New US AK-47 Manufacturer


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Pingy
May 22, 2011, 02:52 AM
Well, at least thats my goal anyway.

Hello I'm new here,

I've read a bunch of things before that popped up in google searches on different gun topics from this forum but this is my first account. I'm trying to start manufacturing high quality AK-47 variants and need to do some serious networking and rubbing elbows with bigshots.

I have my bases covered so far.

No Zoning Restrictions in my County
Sherrif's office said there was no laws against having a firearms manufacturing business where I live
ATF said so long as my background checks out, I'm good to go


I'm still waiting for my fingerprint cards in the mail before I can officially apply for my 07 FFL but am trying to get suppliers, plans, and processes set up now so that as soon as I get my license I can get it on file with whomever needs it and get started right away.

I was going to be getting good barrels and milled receivers from Lancaster Arms until I saw they had an "F" rating with the BBB, and I don't want my brand associated with that. So now I'm out of an "affordable" supplier, and the only decent pricing I'm getting is from Brownells and Tapco. Best pricing is from Tapco but a local gun store owner said that nothing "high quality" with tapco furniture will sell but slap it on a WASR-10 and we'll talk.

I really need someone who will be able to form the receiver (milled would be preferable methinks) stamp my logo and serial number on it, heat treat it, and weld the rails in properly. After that I can use this 12 ton press I found at harbor freight along with various kits from AK-builder to get the rest put together. My main addition to value is going to be the fit, finish, parts chosen, and accessories chosen for said gun.

Anyway, google has been sending me on wild goose chases and I thought you guys might have some connections and be able to help me, maybe I could help one of you, I dunno.

I've got a sort of "log book" on my progress towards production and a bit about me and what I'm planning to do on my website www.pingyenterprises.com if you want to check it out. It's an actual business entity with a copyright pending on the logo and everything, I just can't seem to get over the limitations I have as far as equipment and finding reliable suppliers and parts cheap enough that I can charge less than $3000 without losing money. (exaggeration, but not by too much) So let me know what you guys think, I'd appreciate any and all help/constructive criticism you've got.

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interlock
May 22, 2011, 04:03 AM
for your barrel needs, how about contacting a barrel maker that has a decent reputation and asking them if they can produce barrels to your spec. There are loads of makers out there. Krieger, border, et al for them it will ony be a case of programming the required profile into one of thier mega machines. Cost might be an issue... how about finding out who makes the adams and bennet barrels that appear on midway for $90 usd each?

docnyt
May 22, 2011, 04:23 AM
I thought it was a lot more expensive to get an 07 FFL?

Good luck with the business though.

WardenWolf
May 22, 2011, 07:06 AM
Tapco furniture is hideous. No question there. The K-Var stuff is good, though. It's an exact US-made copy of the real Russian polymer furniture. I put some olive drab furniture on my WASR underfolder and it turned out quite nice.

http://i154.photobucket.com/albums/s279/WardenWolf_1982/th_ODFurniture.jpg (http://i154.photobucket.com/albums/s279/WardenWolf_1982/ODFurniture.jpg)

ironhead7544
May 22, 2011, 07:26 AM
Green Mountain is making AK barrels. NoDac Spud makes good receivers. Have you ever built a kit? Ironwood makes very nice AK stocks. Do a search for AK forums.

Ohio Gun Guy
May 22, 2011, 07:50 AM
You are going to need to work on how to get the price down. From your post, you will be buying in much the same way a home builder could. So quantity and efficiency are your friend.

Dont forget INSURANCE.

There are also sources for US made Wood stocks, Timbersmith and Ironwood.

Good Luck

onebigelf
May 22, 2011, 08:15 AM
I hate to say this, but someone should. From your post you plan on buying components off the shelf, just like any home builder would.

"I having 0 heat treating capability, and I don't know how these people build their own furnaces, but I'm not that talented."

"After that I can use this 12 ton press I found at harbor freight along with various kits from AK-builder to get the rest put together."

"I finally found a toaster oven that will fit a 20 inch barrel diagonally (don't judge me, more on that later) so I've got the finish baking thing down"

These statements are incompatible with "I'm trying to start manufacturing high quality AK-47 variants".

To be blunt, you appear to lack the skills and resources to achieve your stated goals. Your plan of purchasing off the shelf components and assembling them in a mish-mash of parts using second rate tools and processes that can be duplicated by any Bubba in his garage over a weekend is NOT going to produce "high quality AK-47 variants" and certainly will not do so at competitive prices. I strongly urge you to rethink your plan and get some skills before trying something like this.

John

RhinoDefense
May 22, 2011, 08:31 AM
If a bank doesn't loan your business money or only trusts it with a few grand, that means your business plan doesn't convince them your business is worth the risk. That is not a bank you want to deal with for loans. They essentially want you to make one rifle, try to sell it, and see what (gross) profit you make from it. Anecdotal data such as that is not a good gauge of business potential profit viability. The bank seems amateurish in this field.

Get a solid business plan together that is presentable to a venture capitalist or financial institution. The Small Business Association has a program called SCORE, which is the Service Corps of Retired Executives. It's a taxpayer funded resource for business owners that assists them in drafting a business plan for investors or bank loans, marketing plans, cash flow management, legal assistance, and general business management. I suggest you put things on hold and give them a call.

Side note here, the best thing you can do is have a full time job and start this FFL business with your free time. Then you don't have the stress of trying to sell product to get a meal later that night. Start bootstrapping your business by taking money from your regular job and invest it into your business (make sure the accounting is spot on). Take out some luxuries in your lifestyle to free up cash for investing in your business. Since you aren't relying on business income for your livelihood, because you have a full time job to support yourself, reinvest all the profit back into the business for growth. Don't plan on drawing any paycheck out of the business for the first year. Stay cash solvent.

Since you are having issues with startup capital, I would suggest starting with parts of lower cost, like stamped versus milled. I do not know if NoDak Spud offers manufacturer discounts, but it can't hurt to ask. They might require decent quantity for such, ie 100 minimum order. Build some stamped kits and use those to establish your brand. One hundred receivers might be too expensive for you and so will a few milled receivers with most of the work done for you. Unless you're building custom target rifles for benchrest, the firearm industry is a volume game. If you get the small loan, make and sell that one rifle, you will most likely lose money on that sale and be upside-down on that loan.

Also, since your company is a privately owned company (ie not public stock offering) I would keep financial information private. It's not the public's business to know you can barely get X dollars in business loan.

I would get a plan together and really look at the realities of your idea. To me it looks like you're going to be making AKs from whatever you can get your hands on or afford and assembling them with hobby grade tooling and try to market them as a "quality" weapons. AKs aren't like ARs where you buy quality parts from the manufacturers and assemble them in a half hour flat. I'm not sure of your process capability or your experience in actually building AKs from kits. I would take a hard look at that.

I admire your entrepreneurial spirit and urge you to not get into anything financial before you sit down and get a very realistic objectified view of your plan. There is nothing wrong with starting small or "microbusiness" I guess is the term these days. In fact many customers appreciate small businesses over large businesses.

Pingy
May 22, 2011, 01:27 PM
I have spent hours and hours going over this plan, and it has evolved almost as many times as I have spent hours doing research. This isn't an issue of me throwing together a piece of crap and marketing it as quality as a few suggest, my goal is quality and I'll market it as whatever it turns out to be.

The 07 FFL is actually cheaper than I thought, it's only $150, but that doesn't mean that everyone who can do this is going to make something they can sell.

In the Marines I learned that what you think are your limits, are actually nothing with a can-do attitude and hard work. As a radar repairman, I had to repair a jackhammer one time. Never thought I could do it, but I jumped in, did what I needed with what I had and got it done. This is going to happen if I have to bend receivers with my teeth and color the gun by beating it black and blue with a baseball bat.

As far as insurance, I already called an agent and am waiting for the insurance quote. Unfortunately my current company won't touch liability insurance for gun makers. Any affordable companies that some gunsmiths here could recommend?

I appreciate those who are trying to help by offering ideas, possible solutions, and asking hard questions to get me to think harder about my plans and possible alternatives.

Pingy
May 22, 2011, 03:24 PM
Ok, I am now researching heat treatment ovens and processes to build my own. You guys have challenged me and now I am tackling the task of increasing my manufacturing capabilities and also decreasing costs to decrease overall price. Lets get it on!

dovedescending
May 22, 2011, 03:39 PM
May I ask why "Pingy" and why the penguin logo...? Neither of those strike me as being very, well, gun-like...

Somehow I don't see purchasing a new AK-47 for $1500 and having to explain to my buddies why it has a penguin on it. You may wish to hire somebody to do some creative work for you.

BTW, I should probably mention here that I am not a manufacturer of firearms, firearm accessories (with the exception of a decent pancake holster I made a few months ago), or for that matter anything that might lead you to think I was some sort of competitor. I am a consumer. And producers should ALWAYS listen to thoughtful consumers.

And for my last little thought, blasting THR on your website is, um, unprofessional? To say the least.

Pingy
May 22, 2011, 04:09 PM
I get where you're coming from with the logo, it's a general thing I had when I started the company and before I knew exactly what it was going to do. I have gotten mixed responses about the logo and name in relation to AK-47's, either people love it or hate it. I haven't gotten enough feedback to really make a decision on whether to stick with it or not but at the very least I do know it will stand out. I've still got time before production begins to sort that out and I appreciate your comments.

I appreciate the suggestions about insurance, nondisclosure of financing information, suggestions for barrel suppliers, and suggestions on how I might better start out.

dovedescending
May 22, 2011, 04:16 PM
You may wish to start a separate blog for your company and put personal thoughts and musings there, instead of on your front page. Just a thought :)

Are you starting up this company by yourself? You may wish to find yourself a partner who has more manufacturing know-how to pair with your business education. It's never a bad idea to have a second perspective.

Pingy
May 22, 2011, 04:59 PM
Would you say that the "progress towards production" is a good place for what is there, or should I change the title to something that might fit better? I will take your advice and remove that stuff from the first page. A friend of a friend is a gunsmith and I'm planning on contacting them to come over and help with my first build.

As funny as this sounds, I actually did pay a guy from Slovakia $20 to design my Penguin logo and am rather partial to it so I'm REALLY hoping it'll be useful. I'm also soliciting offers to have a kiln built with a reliable and accurate means of heating, but I'm doing that on another website where I know people a bit better. The site is actually not related to guns at all but there are a lot of guys who know about electronics that I'm friends with who'll give me good prices.

Pingy
May 22, 2011, 05:07 PM
Oh yea, and this is a one man show right now. I'm a little stressed because of what i found out about who my main supplier was going to be and it completely threw my plans for a loop. I'm going to pursue a business relationship with Nodak Spud, but I'm a little afraid that with the low volume I'll be initially purchasing they won't want to mess with things like logos or model numbers. I guess I COULD stamp it on the side of the rear sight block without having to worry about damaging anything if I have to do the stamping myself, want to stay away from trying to stamp the hardened receiver.

Ohio Gun Guy
May 22, 2011, 05:16 PM
I Wonder if there is a local engraver that would put something on the stock or send batches of sight blocks to the engraver.

Commercial kitchen equipment may go high enough and have good heat control / accuracy. I think you can do this if you are determined. You will probably need to hire a testing agency or engineering service to test the first of your product line, if your doing heat treating and the like. You should also have the finished rifles inspected by a gun smith, or get qualified yourself. Some means of reliable quality control will go a long way in finding problems.

Rollis R. Karvellis
May 22, 2011, 05:47 PM
I'm, not sure about the name, but I, do like the logo.

Dreamcast270mhz
May 22, 2011, 08:05 PM
You have great ideas! I suggest you do what other US AK manufacturers don't do, and that is make a Bizon AK clone. Cheap and simple to start out with as it is conventional blowback and you would not have nearly as much competition.

Pingy
May 22, 2011, 08:06 PM
So that is:
1 No for Logo
1 Yes for Logo
1 No for name

I need to go make an official tally at my other place too. One thing that I need to keep in mind though, is that this isn't my target demographic. You guys know waaay to much about guns and will research, and find there was a model of AK-47 imported in 1984 that 1 store still sells for $30 and it's the best AK-47 ever. I'm exaggerating and making that up of course, but I think you get my point. My target audience is the guy who walks into the local gun store and says "Wow, that rifle looks SWEET" because it's the only AK-47 in the place and has the disposable income to pull out his wallet and buy with cash. Of course I'm still going to build the best product that I can which will keep them happy with the purchase forever. So to that end, I'm going to try to build a rifle that you guys would like and buy because if it's good enough for you, it'll be more than the other guy will ever expect.

Local engraver is a good idea, but commercial kitchen equipment runs a little too high and is a little too big. Luckily though, I just remembered that one of the guys I served with always loved building things and got his degree in Electrical Engineering so he could rig up a kiln with heat bricks and a good heating element with temp control.

Pingy
May 22, 2011, 08:09 PM
Bizon AK? Ok, now that I've googled it, not a bad idea! Only thing is... where am I going to get those mags and parts? That would definitely stick out to customers.

RhinoDefense
May 22, 2011, 08:52 PM
The idea that you have to have a ton of money and use the most expensive processes I just don't buy into.
No, you don't have to have a "ton" of money, just enough money. No one here suggested you have "the most expensive processes", we urged you to get proper equipment. That does cost money. You don't have to buy everything new, but buy smart. Go to auctions, talk with machine shops that might have equipment laying around unused that they would like to sell you and get some of their money back.

The idea that you have to have money to make money is a catch 22 that isn't acceptable to me
It takes money to make money. That is a fact that is not avoidable. Today it's not about having money yourself, it's about having access to money. There is a difference. If you can't open your wallet, then you need people who are willing to do it for your business. Either way, it takes money. Welcome to the real world.

and not just any bubba in his garage is going to go through all the effort of figuring out how to do more with less and more importantly, isn't going to be able to produce a rifle that is legally transferable.
You'd be surprised what weapons started out being made in a garage by home based 07 FFLs.

I'm gong to say this as nicely as I can. While I appreciate the attempts to dissuade me, test my resolve, and question my ability to adapt and overcome; I'm already past that. So either lead, follow, or get out of the way. I appreciate those who are trying to help by offering ideas, possible solutions, and asking hard questions to get me to think harder about my plans and possible alternatives. I don't appreciate being talked down to or being criticized without possible solutions or alternatives
Lose the attitude and take off the blinders. We are not trying to disuade you or conjure up cute little military cliches. We are giving you real world insight and advice which you sought. We WANT you to succeed. I'd love for another US based AK manufacturer to make a living off it, but I want them to know the realities of business and industry that you are getting into. What you need to develop is thick skin. Banks, investors, venture capitalists, and suppliers are more harsh than anyone on a gun forum. There are manufacturers on gun forums, such as myself, that have survived many years in this industry and started from more humble and dramatic beginnings than yours. Instead of puffing out your chest in defense, you'd be better off sitting down, getting a beer, and opening your ears. Process the information you are given. I've seen literally HUNDREDS of FFL businesses fail in my life because of one thing or another, usually poor business skills. I don't like seeing failures.

I understand some of you are my competition in this business and market, but if you think I am a competitor that you can eliminate through intimidation and negative attitudes and comments, think again.
I admire your confidence, but your fellow AK manufacturers (I'm not one of them, BTW) have been in business longer than you have been alive. They've seen young hot shot companies come and go time after time. That's your competition. It isn't easy to be beat, let alone competitive itself. You are the underdog that's inexperienced and underfunded trying to climb the tallest mountain in your life. I've been in the Corps and it doesn't prepare you for this.

I sincerely wish you the best of success with this. If you want to talk to a firearm and ammunition manufacturer that's been around for several successful years, you know where to find me. I give no BS information.

Rhino

PS: head over to guninsurance.com for firearm manufacturer liability insurance.

Pingy
May 22, 2011, 09:33 PM
As much as you telling me to lose the attitude makes me want to say "you haven't seen attitude yet," I understand what you're getting at with the thick skin thing so I'm just going to ignore it, listen to the helpful things you have to say, and just go with it.

I'm thinking the moral of this story is to teach selective perception, ignore the crap talk and and take all the nuggets of information out of your post that I can. Thanks for the business lesson. This is more of a learning experience than a "make a living" thing right now, so I'll take all the lessons I can get.

dovedescending
May 22, 2011, 10:10 PM
You know what I'd like to see? The functionality and robustness (if either of those are even words) of an AK in a sleeker, less communist package. I'm going to get hate for saying this, but AK's are some damn ugly rifles. There HAS to be a way to make 'em purtier.

RhinoDefense
May 22, 2011, 10:14 PM
Trust me, I've seen attitude. Teenage girls, years spent in the Corps, years spent in law enforcement, oh trust me, Sir, I've seen attitude from all areas of the spectrum. :) Business is about knowledge, knowledge is about learning. You are too defensive. Just let it go. I was the same way when I started out.

Just remember, Charles Walgreen, Henry Ford, Sam Walton, Andrew Carnegie all failed many times before they got the right program together and were successful businessmen. Not a single person on this planet learned to ride a bike the very first time. We got training wheels, then bumps, cuts, and bruises from failed attempts. But then something *clicked* and we "got it" and were successful. That's exactly how business is.

Since you are in college, the university should have a business club. Join it. Get in touch with the business instructors. They will help you. Trust me when I say to pursue the SBA's SCORE program. There should be a local chamber of commerce, become involved. Network with people who would be interested in buying your product. When I started out, anyone worth knowing or having be known by, was anyone having to do with the annual gun shows. The top city officials and businessmen were all about the guns.

Use the time in college with R&B paid for, to get your process down, focus on your intentions, manage customer expectations, manage cash flow. Anything you can do with cold cash, do it. Paying interest on a loan means you have to factor someone else's profit (interest) into your markup to cover your COGS (cost of goods sold). Goods are sold FAR less efficiently than they are made.

Set yourself up for success now so that you can enjoy it later. Entrepreneurship is about living your life now like others won't, so later you can live life like others can't.

john wall
May 22, 2011, 10:40 PM
Also, don't forget the ITAR. Google the State Dept, read it and weep. It is a destructive tax for the small manufacturer.

For a good looking 7.62X39 rifle, look at the VZ-58. It is light years ahead of the AK.

Pingy
May 23, 2011, 12:06 AM
Good thing I'm not manufacturing "Defensive articles" then. I've checked with the Sheriff's department and will be working VERY closely with the local ATF bureau to ensure legality. I called them the other day and talked to an agent for about an hour, and he was actually very helpful with recommendations about checking into zoning, local ordinances and whatnot. I told him exactly what my plans were, exactly what rifles I was manufacturing, and he said all I needed other than the above was my 07 and to pay excise tax. I looked it up and any manufacturer who makes less than 50 rifles per year is exempt from excise tax.

The only thing he really stressed was that I NOT attempt to make them automatic which is a no-brainer. I'm not quite sure why everyone is so paranoid about the ATF, but I haven't seen anything to make me leery. Well, other than Ruby Ridge and Waco, but not lately. I'll be sure to ask them specifically about the ITAR though.

I'm going to be visiting family this week so I might not get back on until next weekend. I look forward to continuing our conversation when I get back though and I'll also look into SCORE then too.

sarduy
May 23, 2011, 12:43 AM
http://www.wpclipart.com/cartoon/animals/penguin/more_penguins/.cache/bad_Penguin.png that's a cool logo for an ak

john wall
May 23, 2011, 12:23 PM
The ITAR concerns making defensive items (or services) which COULD be shipped internationally.

Contact the State Dept, the BATFE has nothing to do with this. A totally different agency.

If you are going to manufacture less than 50 rifles annually, just admit you are engaging in a HOBBY. Save your money. Why would I want to pay that kind of money for an AK when I can get a Century Arms for less than $400? Ugly guns that I have no desire to own.

Once again, look at the VZ-58, if you want to deal with a (relatively) attractive MSSA (Military Style Semi Automatic).

This is from a former class 07 licensee.

RhinoDefense
May 23, 2011, 12:48 PM
If you are going to manufacture less than 50 rifles annually, just admit you are engaging in a HOBBY. Save your money.
There are manufacturers that make less than 50 weapons annually and they make a living off it. It's a specialized niche they fill and it certainly isn't a hobby. Most custom benchrest rifle manufacturers make fewer than 50 per year. Don't be quick to judge quantity.

Why would I want to pay that kind of money for an AK when I can get a Century Arms for less than $400? Ugly guns that I have no desire to own.
Because anything Century Arms is junk. That's why they are $400. Arsenal AKs are much better quality and that's why they are $700+.

Telekinesis
May 23, 2011, 01:45 PM
Please excuse any misspellings, I'm typing this from my phone and am having a hard time reviewing and editing my post.

Do you have a business plan that you can show us/distribute? I would be interested in seeing it. Mainly I'm interested in what you see as your direct competition and who your target market is as well as your projected sales considering that we've recently seen the end of an unprecedented boom in sales of ARs and AKs.

Also, I would recommend that you delete any comments about finances now that they're irrelevant to the conversation. This thread comes up as the 8th result in a google search of your company (right behind your website's various pages), and I think it's very hard to believe that an investor or bank (or potential customer) won't at least look through the first page of google results when trying to decide o they want to loan you money or do business with you.

I'm not going to comment on your statements to others in your industry (or potential customers) except to say that I have hear several people say (online) that they will never do business with XXXXXX suppressor company because the owner is a ******* who likes to talk down about his competition and others. Take from that what you will.

As to your comment that we at this forum are not your market because we research our purchases before we buy, I would like to disagree. While most people won't want to dig deep enough to figure out what kind of trigger group you're using, be prepare for someone to say "I've never heard of these guys, let me run home and do a google search before I drop $1,000-2,000 on a gun." remember, this thread is on the first page of a goggle search. This IS how your future customers will see you. But is this the way you want to be seen by them?

I think it will also be unlikely that yours will be the only AK in the shop leading to an impulse purchase when a FFL can buy 4 WASARs to every one of yours (of course depending on your final price point.) from your price point, I expect you will be competing with not only Arsenal, but also other AR manufactures and possibly the Sig 556 type rifles.

Pingy
May 23, 2011, 03:38 PM
I think I'm really starting to get it now and have taken your advice. All irrelevancies to the discussion, financial and asinine, that were in my posts have been removed from here and my site (if you find something I missed just PM me please so I can fix it). It would be great and a big help if anyone referring to one of those comments could remove that from their posts as well. You don't have to if you don't want to of course, but telekinesis is right in what he says and it would help me a lot.

I'll include in my business plan a section on "public perception" and a sort of "code of conduct" which will enable me to succeed at achieving that goal. Ok, heading out now officially, catch you guys later ;)

renegade-rick
May 23, 2011, 10:34 PM
I have been self employed as a full time gunsmith gunshop now for 3 years. yes when King-O got elected we all had sales through the roof. I originally planned on getting my 07 and building AR 15's. After numerous phone calls with ATF and trying to understand how to meet there guide lines I swapped my 01 FFL for a pawn. I can still do gunsmithing as well as retail sales. It was my understanding that first you had to manufacture a receiver then get ATF to approve the serial number then machine it on. You also have to get set up with the IRS to pay the Pittman Robertson tax on the value of the firearm you are building for sale. You need to talk with ER Shaw they produce a quality barrel at a reasonable price but they require a contract for at least 50 barrels. What I do is go in with another manufacturer and add my order to his. That way i can buy 10 AR barrels and he only has to find other dealers to make up the rest of the order. I build complete uppers not complete rifles. There are a zillion people mfr AR's and i don't recommend getting into that. I recently had an Arsenal AK through the shop which is suppose to be about the best quality AK around. It sells for around $750. Has some US parts and over all not a bad AK. By and large though and i will probably get some hate mail for this but the AK market is generally brisk in the lower end of the sales spectrum. I have sold many romanian, mak90's, and WSR type AK variants and all in the $400 to $450range. A $700 AK is a tough sale. Also you might consider changing the caliber. Clinton banned importing the cheap chinese ammo who knows what -O- may do before he is out of office. If they ban the importation of military type 7.62x39 or put a 500% import tax on it which leaves you to shooting rem and win. The ak will become a door chock. There will always be plenty of 5.56 and 308. Just my 2 cents

renegade-rick
May 23, 2011, 10:45 PM
www.cedarridgetactical.com

renegade-rick
May 23, 2011, 10:51 PM
The cheap crude manufacturing of the AK is what makes the AK so desirable. Its inexpensive and it flat works. You can throw one in a pond and come back next week and it will throw lead down range. Its not the most accurate rifle out there however. But if you start tightening up tolerences to improve accuracy it might not be so reliable. The AK was originally manufactured with a milled receiver but it ran into heat issues.

renegade-rick
May 23, 2011, 11:01 PM
If you can produce it for retail sale in the mid $400 range and make a profit you will be fine.

RhinoDefense
May 24, 2011, 01:44 AM
It was my understanding that first you had to manufacture a receiver then get ATF to approve the serial number then machine it on.
Horribly incorrect.

You also have to get set up with the IRS to pay the Pittman Robertson tax on the value of the firearm you are building for sale.
Nope. You pay the FET to the TTB, not the IRS. Also, it's not the "value of the firearm" it's the sale price of the firearm.

"A $700 AK is a tough sale", but I know for a fact Arsenal/Kvar sells more AKs than Century Arms. Doesn't seem like it is really.

xr1200
May 24, 2011, 02:11 AM
What is your exact conception of a custom ak47 and how much do you intend on selling each gun for.

There are already a lot of custom and USA made ak out there, so trying to be the new kid on the block with a old item is really a bad bussiness plan.

Anyone who knows anything really about ak47 is not really going to spend much more than $500-$750 for these rifles, there is only so much you can do with the ak47 design.

Knowledgeable shooters know that its better off to put money into an ar10 style platform , than it is to sink a lot of money into an AK design.

RhinoDefense
May 24, 2011, 02:34 AM
There are already a lot of custom and USA made ak out there, so trying to be the new kid on the block with a old item is really a bad bussiness plan.
Kimber seems to be doing well making 1911s that have been around for 80 or so years before they came about. Remington, Ruger, Winchester, Savage, Stevens, Jarett, Dakota Arms have been doing quite well with that old turn bolt action rifle made in the 19th century. Black Hills and Georgia Arms are doing quite well. So is Hornady. All those companies entered a well established market and are profitable year after year. Don't be so confident. A saturated market needs a game changer.

Anyone who knows anything really about ak47 is not really going to spend much more than $500-$750 for these rifles, there is only so much you can do with the ak47 design.
Quite the opposite. Those that know AKs spend the money. Hit up Krebbs.

Knowledgeable shooters know that its better off to put money into an ar10 style platform , than it is to sink a lot of money into an AK design.
Facepalm.

xr1200
May 24, 2011, 04:05 PM
There isn't much you can do to accurize or even make an ak shoot better. The design has a lot of faults. Most of the accessories you can buy for them are simple dress up items , stocks, light, lasers, hand guards, all equal to the "Street Dork Section" at your local auto parts store.

Don't get me wrong I 'm not saying the ak is not a good design as an assault rifle. Im my mind its probably the best. As an end of the world weapon it would be my first choice.

But from a point of selling or making a high grade ak or accurized target version, there is only so much you can do to one.

Problems are scope mounting system bad, short sight radius, bad ergonomics,
Barrel mounting and barrel not being free floated, to much play in action tolerances, no good mounting platform for sights and lights ( you can't mount sights to a moveable handguard.)

AK 47 is a great gun if used as designed, as I simple infantry assualt rifle, nothing more.

RhinoDefense
May 25, 2011, 12:46 AM
AK 47 is a great gun if used as designed, as I simple infantry assualt rifle, nothing more.
If someone were breaking into my house and my tossed me an AK47, I sure wouldn't turn it down. Weapons have other uses than simple warfare.

xr1200
May 25, 2011, 01:16 AM
So is a stick, but I wouldn't start a new bussiness making high end sticks.
When you compare to the AK47 to the AR platform there is no comparison in terms of accuracy accessories or modifications, AK's just have to many limitations.

dacavasi
May 25, 2011, 01:24 AM
heat treatment and the proper facilities to do it are a fair amount of art mixed with science. you will need to do a major amount of research in that area if your intent is 'quality', and, it will not be cheap...

Gord
May 25, 2011, 02:17 AM
My target audience is the guy who walks into the local gun store and says "Wow, that rifle looks SWEET" because it's the only AK-47 in the place and has the disposable income to pull out his wallet and buy with cash.

So what you're basically saying is that you aspire to build AKs that only get bought on impulse by people who don't know any better? Classy. Maybe you should start hanging Tapco stuff off of your rifles after all. Don't forget the green lasers and strobe lights. Your target audience will eat 'em up.

I actually did pay a guy from Slovakia $20 to design my Penguin logo

You could have mentioned "new gun company" and gotten about two thousand submissions from guys on Photoshop forums for free.

Quite the opposite. Those that know AKs spend the money. Hit up Krebbs.

I daresay some of our most knowledgeable AK guys (paging nalioth) would disagree with you. The ones who buy $1500 AKs are the ones who buy into the gun-board BS and nothing more. I'd surely hope that I would outsell Century if I put that much money into marketing and snazzy logos, too...

RhinoDefense
May 25, 2011, 03:03 AM
You are sorely misinformed and your posts show it.

Dreamcast270mhz
May 27, 2011, 11:50 AM
@Pingy

You don't necessarily have to use the official helix magazines to begin with, start off with a calico hexlix magazine in 9x19mm and from there you could make your own based on their design. The only catch is you either have to make it as a pistol (no stock) or a 16 in barrel must be used.

Another possible start point would be to chamber it in 7.62x25, use a shortened AK barrel, and use a PPSH magwell and magazines, until you begin making actual helix magazines.

I like your idea and would buy a Bizon AK from you, as a pistol and put a folding stock and NFA it if you ever decided to, just make sure it is competitively priced (~250-300 would be fine)

bubba in ca
May 27, 2011, 09:48 PM
No crystal ball, but if the govmint doesn`t ban the imports you are stuck with a lot of cheap end competition from places with much lower costs than yours. If they see a market change for more quality, they can jump in and ship a boat load before you know what hit you. And the existing US ones are your high end competition...

I think you need a gimmick, such as an ak in a different calibre, or stainless steel, or a gold plated one like Saddam`s. Something the others don`t have and don`t want to bother with. Even then, you still have all the quality and name recognition problems.

Another choice is import all the secondary parts like stocks and magazines and just do the barreled actions and assembly yourself.

I wish you luck. This country could use more domestic maufacturers so we don`t end up someday with just Chicom stuff like the 870 and Ithaca clones.
Think like Ruger and come up with unique designs or manufacturing methods that pencil out.

james_bond
May 27, 2011, 10:18 PM
I am in the market for my first AK and I know I want to see VALUE. Stamped is fine mil-surp parts are fine, imported parts are fine.
I bet a quality/clean, lightweight, handy, affordable AK if done right could change the way the US gun market sees AKs, because right now there are basically two options, a messy canted $400 wasr or a $999 US Arsenal a middle ground would be intriguing to me.

Pingy
May 28, 2011, 09:40 PM
Unfortunately I won't be able to get started, once I started looking into the general and product liability insurance for my business it put the costs WAY over my maximum acceptable risk level.

Again, I appreciate all the support and knowledge you guys gave. As a consolation prize I think I'll sell my WASR and put that money towards something better, maybe a 5.45 or 5.56 AK.

As far as the WASR, I've refinished the stock, cleaned up the bad machining so the action works smooth, and have a side mount, scope, and barrel clamp rail system with a laser on it. Just bought the laser today to help it sell, maybe put a 650 round ammo can with it as well. I personally think it looks silly, but the gunshop owner by my hometown said people dish out big money for that sort of thing all the time. Honestly, with the AR market and how some people will put 20 lbs worth of gear on an AR-15 that is 60% rails I'm inclined to agree.

I'll try for $1250 with the ammo can (640 rounds) and extra accessories (I have 3 flash hiders, 3 mags, mag pouch, etc.) but I still highly doubt anyone would pay that especially since I'm going to tell the God's honest truth that it's a WASR-10 that won't feed HP or SP ammo, and post pictures, but maybe someone will have the money and not care.

Pingy
May 28, 2011, 10:49 PM
Still waiting for someone to troll the price tag. lol. Seriously though, considering the market conditions I described as well as the product, anyone have a suggestion or two?

xr1200
May 29, 2011, 12:17 AM
If you do gun related bussiness check out the NRA they have the cheapest gun shop bussiness insurance out there, but they may not offer it to a manufacturer.

Another good company is the Hartford.

Generally your looking at $2000-3000 a year just for product liability, the problem with anything gun relate insurance companies will treat you like a leper.

If you look deeply into the gun bussiness it is not really that profitable and you are always open to a lot of risks, financial, laws, liability etc. The actual margins gun dealers operate at does not really make them rich.

If your looking at starting your own bussiness landscaping is actually one of best that you can get into and right now about the only other thing left in the USA to do is either government work or health care related, BTW nursing is still one of the best fields to get into.

Sky
May 29, 2011, 07:10 AM
You might think about a shop that lets people send you their AK or whatever and you to customize and fix. There are individuals who replace firing pins with their own design or do trigger work and they have been in business for a long time. I do not know if it is a labor of love or a super money making business for them; but they have been around for a while now.

Say someone has a WASP that is not meeting their expectations or want it dressed up with a fix you know it needs. They ship, you fix it, and return the rifle or part better than new. Just a thought on starting small and building up to bigger and better things.

Pingy
May 29, 2011, 10:23 AM
That sounds like a pretty good idea, I did do all that work on my own rifle after all. What would be the licensing or insurance requirements for customizing and fixing AKs?

RhinoDefense
May 29, 2011, 01:04 PM
That would be a simple Type 01 Dealer or Gunsmith FFL.

What you have to be careful of is you can only work on customer owned guns that have already been transfered to them. If you do work on guns that haven't been transfered on a 4473, it's an act of manufacturing and you'll need the Type 07 FFL, etc. Customer brings in a gun direct to you or brings it to a dealer who then sends it to you as a subcontractor for gunsmithing is fine. If you modify a receiver or existing firearm then transfer it, that's manufacturing.

Getting started as an 01 FFL gunsmith for AKs and doing transfers might be a good way to get your name into the market and build up a reputation over a few years. Then when there is demand for factory built AKs like you want, then get the 07 FFL, drop the 01 FFL and start making them. With the 07 you can still do everything the 01 can, but you can also manufacture.

Bubbles
May 29, 2011, 03:35 PM
That sounds like a pretty good idea, I did do all that work on my own rifle after all. What would be the licensing or insurance requirements for customizing and fixing AKs?
Type 01 FFL, insurance is going to be about the same but there are more providers out there. The NRA's insurance doesn't cover manufacturers, just dealers and gunsmiths, so you may be able to get it through them. Manufacturers are stuck with using Joseph Chiarello & Co (http://www.guninsurance.com/).

Also be very aware of what the above poster said - the ATF has drawn a pretty sharp line between gunsmithing and manufacturing, and you don't want to cross it. The easiest way to stay clean is to make sure anything that comes in is a complete firearm that belongs to someone else, and you are only charging for parts and labor to repair or upgrade it.

A Type 01 local to me got in a lot of trouble a few years back for buying rifles and scopes, installing the scopes in the rifles, and selling the scoped rifles as a package deal. That got him popped for manufacturing w/o a license. He kept his FFL but the fines were painful.

Also, I don't know who said the OP doesn't have to pay ITAR as he's not making "defense articles" because that is incorrect; the AK is very much classified as one.

Pingy
May 29, 2011, 08:40 PM
I think that was me saying about not paying the ITAR. I know the ATF will shoot your wife and dog, run your house over with a tank, and burn it down with the children inside, but what's the State Department going to do? Talk to me about it?

lol. Yea, I know someone probably does something to you and it's really bad, just wanted to make the joke. Anyway, manufacturing is out of the window so no need for ITAR or anything else.

Anyway, if they're fining people for putting scopes on rifles and selling them I don't think I want to touch that either. Too many stupid laws and too many people (insurance and govt) bleeding you of all financial resources before you even produce the first product.

I need to keep my eye on state laws, there was a State Constitutional Amendment proposed which would nullify any federal gun laws, so long as the guns were stamped "made in Missouri" and not transported out of the state. On the legal side of things all the feds are doing is abusing the Constitutional power of regulating interstate commerce to create otherwise unconstitutional laws.

Anyway, this isn't the forum for politics so I'll just say this. Any and all proposed business plans as of now are a no-go and if I do anything at all it will be as a private citizen in a hobby capacity for myself only. Not sure if they close threads or what, but as far as I'm concerned I think this one has unfortunately run it's course :( I think I'll make a new one somewhere else about selling my current AK and buying something else.

RhinoDefense
May 31, 2011, 10:31 PM
Maybe do some non-FFL stuff. Get a state retail sales tax license (usually free and done online) and sell AK accessories, parts kits, get in with some distributors (like Graf's) and sell ammunition. Use the non-FFL part of the business to establish your business and build capital. Do it part time and just reinvest the profit back into more inventory while working a full time job. Be honest with you, there is a lot more profit margin on accessories than weapons.

I started my company, Rhino Defense, by buying and selling used ballistic vests from police officers and agencies that were getting new ones. I registered with several states as a supplier, then I could get access to the contracts and bids. When a bid was accepted to purchase new vests, I contacted that agency and put a bid out to purchase their old vests. These I sold to other agencies and officers with low budgets or civilians in legal areas. That lead to buying and selling used police duty belts and gear. Buy from retirees or departments changing gear and sell to rookies just out of the academy or security companies. What do I do now? I make ammunition and suppressors for law enforcement and perform explosives protection research for the Dept of Defense/US military.

Gotta start somewhere. Don't be discouraged, be encouraged.

Pingy
June 2, 2011, 11:45 AM
Sounds like a good plan. I'd like to wait on it though, I'm going to college full time for a business degree so I think there's a few very important things that I could still learn that would make any business attempt much easier for me in the future. I'm glad I did this because I learned a lot, and I'm definitely not giving up, this is more like a strategic withdraw.

xr1200
June 2, 2011, 05:42 PM
Most gun wholesalers will not give you can account unless you have an ffl and a state tax # minimum.

Also trying to sell various gun parts online has a lot of state restrictions and competition from other already established online sites.

The only way you can even think of competing would be to deal directly with the parts manufactures, when ever you deal with the various USA distributors the mark up will be so high that you wll never be able to sell your products online.

Then comes the next problem, in order to get the deep discounts you need from the manufacturers you wll have to place big orders usually $50K - $100 +

In todays online market place, don't even think of selling locally retail. Most local retailers go belly up with in there first year, as they can not compete with online sales.

The example rhino gives of his bussiness, is a good example of niche, bussiness where insider information and contacts can pay off well, but you can't use this bussiness example to every situation.

You have to look closely at the current market, customer type or demographics, existing competition and pricing, market forecast.

One thing you should do is get a few used text books from a local college etc on bussiness 101 and management 101, or even just barnes and noble etc. Get the basics down before you take any deep plunge into loans or inventory purchases.

In doing a bussiness forecast or plan you really need to take into account things like rent, office space, mandatory taxes, inventory, expected profit etc. health care costs alone are about $6000 a year for 1 person and about $10K for a 2 person operation

One of the first issues will be the high cost of overhead, in just rent and utilities etc. you will often find that a lot of small bussiness barely make enough to break even and that it would be wiser to just work a 9-5 job then continue making almost nothing at their own bussiness.

That is why I mentioned to focus on another carrer choice like government service, law enforcement. You really can't beat the GIGS that most cops have $75K - $100K per year with OT and retirement after 20 years at 50% of their last 3-4 yrs. pay, and 80 % after 30 years, + free health care for life.

I know a lot of cops that have retired after 20 yrs. getting $40-$50K per year and full health care and then start their own bussiness or second career.

crossrhodes
June 2, 2011, 09:06 PM
Rhinodefense has sound advice, heed it and remember it. We have a small shop and was fortunate and thankful for the VA's (VocRehab) help and received grant but, it only happened because we started small and had a very detailed business plan projected five years out on where and how we intended to get there. Semper Fi and good luck on your endeavor.
Guns out.

1stmarine
June 2, 2011, 09:31 PM
IMHO.
If you do not have a business plan yet get one. You will find out if the business works or not. If the business works on paper there is still a chance it will work in a real life (not actual warantee). W/o a business plan in a volume based model there is no chance.

So before the 'how-to's' one has to be able to answer the 'what's' and the 'why's'.

crossrhodes
June 3, 2011, 08:22 AM
1stMarine is right. We spent about 40 days total with revisions before we had a solid plan. It really inspires you method of madness and puts things in perspective. You have to look at every thing from traffic of potential customers that are driving by to other business's to advertising. Basically your picking fly crap out of pepper on your plan to get something solid. Ask yourself the same questions an investor or bank would ask you.

oldvet53
June 5, 2011, 02:17 PM
for your barrel needs, how about contacting a barrel maker that has a decent reputation and asking them if they can produce barrels to your spec. There are loads of makers out there. Krieger, border, et al for them it will ony be a case of programming the required profile into one of thier mega machines. Cost might be an issue... how about finding out who makes the adams and bennet barrels that appear on midway for $90 usd each?
Adams&Bennett is made by Green Mountain, I have one of the Adams&Bennetts on my Ruger 10 22.

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