyers love them because they get to draw up partnership agreements for big $$$. A CPA should be able to set up an s-corp for a few hundred dollars. Consider it insurance so a creditor cannot take your house.

S-corp = good
Sole proprietorship = bad

freakshow10mm
April 30, 2008, 09:47 PM
An LLC can elect corporate taxation. In my situation, it is a better choice to go with an LLC than an S corp. It cost me $50 to file the LLC paperwork with my state.

SSN Vet
April 30, 2008, 10:46 PM
I'm not sure how it goes in each state....but from where I am, the LLC gives you the best of both worlds.

Here's the process.....

1. Fill out the application to form an LLC with your states board of corporate elections and commisions. You are creating a legal entity by doing this, so you have to declare who the "registered agents" of the LLC are. These are the people who get sued if the LLC causes someone harm, or who get prosecuted if the LLC conducts illegal activities. In my case, even though it's my wifes business (so far) I have both of our names listed as registered agents, because if one of us is incapacitated, the other one can still cary out the legal activities of the LLC (i.e. sign a tax return). The state is going to make sure you're LLC name doesn't duplicate or very closely match that of another LLC in the state, cash your check and send back your application with a stamp and signiture on it. My Dad tells me that people used to think that LLCs were a good vehicle to borrow money from the bank, because they could let the business go under and walk away from the debt, but that banks are wise to that and will require you to put up your personal assets as collateral.

2. Download form SS4 from the IRS web site, read it and either call up the 800 # or apply on line. Now your LLC has the equivalent of a SSN or tax purposes.

3. Download and submit form 8832 to the IRS. This is where you request that your LLC entity be classified as a Corporation for tax purposes. You don't have to be a corporation in order to be taxed as one. In about 6 weeks you'll receive a response from the IRS saying they have approved your form 8832 entity classification.

4. Next you download and submit form 2553. This is where you elect to be classified as an S corp. When you read through the instructions, it's going to sound like you can't be an S corp. unless you have employees, etc.... My tax guy tells me that this is their attempt to scare off sole props. from dodging FICA taxes by establishing LLCs and taking all of their profits as pass through income, vs. wages. Just submit the form and realize that at some undefined income thresh-hold, your going to have to run payroll and pay yourself a salary, upon which you will pay FICA. For example, a plumber friend of mine makes about $50K/year in profit. He pays himself $20K/year salary for the work he does for the LLC. Then at the end of the year he takes the remaining $30K as pass through income. He only pays the 15% FICA on the $20K. Again, you'll get a response from the IRS saying they accepted your status as an S corp.

5. I'd suggest getting a business checking account, if you can get one without monthly charges. Often you need to carry a min. ballance to avoid such charges.

6. You need to use the business $ for business purposes and not co-mingle your private and business funds. You can lend money to the business, but don't use business dollars to pay for your personal expenses. If your business assets are less than $100,000, you don't have to submit ballance sheets and other such business reports with your taxes. You don't really need to run Quick Books or Peach Tree, but keeping a little spread sheet or writing everything down in a ledger is a really good idea.

7. Your going to get a lot of paperwork from the IRS. If your not cutting payroll on yourself or others, you can throw all the Form 941 stuff away (this is where you send in the FICA).

8. If your turning a profit, you need to submit quarterly estimated taxes. As a pretty decent rule of thumb you can take your estimated profit, multiply it by 25% and then split that between the Feds and the State. Or, if you have a "day job" you an just up your withholding at work. The IRS doesn't care how they get your money, as long as they get your money.

9. At the end of the year, you file form 1120 to report how much profit the LLC (taxed as an S corp) made. Here you also pay any specific "business taxes" that are due (still haven't figured out what these are). Then you cut a schedule K1 to all share holders in the LLC/S corp. reporting to the IRS what each of their share of the profits is.

10. Each share holder lists their share of the profits as reported on schedule K1 on their 1040, Schedule E. Done!

11. Pray you don't get audited. :)

12. Every year the LLC has to file an Annual Report with the state (cost us $80) in which you state that you're still in business, your address is still good and the registered agents are still the same.

It's easier than it sounds and as long as you don't have to formally split up the shares among multiple share holders, imho, you don't really need a lawyer at all.

And finally....I'm not a lawyer or an accountant, so if you believe anything I've written above, your on your own :)

edited to add a word about "hobbey losses"

if your business doesn't turn a profit and pay some taxes within a couple years, the IRS is going to call your bluff and say it's not a business but rather a hobby and that your just trying to deduct your hobby expenses from your taxable income. One of the ways to avoid this is to show that your are doing business in a "business like manner" .(... segregated accounts, EIN, Records, legal entity, bla, bla, bla).

TurboFC3S
April 30, 2008, 10:52 PM
I do a few things as a self-employed individual ... one of which involves woodworking making higher-end home stereo speakers. The margins are pretty good there, and if my woodworking skills were better my margins could be ridiculous. I'm saying that based on my knowledge of the market. But they're nothing compared to a friend of mine who makes custom wood doors. He's sold a single door for $25K, of course he had probably 200 hours of work in actual labor and consulting with the client, but the materials cost was low. If I had his skills, I'd definatley give that a shot. Take a look at some custom doors and wood arch work and think about if you can do it or not.

strat81
May 1, 2008, 11:54 AM
Glad to see the LLC is maturing and that at least you guys learn about them! I've spoken to way too many LLC owners that never bothered or didn't know about corp tax treatment and complained about the ~20% SE Tax.

Your point about collateral is well taken. Whether or not corporate officers guarantee payment of loans, accounts payable, etc varies from company to company and vendor to vendor. New companies generally do require an officer to put up collateral.

As far as how creative you get with your accounting depends on if you want your books to look good or not. Some folks choose low "paper" profit to avoid the taxes. This hurts their ability to secure loans.

If you have a partner that is not your spouse, run everything on the up and up. Folks get real nasty when the IRS shows up and will throw you under the bus ASAP to save their skin.

Save every receipt and invoice you get. If you file them, great. But ALWAYS SAVE THOSE RECEIPTS.

Make any decisions, SSN Vet?

wcwhitey
May 1, 2008, 05:30 PM
I agree about making holsters and accessories. Well thought out (wearable) holsters, flashlight and mag holders, mag pouches are always in demand. It would require a small upstart investment and no licensing . Once it takes off you can step up as demand requires.

SSN Vet
May 1, 2008, 06:45 PM
Make any decisions, SSN Vet?

I've got a ways to go yet....

I promised my wife I'd finish our house first (I built it 9 years ago, so it's about time). And I need to finish off my new shop space in the basement.

So we're talking fall '08 at the earliest.

If I ever lost my job....I jump into the case business in a heart beat.....

but for now we're talking supplimental income.

Holsters would be great....but I know absolutely nothing about how to do that.

I'm leaning towards the "custom display boxes with CNC engraved covers" direction, as I'm a pretty decent woodworker and have pretty good tools, but I have to admit that getting the type 06 FFL and selling ammo sounds very interesting.

I'll keep you guys posted as I progress....

thanks for the ideas.

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