Possiblly buying into an existing gun store


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gym
May 10, 2011, 10:30 AM
I have given this some thought, "I should hope so". A new gun shop opened about 6 months ago, and I became friendlly with the owner slowlly. He is a competition shooter, ex special ops, Fbi trainer, and more. Thing is he's a not an experienced businessman. He is at the point where he doesn't have inventory, He get's a lot of calls, "I am in and out often", but must tell the client that he can get them the gun in 2 days. Maybe he has 20 handguns. Mainly he is into AR's and tactical shotguns, and modified custom stuff. He showed me his latest build, an AR, made to fire ak rounds. It was done very well. He is good with tools and is working on a new type supressor and some stuff for the AR. He makes a lot of cool things.
What I proposed to him was, I will put money in to the business to buy inventory, "guns that sell" and we split the profits on those. I will have nothing to do with any money he owes for anything. He sold out at every show that he did, but doesen't know really how to lay out a budget and has no marketing skills, "no website, no ads in local anything", and he is on a street that you need to know he's there to find him.
Basically, if he has guns, he sells them and needs capital to get back on his feet. I would start small with him just to see how it goes, and spend time there every day, do the shows, and marketing, That is my thing, I did all the ad work for 5 business I owned in 45 years. I know how to build websites, and also am great with people and getting a human intrest storys in local press.
I think it has tremendous upside, all his friends are "good people" and that says a lot, They are most all ex military or current. He hangs with special ops, guys he served with and is very moral, "I am pretty good at reading people". So please tell me any downside you see as several of you have been there, done that. I believe in listening to people who I respect, there are a few of you whose opinion I value, so if you have a mind to, tell me what to look out for, thanks,
Gym

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Sam1911
May 10, 2011, 10:44 AM
You probably already know this, but put every last possible detail in writing -- from what you each bring to the table, to exactly how you will someday part ways and disburse the assets at that time.

Strong fences make good neighbors and the time to build those strong fences is before you become too close to say the tough things that might need to be said.

You could really help him out and do well for yourself, or you could ride a circular path down the drain with him.

Also, make sure that he is reaching out for adequate excellent business help. Meaning accountants and other consultant types who can see what the business needs to bring in and put out to survive. Enthusiasts, tech guys, and gear nuts are almost universally horrible at that. I'm starting to think it would be better to go into a business you hate so your enthusiasm for the cool/fun/neat-o part of what you're doing doesn't trample all over your business sense. There are lots of very disappointing decisions on the road to business success -- and a lot of REALLY COOL ideas that will never be anything but a drain on finances.

JMHO, and good luck!

rellascout
May 10, 2011, 11:15 AM
IMHO you are taking on a huge liablity for very little upside or potential profit. If your profit from the business is going to be from selling guns only there will not be enought profit to split. Talk to other FFLs. There is not much money in moving metal these days. The avg profit on a gun is around 15% IIRC. So once you have split that on $1,000 gun what have you got? $75?

Unless you see the ability to turn this business into a custom shop or a high volume shop there really is not a lot to gain. IMHO Look at it this way. If he was selling "widgets" would you be interested? If the major appeal is owning a gun shop I can understand that but you have to go in eyes wide open. If you do not have a high profit sales line to increase profits I cannot see how you will make money.

I have run some inital numbers and they were not good. I found that you were better off being an acessories company over an FFL. The margin there is better and with less hassle and regulation. The sucessful FFLs these days are high volume internet based like Buds, dealers with large custom shops like Wild West Guns or people that have a captive audience which have limited resources to shop elsewhere.

Just my $.02. Which are most likely worth less than that. LOL

Bubbles
May 10, 2011, 11:39 AM
Your friend needs to figure out what he want to do with his license. Since he wants to "play" or "innovate" - that is, I'm assuming that he's got an 07 w/ SOT since he's mucking with suppressors (and yes, it really is a license to play) then I'd suggest he stop stocking new inventory completely, focus on gunsmithing, innovating, transfers, consignments and estate sales, appraisals, and taking in trades for work. That keeps his overhead low, generates decent cash flow, and gives customers a reason to come to the store.

You make almost nothing on new guns unless it's a new release with a lot of hype (like the Kel-Tec KSG will be when it hits the market later this year, or the Colt 1911 100th Anniversary model). Most shops only mark them up 15%, which means a profit of 4-5% after deducting your overhead costs - and then customers will be PO'ed because you're still $50 higher than Bud's even including the shipping and transfer fee.

mbt2001
May 10, 2011, 12:50 PM
Find a good lawyer and accountant before you buy into anything.

rondog
May 10, 2011, 12:50 PM
Ooooo, DANGER Will Robinson, DANGER!

Trebor
May 10, 2011, 01:20 PM
Be aware that most of the profit is in accessories and, to a lesser extent, used guns. The mark up on new guns is really quite low.

Shadow 7D
May 10, 2011, 01:29 PM
Hey, Wild West Guns, isn't that large of a place (physically) it's just a two story building in a mixed business/light industy area. And they only have about a 1/4 of the ground floor for the show room, and a goodly portion of that is the paneled highend display room (1K and up, interesting to see $32,000 shotguns look pretty much like browning double barrel)

See, my point is, maybe they are really making their profit with the OTHER 2/3 of the building, the stuff with small CNC machines, cryo tanks etc.

gym
May 10, 2011, 06:29 PM
Thanks guys, we had our first meeting, he is a skilled gunsmith, he has patents pending on a 50 cal and a new design for a supressor. Also he is a licensed pilot, with the use of a twin engine plane right here in Vero, for use in Estate sales. We want to keep the store running while he finishes up the 50 that he is going to show me tomorrow, and several other things, he is very good with his hands, and has gone to school not only for gun related things but certified in 4 different motorcycle , most every armorer, and both guys, one employee are very good with machining parts etc. They do a lot of custom work, like taking an AR and converting it to fire the AK round.
He just needs inventory in order to get people in the door, and someone who knows marketing, which I do well.
He never owned a business and just needs direction, I have owned 5, so the fit should be good. The nut is small and he knows a lot of people in the industry and in the town. More investigation must be done on my part of course, but it was a good first meeting, and I made a sale while I was there.
Addressing what you mentioned Sam, I did that with the Gym business, taking a hobby and trying to make a living out of it, but thanks it isn't that way now, I will be a limited partner, only splitting profits on the guns we sell and the custom work we do. I won't have much to do with the daily running other than setting it up, and fixing what is broken. I will probablly do some shows, and if we get that busy, I am down the road if he needs help. Mainlly getting people in the store will be what I do best. He's breaking even now but no one knows he is there, and he went in under financed. That prevented him form having the funds to complete his rifle and other custom work. So it's more guidence, marketing, and inventory he needs. a grand re opening with proper placement, and a few well placed articles along with great personalities and enthusiasm, and the guy really knows his stuff. But again it was just the first meeting, we willo see as time goes on.

InkEd
May 10, 2011, 11:44 PM
I would pass on it.

stonecutter2
May 11, 2011, 12:57 PM
It's obviously not without it's risks.

If you're so inclined, I say go for it.

However, be sure things are well detailed, so that if this goes south it doesn't take you with it.

If you become part-owner (which it sounds like you are), and this business goes down, are your possessions liable to be used to pay back the debtors?

It's important to have details written out, and looked over by someone familiar with the legal angles of this.

Be as informed as you can be, and if you want to take on the risk and see a potential for profit, go full on and the very best of luck to you!

Lothar Allen
May 11, 2011, 01:04 PM
Talk to an accountant about how to structure the business to minimize your potential tax obligations. Talk to an attorney to minimize your long term risk.

Despite your potential partners insistence that his current debt will not become yours, that very well may not be the case should things turn south and you are part of a partnership.

How you structure the business has HUGE impacts on your liability, both current and future, as well as your tax obligations.

And despite how knowledgeable/ trustworthy/ ex-military he is, it won't make a difference if YOU don't make money. That is the only reason to undertake a business opportunity.

Considering how much time you intend to devote to getting this business going, and that you are leveraging your personal assets to fund this, I don't see a very reasonable return on your investment. Not only is it quite likely you will lose money (remember, many businesses do, don't think you are exempt from this), but even if you do turn a profit, what is the likelihood it is more than you could earn just investing your money in a mutual fund and doing no work?

gym
May 11, 2011, 05:30 PM
Honestlly I was a full time day trade for 12 years working out of the house on 2 machines and a laptop with 6 screens. I could tell you what s most likelly to happen, but even I get fooled sometimes. I want nothing to do with stocks right now. Shorting the indexes is probablly the best thing you could do intraday.
As far as businesses go, I started 5, from scratch, and all of them were considered to be "not great ideas" the first one turned into a 200 man operation with 5 salons. It was the largest independentlly owned chain in NY. So I don't mind taking risks, and do have excellent legal and financial advisors. I just don't know the gun business as some of you guys do, Business itself I know. My experience is most times people will tell you not to do something regaurdless what it is.
I do know that here are a few guys in here who know a heck of a lot about the gun business. My friend ron also in his 60's taught constitutional law, amoung other things he did 4 tours in Nam, and owned a gun store had a class 3 and was given 4 months to live. They were obviouslly wrong as 3 years later he is cancer free. But he also gave me some advice "which I value greatlly. He said I wouldn't do it for the gun sales, but if he can do the gunsmithing work the way we have seen so far, and finish up his class 3 license, we would be one of the few class 3 dealers in the area. That's more what I am looking to do. The guy is great with gunsmithing. I have watched him work and I worked in a plant with my dad when I was a kid and grew up in a defense plant full of machinists and engineers. I see a talented kid with some good ideas. Once he gets someone in the door, chances are they are going to leave with something or want one of "those" on their AR or AK. I still am pondering different scenarios, but my eyes are open, and in any business you have to start someplace, and he is the kid that could take this place and turn it into a thriving business. That's just my gut. He's smart, eager to learn, relentless, and even has a pilots license at 30 years old. He opened a year ago with no press no advertising in a section that you wouldn't see unless you knew he was there.
If I can get him some exposure, a little guidence, adna little capital, I think he can really turn this into something.I appreciate any and all responses, the custom end of the business is more what I am looking at, but you need guns to get people in the store. This was meeting 2.

TriTone
May 11, 2011, 05:35 PM
Not to be rude, but I hope you're business sense is better than your grammatical ability.
I would pass and start your own place in a better location that is there primarily for your business purposes. Then offer to stock some of his custom products.

gym
May 11, 2011, 05:44 PM
If I were writing a formal letter I would use "word" and format it correctlly this is just a forum not a spelling bee. I would put my business sense up against your any day.I don't want or need to do what you suggest, a limited patner is all I choose to be. I don't want to stand behind a counter. Nor am I a gunsmith or have a running business with all of the things already in place, there are three gun stores that offer nothing and have done quite well, in worse locations, in the past year. And they just sell guns.

premier1
May 11, 2011, 05:44 PM
I am a former owner of a sporting goods store. First if you make a profit on the sale of a gun you have to report it. Next you may have to set up a business name a get a FFL for yourself. Every one else is right you'll make more money on selling a good fly rod than you will a gun. This guy special ops or not(which I doubt) and pending patents or not is in a game which volume buying is necessary to make money and that goes for you too. Buy a pizza shop there is more money to be made with less liabilty and investment.

gym
May 11, 2011, 05:50 PM
Pizza huh, if you knew me you wouldn't be such a wise ass. I owned a lot more than pizza. Your lack of posts is no excuse for being a wise guy.

geekWithA.45
May 11, 2011, 05:53 PM
I dislike this deal.

To be more accurate, I like the overall thing, but I do not believe the risks, benefits, and values traded are balanced, and therefore dislike the *deal*.

I think that you have to recognize that by operationally ensuring that the gunshop delivers on its basic promise of selling guns, that you are providing more value to the operation overall than the profit on the discrete pieces you sell.

You are adding value to an indivisible entity, that will someday be sold, and for which you won't benefit. You are also accepting the entire risk of inventory, while taking 1/2 value only from that aspect of the business. Your "partner", on the other hand, is taking a different set of risks, full value from them, and half of the value of what you risk.

Irregularly and malformed deals like this rarely work out. I would seek a different approach: spreadsheet out actual value contributed, and divide ownership of the whole proportionally.


Doing biz is one thing. Doing biz with co-owners brings a whole new dimension of pain to the thing.

gym
May 11, 2011, 06:09 PM
Geek we did try that already, it's only our 2nd meeting. He said actually what you said, we have to have inventory to get the people in the door. I can do this several ways, one of which is just to be a money man, and stock him with 10 or 20, thousand in guns, just to move him to the next level and he can work on his projects with a contingency for me to own a piece of that also included in the agreement.
I really don't want to buy his inventory, as that accomplishes nothing for me. He ends up with 20 or 30 pistols more or less and I get 30-50 dollars on each one. That isn't viable either. I need to see a possibility for growth and expansion into cyberspace and also brick and mortar.
Risk wise, I can take as little or as much as I want as far as he cares. It's up to me to congure up a deal that benifits us both, or let it go as I have many times before.
We had a 40,000 sq ft health club, salons, atm business etc, but this was more of a work of love than anything else. But if it doesn't jive after all is said and done, then I still will be friends with this youn man.
The patnership thing can be as I once had it with another partner. Two seperate corporations doing business as World Gym. This way the individuals kept a safe distance from each others liabilitys or possible problems My corp paid me and the biz paid my corp. So there are ways to go about that end of it and isolate yourself, and so far I don't see any debt on his end, Everything there is paid for "of course i will have my guys check". He just has no operating cash. His landlord is someone I know also, and he's up to date on everything, with a low nut. The store is 10 times nicer than 2 stores "I won't mention", that run ADS in several forums, and grew from a "bay" in a strip mall,to a decent sized operation in a year. One, doesn't even have a working on site, owner. It's by appt. So there are many ways to do this. I remember a year ago when said shop started out with 6 Glocks. Now they carry everything. Both are growing very nicelly, and really don't have the size or potential that this one does.

Toforo
May 11, 2011, 06:53 PM
A new gun shop opened about 6 months ago, and I became friendlly with the owner slowlly. He is a competition shooter, ex special ops, Fbi trainer, and more. Thing is he's a not an experienced businessman. He is at the point where he doesn't have inventory

He's breaking even now but no one knows he is there, and he went in under financed. That prevented him form having the funds to complete his rifle and other custom work. So it's more guidence, marketing, and inventory he needs

He opened a year ago with no press no advertising in a section that you wouldn't see unless you knew he was there.
If I can get him some exposure, a little guidence, adna little capital, I think he can really turn this into something.I appreciate any and all responses, the custom end of the business is more what I am looking at, but you need guns to get people in the store

Open 6months to a year and without the capital for either his custom work or further inventory....

He needs a "buy-out" not a limited-partner....

....as stated, there's currently not enough money to get the work (either sellable goods or services) for HIM to make money, much less adding debt (investment) for an additional person to make money

The only people making money from this so far is the landlord he rents from, and the insurance company he insures with

Retail is retail is retail is retail

There's an old expression about retail (and restaurants) -

"Want to know how to make a million dollars in this business?


Start with 2 million..... "

If you have the kind of capital it takes to make all the corrections you say are needed (bad location, bad "first start" and opening, no inventory, not enough time for service-work, etc) then you'd be better off to get your own FFL.
After you get your own FFL - then go into business with him as a "management company" with all the specifics you have mentioned as the responsibility of the management company you own.

That - or buy the property his NEW business is on and collect rent from him and if/when he goes under - then you have the property to rent out to the next LGS guy....

gym
May 11, 2011, 07:46 PM
You aren't wrong, I just don't have the time or inclanation to sit in a store all day. And you would need a store in Vero as they would never allow you to work out of the house where I live.
this was a situation where I could have my cake and eat it, even starting from zero, all of the work and licensing is done, the store is built and the rent is low. Plus I don't need to be there unless I want to. Bottom line is it has potential.
To start out and do this from scratch myself is just not feasable for me. I have too many other things that take president over this. It is the kind of thing that you take a shot on if you believe that it can work. That's it really, it's more like backing a business than working it. I have done both, I see the glass half full. The downside to me is little, it would cost 50 grand to build out what he has including the size space and room for expansion. Location is important, but neither of the stores that have done well near here had a "better" location. Just better promotion, he just never was in business before. Great at what he does but I can cut his learning curve to zero.
I did every major publication when in the my other businesses, I even did HBO when it first started on local tv. My ex parther is on QVC, and was on HSN, so I have a lot I can show him. I know how to get in local press, who to call and how it's done. I commonlly had articles even the center of the Ny Post, when we were in the salons, 3 or 4 times a year.
But none of this is important unless I decide to go forward, which I am in the process of now
I take your input seriouslly, but ultimatelly I have a feel for something or not. This still interests me, so we will continue to talk, and see what happens.

kingpin008
May 11, 2011, 08:14 PM
Pizza huh, if you knew me you wouldn't be such a wise ass. I owned a lot more than pizza. Your lack of posts is no excuse for being a wise guy.

Where was he cracking wise? The point he was trying to make is a valid one.

And FWIW, I'm no business maven, but this sounds like a potential nightmare to me. I can understand your interest, and the guy sounds like a stand-up fella, but as a few others have mentioned, all the FBI/spec ops experience and great ideas for new products in the world ain't gonna help when your business acumen is absent. Best not to get yourself too deeply tied up in it, IMHO.

nazshooter
May 11, 2011, 08:47 PM
So does he have the time/inclination to deal with volume retail sales?

Sent from my Droid using Tapatalk

Cosmoline
May 11, 2011, 09:03 PM
Absolutely get a lawyer on this one. We are much cheaper at the FRONT end believe me. It sounds like you should set up the store as a partnership, and if so you should be real clear at the outset what your cut of profits will be, and of course find out what the business owns and what it doesn't own. Everything needs to be in writing and clearly understood. Handshake understandings are a recipe for trouble. Also have an exit plan mapped out if things don't work out. If you're running the storefront side you'll want control over it, so you can turn the place into a proper store instead of a place for friends to hang out and talk.

Folks are right that value added accessories are where the profit lies. Esp. in this age when you're competing against gunbroker. Packaging is something most gun stores fail miserably at. Customer service in general tends to be weak. But man it's an uphill fight. The physical location of the place and the local market's spending money is also a factor. Though of course you would want to market specialty services on the national level. WWG in our town makes most of its money doing just that. The actual gun store there is kind of an afterthought.

Good luck if you decide to do it!

rellascout
May 11, 2011, 09:41 PM
WWG in our town makes most of its money doing just that. The actual gun store there is kind of an afterthought.

That is why I mentioned them Ken and the boys will make more $$ from the custom work he does on my BHPs and Colts than he makes selling me guns and I have bought quiet a few guns from him. :evil:

Toforo
May 11, 2011, 09:52 PM
You aren't wrong

I know where you're coming from and can understand your background - but let's take a step BACK and look at it from another "florida aspect"

Owning a boat is fun with the WONDERFUL benefit of "bragging rights" and prestige.... but with ALL the costs, liabiliy, maintenance, fuel etc....

Isn't it much more fun to be BEST FRIENDS with a boat owner and have OPEN ACCESS to all the good parts with none of the liabilities and problems - being able to enjoy all the benefits with NONE of the liabilities and costs of ownership?

And you still get to USE the boat!

Use your "powers" as his friend - reap the benefits without the costs!
HELP him with your time and leave the liabilities to him. ENJOY having him be able to get you products at "cost" while he get's you (occassionally) behind the sales counter or at a show.....

COMMIT nothing but give him your TIME... Think of the "collectables" you'll come across while occasionally working his counter or at an estate sale - he get's your knowledge, you get "right of first refusal" on any used "product"

With your background, I really think there ARE better deals for you with less liability....
(I did the same thing in a different "retail" environment - LOVED every minute of it WITHOUT the liabilities and I STILL continue to reap the rewards)

gym
May 11, 2011, 10:01 PM
All valid points, I will continue to re-evaluate, as things tend to move fast in these situations. The idea of doing his marketting alone may be a good way to go. But I don't see him getting through the "long" Florida summer, "off season" without an immediate cash infusion. I'll take what you guys say into consideration as this goes forward, and if not I still appreciate the input.

Quoheleth
May 11, 2011, 10:18 PM
Toforo hit it on the head.

Put your time into the business as billable hours. Help your friend and get billed for your time. Be contract labor at reasonable rates. Do goods-in-trade if need be.

Help him build what he has (a business) with what he has (inventory/skills) without you tying a lead balloon to your feet and jumping into the deep water.

Another option is buy him out, you be the CEO/CFO and he be your skilled employee. You set the rules and policy and make the plans; he works the plans and follow the rules. Someone who has no business sense but opens a business is NOT somone you want as a managing partner, IMHO.

I'm no businessman, but I do have common sense and my sense is saying, "No."

Q

rellascout
May 11, 2011, 10:21 PM
All valid points, I will continue to re-evaluate, as things tend to move fast in these situations. The idea of doing his marketting alone may be a good way to go. But I don't see him getting through the "long" Florida summer, "off season" without an immediate cash infusion. I'll take what you guys say into consideration as this goes forward, and if not I still appreciate the input.

You have to ask yourself honestly what are you going to get for your cash infusion?

gym
May 12, 2011, 12:15 AM
A roi, of 10 %-15%turning over every time we order guns, he does sell guns, last show they sold out, after we sit down and figure a split on guns bought with my financing, possibly more, he just needs the traffic in the store to make his money on accesories and smithing, he had 25 customers today, sold 3 rifles and a few handguns, but did a load of lasers, sights 2 bump fire stocks, etc. he also put a new trigger in my friends gun yesterday in less than 10 minutes, a 27, for 50 bucks, the guy was so happy he could get it done with no wait he gave him 60, the ability to get my stuff at cost, and most important, the class 3 license. That brings in a different clientele. On the class 3 we will work a different deal, that's why I say this is just the start, our 2nd meeting.

lykoris
May 12, 2011, 05:50 AM
if your ROI is 10-15% I assume you are reaping all the benefits of financing inventory, it wasn't the case at the outset of your post. If so, this is reasonable and I wouldn't accept anything less.

If you traded the markets you no doubt heard "only invest what you're willing to lose". Your personal relationship may be clouding your business judgment and being 100% objective in assessing the risk/reward.

I personally don't think it's a good idea given you do not appear to have this as a priority and have other issues that take a higher precedence in your life.

As a bare minimum,

- I'd want the entire scope of any business relationship in a legally binding document with everything listed from A to Z.
- I would want a complete and thorough review of his personal finances to ensure no contingent debt liabilities exist.
- I would want complete unrestricted access to all financial information from the business since inception, thorough analysis of cashflow, working capital requirements, existing inventory turnover, his cash burn rate would be top of this "extremely limited" list.
- I'd talk up other gun store owners in the area to get a feel for the local market. You need comprehensive information on the local market to attempt to forecast future revenue.

A gun store here(although this is Luxembourg, Europe) deals purely on reloading components/accessories/high priced optics/gunsmith services and does very well. Everyone buys their guns elsewhere but he undercuts all the other stores on everything else and does pretty well.

good luck with your decision.

danprkr
May 12, 2011, 07:52 AM
My first thought is that you check out his bonafides. I know you say he's x-spec ops whatever, but I never met an ex military gun guy who wasn't. If they went in as a trash collector 3 years later they were ex-delta or a sniper. I've seen it way to often. I'd check that out first and foremost. That way if he turns out to just be a wannabe you know it up front, and you have an idea of his credibility.

Then as others have said study the numbers very closely, and decide if your return is worth it. Some are knocking the low profit on each unit, but Walmart built an empire on high volume low return sales so that's not necessarily an issue. But you need to make sure you can turn your money fast enough to make it worth your while.

Then I'd work with him a few months just to make sure you and he get along, and have some idea of fair/standard business practices. You and he may be best pals, but if he's a hobbyists and you're a business man it may not work. Nothing against either of you, but if your ideas on how to treat customers and the work are not at least roughly the same there will be friction from day one, and won't get any better.

Just my first thoughts. Either way good luck.

gym
May 12, 2011, 10:50 AM
Thanks again fellas, you understand that this is a work in progres, so we are still finding things out about each other. I am having him over to my home where we can "really" talk. My attorney has been a personal friend for years and is very overlly cautious ex state prosecutor. Honestlly he didn't even trust the builder I bought my house form, the largest in the state. But that's all good. He makes sure I am protected. But we will continue negotiating untill I see everything, you can be sure of that. I appreciate your input. I really am not "best friends with him" I ask a lot of questions when I am interested in something, and I met him when he put up the store, about a year ago. I like him and I have met some of his friends. He's originally from Kentucky and we get along well. He asked me for my guidence that's how it started. He is smart enough to listen.
That is very important, he knows what I have done in business and thus the conversation started. Now it's just a series of meetings until it either works or dosen't.
I really want to be more "as I mentionet" financial and marketing, advisor" role. Although I don't mind helping out if needed. He has a strict work ethic, so that part is a big plus. I pryed out the military stuff because my best friend here, was a career military man" and he spotted certain traits. So I don't doubt what he said nor do I get more than a one word answer when it comes to that. There are always active military guys in there most all his friends are, so thats what I see through my eyes. That isn't going to make me money so it's not an issue. He already called me to apologise for cancelling last night, so we will meet again and again, till it either works for me or not.
It would be cool though if it does come together, as not many things interest me enough to move my butt anymore.
Also the deal is going to change many times until we reach a final agreement, so please don't take everthin as gospel, as I am still working this out. It's more involved that when you do something alone and do it your way, it's a feeling out process, certain things will change day to day, thanks

lykoris
May 12, 2011, 11:18 AM
I have two questions to ask.

Prior to this

Have you ever previously considered investing in a retail gun store or put in another way, have you previously considered the business model of a retail gun store attractive?

If a random gun store owner asked you to invest in his business prior to meeting this particular individual would you have given it as much thought?

If both answers are no then you may need to review how impartial you are in assessing this adventure.

I don't mean to be rude so please don't take it as such.

MtnSpur
May 12, 2011, 11:22 AM
Just an opinion here from someone that is good friends with a guy that got his FFL, works out of his house (was cleared by the town zoning commission to do so) and has been going gangbusters. You'd be better off starting your own business than entering into an existing situation that may have some "boobytraps" you aren't aware of.
The old adage "that if it seems too good to be true it often is" should always be in the back of your mind.
Definitely speak with a Business Attorney and a Business Accountant if you plan on pursuing this venture. Best of luck with whatever your course of action.

Grey_Mana
May 12, 2011, 01:38 PM
Different business, but I would think the advice applies to all businesses working on thin margins: http://rrgconsulting.com/ten_restaurant_financial_red_flags.htm

Bubbles
May 12, 2011, 04:27 PM
if your ROI is 10-15% I assume you are reaping all the benefits of financing inventory...
If my ROI for flipping new guns was 10-15% I'd quit my day job. Markup is typically 10-15%, while ROI on a new gun is more like 3-5% after paying rent, utilities, CC charges, insurance, federal/state/local licenses, business taxes, fees, etc.

lykoris
May 12, 2011, 05:32 PM
he never stated his capital injection into the business would cover any overheads so he is effectively looking at gross profit not net income after fixed/variable expenses.

gym
May 12, 2011, 08:29 PM
The last post was the best explanation, I am not sharing in his bills. I am only getting people in his store. Most of what I lay out to buy guns is merely to get people into his store so he can sell them other things and accesories, smithing etc. That's what I meant by Limited partnership. He is holding his own but needs more traffic and the guns to drive the trffic in. Once we make a customer he will make money from the accesories and maybe a little on the guns, but this is just the beginning of a discussion, my last business we spoke for months before reaching an amiable agreement. I in turn will make most of the money from the guns and a little from the smithing. A flow of guns is "I am sure you will agree", necessary to get the base built up. Then we do have other projects we will work on together, but this isn't going to be a 7 day wonder, there will be ample time to do the math and see what is what. We know you only make 10-20% on guns. But I will do that all day. If I can turn over every month or two.

leadcounsel
May 12, 2011, 10:33 PM
Gun store - VERY little upside and a lot of risk and regulations. If you jump in, FIRST get good accountants to go over the books and a good attorney to draft the contract. Best of luck.

PS - WARMLY welcome FFL transfers for reasonable $25 fee. My (old) FFL lost my business because he got difficult over not wanting to bring in FFL transfers.

Supertac45
May 14, 2011, 02:54 PM
Does he have a license to build suppressors?

BK
May 14, 2011, 08:59 PM
I'm a licensee, and a lot of the comments here are spot on. When I ask myself this question: Knowing what I know now, would I have decided to get this license years ago like I did? Sometimes I say no. Sometimes I say yes, I should have done this a decade ago. It is just a horribly cursed business to get into, but it is also a passion of mine. Very bitter sweet. I wish it was different.

Sunray
May 15, 2011, 02:34 AM
All the alleged FBI/spec ops experience, aircraft/pilots license, motorcycles, etc. means absolutely nothing. Sounds like he wants to play without having the skills.
"...converting it to fire the AK round..." Nothing new or innovative about that. 7.62 x 39 AR conversion kits and rifles are readily available from multiple sources. Ditto for a .50 cal.
"...he doesn't have inventory..." Either means he has bad/no credit or his suppliers won't give him terms because he doesn't order enough from them.
"...will have nothing to do with any money he owes..." You will if you become a legal partner. Lawyer, first.
"...won't have much to do with the daily running..." You need to re-think that since the guy has no business skills. He'll get playing in the 'shop' and not do what needs doing in the store. Pretty much what it sounds like he's doing now. Sounds like he needs sales types and a store manager.
"...stock him with 10 or 20, thousand in guns..." That'll be COD. You have that much cash? (No answer is necessary, not anybody else's business.) The assorted distributors all work that way until they decide the shop sells/orders enough to warrant giving credit terms. Those usually start at 30 days.
"...want one of "those"..." That doesn't mean a sale has been made.
"...wouldn't see unless..." No walk in traffic.

john wall
May 15, 2011, 10:59 PM
Having been in this business for many years, you are about to take a bath.

"Esoteric military skills" and a dollar will get you a cup of coffee in the civilian world.

"New and fantastic Title II gun designs" are other terms for Bravo Sierra (BS).

Don't fall for that crap.

If you want to sell guns, do it yourself. You will be the money man supporting another's hobby, until the money runs out.

Who is going to mind the store six days a week? An employee?

Been there, done that.

jim goose
May 15, 2011, 11:37 PM
Step into it slowly and make sure he follows your terms first. If he does not, make sure its less than the small claims amounts so you dont have a headache.

In these times I think its great when others can lend a hand and help someone with a real passion trying to get a start. We seem to have forgotten the importance of that in this country.

At the very least, you will learn what you need to know to make a go of it on your own.

gym
May 16, 2011, 11:35 AM
Well after much deliberation, and some wise members here, and in my personal life. I decided not to go forward with the Gun Store. I Just let Chris, "the owner" know, and he was ok with it. I will stop in and see him later and still do whatever I can to help him out.Thanks for all you help, The shop is called "The Right To Bear Arms", and he will do $25 transfers, for those who asked, its up here in Vero Beach FL, pm me if you want the address for your personell use. "we are still friends" I just couldn't see how I could do everything necessary to get the place where I wanted it to be, if I wasn't in control of everything that had to be done, without a large outlay of money, which would make me a slave to the store. Been there done that, I will still do marketing and re do his website for him just as a friend just no cash outlay, thanks for your input,
Gym

oneounceload
May 16, 2011, 12:38 PM
Maybe you could hook him up with Hal DuPont in Vero - he has been running a successful gun business for decades (think Kreighoff shotguns)

lildragon611
June 22, 2011, 06:27 PM
I say "DO IT". There are many people that have no sales and marketing ability. You cant run a business and be profitable without it. If he has no clue and is getting by just imagine if you come in and bring the customer relations side and market the heckout of it like you know how...Thats the problem with most companies these days anyways the old fashion way of taking care of clients and customers is GONE..

indie
June 22, 2011, 06:50 PM
I'd be cautious as others have stated. Unless you plan on having control of business operations, its little you can do if the guy just isnt good at running a business.

gym
June 23, 2011, 04:04 PM
There is a lack of interest on his part as to the "other things" that are necessary in making a business sucessful. I have no more tolerence at 63 to teach someone who wants to run things without a plan or lack of trust in the success of one who has been succesful in 7 or 8 businesses of larger more complicated nature. There are too many groupies and side jobs that are distractying him from being sudessfull in the business that will make him the most money. Two empty rooms which can be used for ccw classes and several other NRA certified HD and Family defensive courses, along wit a spray room with compressor to do duracoating and other finishes. Along with mods and extras. I would turn this place into a gold mine if it were up to me, but I am tired of giving people my expertize for free. I would rather find a partner with no debt and start fresh. He fights me on my opinion then does it anyway without me, so we are done, there is no follow through here on this kids part. I nee a businessman who can alter his ego and sell someone what they want , not what you want.

gym
September 5, 2011, 05:41 PM
Well in a sense I had to resurrect this post just to say that most of the advice i gave him , about doing the Spray room "Dura coating" in the front room, and several other ideas, are "his " ideas, no thanks no nothing. I also advised using a third "empty room, as a CCW license and offer the NRA courses, HD, Shotgun, Family HD. I am waiting to see that happens next. My idea was to tie in several gun related businesses which would feed off each other, Training is something everyone needs. Having 3 different business that bring in buyers is a lot better than one. But I think it's time to do my own thing now.
No regrets, it's the highest form of compliment, but saying thanks never cost anything.
I wish him the best.

Sam Cade
September 5, 2011, 07:04 PM
Does he have a license to build suppressors?

The FFL for this operation is held by a "Rhett C Howard" and its listed as a Type 01. The "C" seems to be for Columbus. :D
http://www.fflregistry.com/FFL-Dealer/Vero-Beach/FL/Right-To-Bear-Arms/Rhett-C-Howard/9427.html
A quick look shows that Rhett C Howard is probably only about 30 years old.

There is a "Chris Clark" who seems to be employed there who is a 2007 graduate of something called the "Motorcycle Mechanics Institute". '02 High school graduate so that makes him about 30. Is this "Chris the owner"??

So which one of these guys is supposed to be the FBI,special forces,kung fu master machinist again?


Gym: I think you better ask to see some DD214s.

gym
September 5, 2011, 08:47 PM
PM'd you Sam
Those and many other questions changed many times.

Sam Cade
September 5, 2011, 09:00 PM
Your PM was unintelligible.

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