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Opening a gun store

Discussion in 'General Gun Discussions' started by Phantom Warrior, May 4, 2006.

  1. Phantom Warrior

    Phantom Warrior Well-Known Member

    My best friend and I have been kicking around the idea of opening a gun shop for years now. I'm increasingly intrigued by the idea and had some questions regarding the mechanics of opening a shop. This is still probably at least 10 years down the road, but I've thought of the following issues:

    1. How much money does it take to open a shop? Fees, property, inventory on hand, etc.

    2. What is legally involved with opening a shop and selling guns?

    3. Is anything extra required to sell guns over the Internet, besides getting a copy of the FFL to ship to?

    4. How much "work" is it to operate a gun shop?

    5. Is it something you could make a living on?

    Your thoughts are appreciated.
  2. walking arsenal

    walking arsenal Well-Known Member

    Posted, because i'm the friend.
  3. Correia

    Correia Moderator Emeritus

    PvtPyle and I opened a gunstore this year.

    1. The more the better. Seriously. Then try to have some extra reserves for your first few months. Inventory costs money. If you don't have inventory, people don't come back to your store. Advertising costs money. Right off the bat you need fixtures, starting inv, security, application fees, etc.

    2. You need your FFL, and then you need to satisfy all of your state and local requirements, business license, storefront, zoning, etc. It is a pain.

    3. Not really.

    4. If you want to create a business, and treat it like a business, then it is work, but you will have a real store. If you treat it like a hobby, it isn't much work at all, but your shop will suck, like 95% of the gunstores out there.

    5. See number 4. :)

    Can you make a living? Depends on where you are, what the market is like, and how good you are.
  4. 1 old 0311

    1 old 0311 member

    #1 Get a range.
    #2 Yes internet sales will be a BIG part. A friend of mine does more internet sales than walk in.

  5. mbs357

    mbs357 Well-Known Member

    Sounds like it might be a good idea for one of you to stay employed at a current job for financial support while the other maintains/runs the shop.
    Once it gets on its feet the other can quit and go to the shop full time.
  6. BigFatKen

    BigFatKen Well-Known Member

    The high mark up items are not guns. Leather, ammo, and other gizmos are the profit makers.

    My shoemaker/leathersmith Nephew males his biggest profit fixxing zippers.
  7. Phantom Warrior

    Phantom Warrior Well-Known Member

    What's a ball park figure for all the money needed to get a modest sized gun shop off the ground? 10K, 100K, 1 million?
  8. redranger1

    redranger1 Well-Known Member

    if i where to open a gun shop i would start small on the internet. the internet provides very very low overhead costs and a better chance at getting off of the ground. the best way to make money is moving inventory, even if you just break even, that away you dont have money invested in something not doin anything. and i would also consider buying directly from a manufacturer if possible. it will require a minimum number of guns to be bought, but it will also be a higher profit margin for you. do some research on some of the online gun auctions and see whats hot and moving, milsurp rifle are hot right now. just keep what moves, and be mindful of hunting seasons around the country(for internet sales) and that will go along way. good luck.
  9. beaucoup ammo

    beaucoup ammo Well-Known Member

    I Wish You Well

    Given the ferocity of the Brady Bunch and Anti's as a whole, you'll have a vested interest in protecting our 2nd Amendment rights. I always make it a point to buy a few boxes of ammo each month (though I might not need to) just to show tangible support to the gun store owner(s).

    Of course bringing younger generations into the fold tops the list. Most all of the Indies I purchase from support youth activities of some sort.

    The previous posts contain sound advice. Best of luck!
  10. sturmruger

    sturmruger Well-Known Member

    My buddy and I ran all the numbers and figured that we would need at least $75K to get up and running. That was in a 1000 sq ft retail store.
  11. Correia

    Correia Moderator Emeritus


    If you are lean and mean. Figure you need enough money to pay rent for the first couple of months. Figure salary (if you're lucky :p). Figure overhead, and there is always overhead. Figure on start up costs (fixtures, bars on the windows, alarm system). Figure you will need to pay insurance.

    Now that you've written all those down, put down a ballpark figure for each. Take your figure and add another 20% for the things you forgot.

    Now you need to buy inventory. Make a quick list of what you would like to stock. I'm going to tell you right now that 75K isn't much to work with. Seriously.

    Here is a peek behind the curtain. Ever wonder why some gunstores have better prices on some brands than others? Because when you are a small store, you buy your guns onsie twosie from a wholesaler. When you can afford to, you go dealer direct. Which gives you a decent price break. However to go dealer direct, they usually require you to buy a whole bunch of stuff at one time. Be prepared for that. Getting master dealer status with a gun company can run you from $1000-$20,000 depending on the company and the package. That is for one company.

    Research your area, a lot. Spend your time before you spend your money. Seriously. Check to see what is missing in your market, and see how you want to set yourself up.

    Ranges are great. People could always use more places to shoot. However be prepared for a shock when you find out how much it is going to cost you.
  12. Correia

    Correia Moderator Emeritus

    A note on internet sales. Be prepared to be very competitve. Which means tight margins. You are competing against guys working off of their kitchen table. Which means they aren't paying rent, overhead, salarys, insurance, etc.

    I can't give you a ballpark, because you can go cheap and small, or you can go big.
  13. BozemanMT

    BozemanMT Well-Known Member

    You need to build a business plan, and there is plenty of data out there, and then come back with "this is what we are thinking, blow holes in our theory"

    the margins are thin in a new gun store, you have to make in volume.
    or in accessories, where the margins are much better. margins on used guns are much better and personally I find used guns much more interesting. My favorite gun store has a lot of both, I KNOW they make more on used.
    Internet sales might allow you to get your volume up to do direct buys, but you aren't going to make much on each one sold. And everything has a cost, doing the books, NICS, etc. Nothing comes in for free.

    Think about getting a computerized inventory control/POP program. They run about 5k, but if you can't follow the money, you don't have any idea if you are making any money.

    other ideas:
    put in extra room in the shop for a built in gunsmith. let him/her rent out the space/subcontract. This would be a great value for me in a gunstore. (Gander thinks so too) and besides space it's really no cost for you and it's a win for both sides.

    Either carry a lot of cheap ammo, or just carry premium brands. But it always seems dumb to me to have .22LR bricks for $15/$20 with 1" thick of dust on them. Find out what sells and carry that, and dump the rest. Go back to my inventory control section. You need to know what sells and how much you make on each. In retail all your money is tied up in inventory, you have to turn the inventory.

    I would listen to Corriea, 75K isn't enough to do much. I bet you should be thinking closer to 250k or more, just in inventory. You need rent, deposits, remodels, set up visa cards, set up NICS checks, books, oh and meanwhile you don't get a salary. I'm sure that some manufactuers let you do it on credit, but I bet the terms aren't pretty. And in a trade with margins as thin as new guns, the carrying costs will eat you up.

    Advertising. Get the book Guerilla marketing, read it, learn it, know it. Gotta get them in the door. Esp that first year, big bucks. Radio, papers, word of mouth, ranges, etc (maybe do a tie in with an existing range?)

    Ever thought of buying an existing store and making it work correctly? Might be cheaper in the long run.

    When doing your business plan, make sure you put in money to pay yourself a salary, there is no point in working for free. the profit is the profit on your investment, not your salary. Make sure and seperate the two at least in the business plan.

    Oh partnerships never work. never. Someone always gets upset at the other and it breaks up. Do it on your own and hire the other or something.

    Sorry, kind of rambling, but hope some of those ideas help.
  14. Henry Bowman

    Henry Bowman Senior Member

    Around here the "small but decent" size gun shops display at ALL the gun shows w/in 100 miles. The shop is open on Saturday, but the cases are empty. All at the show. If the show is across state lines, they just take accessories (tactical gear and such). They say that they would not survive w/out doing the shows. I think that packing and hauling is a huge hassel and would try Gunbroker first as a seller.
  15. Phantom Warrior

    Phantom Warrior Well-Known Member

    To those of you who have done it, how do you finance multiple hundres of thousands of dollars? I doubt I'll ever that THAT much money in my pocket. Did you take out a loan? If so, what were the terms?
  16. BozemanMT

    BozemanMT Well-Known Member

    financing a new business is tough. SBA (small business admin) sponsored loans, etc. most new business owners re-fi their house, take out big credit cards etc. Cash flow is the key to any small business. You can be profitable and still go bankrupt because you don't have enough cash flow to pay the bills.

    When i was looking into buying an existing business, the rates were actually pretty good (since the books are already there and the bank can see what stuff makes and doesn't make) and those rates were about 20% down and prime + 1 or so. That's pretty darn good.

    new business's have no history so their rates can be ugly. Basically ti's a personal loan with your gaurantee (your house, car, etc). Now, one plus with a gun store, your major cost is your inventory so they have a good way to see where that money goes. Some factories might even do it (as I said above)
  17. XLMiguel

    XLMiguel Well-Known Member

    FWIW, according to he SBA, my research & experience, 80% of small businesses fail within tghe first two years due to under capitalization. Listen to Correia - bring money, lots of money, enough to get you through the first year at least covering you fixed costs & overhead. If it's a passion, you got a chance, if it's a hobby . . . . . :scrutiny:

    As noted, internet market margins are really thin. What makes you different? Check out some of the vendors in 'Group Buys", read & heed. Good luck to you, and best wishes for success, but #4 is key - no free lunch, be prepared to work hard and think creatively.
  18. PvtPyle

    PvtPyle Well-Known Member

    $75k is a drop in the bucket. That will probably not last you 6 months worth of salary and overhead and leave you absolutely no room to grow your business or inventory. Look at these numbers:

    Salary X 2 = 5k a month
    Rent = $2000 (being generous for a good location)
    Insurance = $300 a month
    Facility overhead = $500
    Advertising on the local talk/gun nut channel = $500-1500 depending on rotation

    So you are looking at $8500-9500 a month. That money needs to come out of your profit margins for monthly sales. At 20%, and more than likely to be competitive it will be around 10-15%, that is $40,000-90,000 in sales a month. Do you think you can drive enough traffic right off the bat to make $1600-3600 a day in sales? I can tell you right now, you can't without spending a major chunk of change on advertising.

    Chances of getting an SBA loan are slim to none. Most don't like the image of the business, the inventory is a controlled item of sorts in that they can not liquidate it themselves so that cuts into the money they receive if they have to liquidate the company, so they wont take inventory as collateral.

    So what do you do? You need a few hundred grand to get started. Licensing, advertising, overhead, salaries, and then one to show and one to go, that hundred or two is gone quick. Larry and I did everything out of pocket. He is still working a real job and I am living off my savings while we get our feet on the ground. They wanted us to put our houses up for collateral, and would only give us about 40 cents on the dollar loan value.

    Luckily, we have good customer service and a lot of crappy dealers around here and we treat it like a business. I get there at 0830 even though we open at 1000, we wrap up around 1900 each night unless there is a class which can go until 2300. I do this 5 days a week. On my weekday "off" I make sales calls to LEO's that we do business with and fit them for armor, or I am working on other business.

    It is a long tough road that takes more money up front that just about any other business. I wish you good luck, but we are more the exception than the norm in our success. And unless you land a big exclusive dealership or a government contract you will never make it big.

    As for the range, if you do it right you can drop over 100K in a small 25M range quickly. For our new facility we are spending over $700,000 on the range ventalation alone. The days of rubber and sand traps are over. OSHA and NIOS are writting indoor exposure standards now that mirror the Navy's. The Navy is the only organization right now that have written standards. There is NO way that an indoor range with the rubber trap or sand trap can meet those standards. And then when you get shut down, you will have to pay hundreds of thousands of dollars in reclamation fees to get rid of the entire range facility contents because they will all be contaminated. A decent range will on average cost you more than double what you have into the rest of the facility.

    Sorry to be a kill joy, but the numbers don't lie. We ran them hard to begin with and got lots of advice before we opened from seasoned veterans in the business. And we were still shockingly off for things we did not anticipate. What do you do when you major product line goes thru a dry spell because of a fire at the facility, or import problems? I can fill pages of advise about things you never think about right off the bat, but worry about the numbers first. Without making those the rest is meaningless anyway.
  19. Run&Shoot

    Run&Shoot Well-Known Member

    I have zero experience in the retail gun business, just a perspective as a customer.

    IT would seem one way to get inventory cheap and move it is the used gun market, especially estate sales. Maybe you can't afford to buy 100 new guns from a distributior to stock your shelves. But what about buying a lot of 20-50 from and estate sale, or a police sale? Maybe clean them up a bit and sell them on the internet and storefront. USe some of the money to buy a few new guns.

    Think about who buys lot sof guns and paraphenelia. IT seems that shotgunners run through a ton of shells and clays (which they buy at Wal-Mart). But they also have vests, wear out guns, etc. Or self defense. Glock is a no brainer. Or be the shop that carries the best selection of new and used 1911s (lots of gunsmith opportunities there). One shop in my area carries only Browning, but has EVERYTHING Browning: shotguns, rifles, pistols, all the hunting clothing, flashlights, everything BROWNING and nothing but BROWNING. Another specializes in black powder. Another in reloading equipment and supplies. Another in a crappy attitude. :) Another specializes in police sales with all of the leather belts, cuff cases, cuffs, flashlights. Anything and everything for the cop or security guard, plus some of it is even of interest and use by civilians. I wish there was an M1 Garand specialist nearby...Hmmmm...what if..

    I would find that niche and then try to find a way to get into it with used inventory. I think services and accessories would be more profit with less upfront invesment than firearms, but you need some firearm focus to make it real and a focal point for coming back. As a reloader I know we go through a TON of supplies, especially bullets which are kind of expensive to buy by mail.. I buy all mine at shows or local shops. Lot of gun powder. It really helps if you have someone on staff that is knowlegeable about reloaindg equipment, processes and supplies. Carry the books, bullets, powder, cases, and equipment. Are you supplier the benchrest guys with precision single stage presses, precision rifle components, and electronic scales? Or the comabt pistol competitor who needs a Dillon progressive press, lots of attachments, bulk pistol components, and more emphasis on the leather gear to compete with? Or how about the cowboy action shooting market?

    There are several shops with no focus whatsoever and they can only compete on price. But if I found a shop that was knowledgeable and helpful with one of my pet interests I would spend most of my money there even if they did not have the cheapest price.

    Stay away from carrying as your main product what can be had at the local Wal-Mart or discount shop. You can NEVER compete with Wal-Mart on price. So carry what they never will. Everyone carries Speer bullets, so carry A-Square, Barnes, Garret, Buffalo, etc. Don't carry Reington 710. Carry the Super Grades, or the Varmit Masters, or the tricked out AR. One guy on the board here was trying to find a NM AR15. All the shops were only stocking M4s. If you specialize in NM gear then go all the way and expect to market to a wider geographic area and get an online shop as well.

    Best of luck to you. I think the others are right that if you go about it the normal way you need $750,000 not $75,000. But, I also think that if you are very focused and creative in using old inventory, quality accessories and supplies, and can find a very cheap storefront (or just start with the internet) then you could be successful. If you don;t have specialized expertise then start getting it. Become a Glock armorer. Take some machinery or gunsmithing courses. Build an AR from scratch, Sporterize and Enfield. Start reloading. Try out SASS. Something to build experience and eventually expertise.
  20. redneck2

    redneck2 Well-Known Member

    I've worked in two gun shops and have good friends that own three different ones. One guy has had his store for three years and has never taken a dime out. He's got a trucking business that makes his living. The gun store is his semi-retirement hobby. His biggest problem is that there are 3 other shops in the same town.

    As above, a range would be a great idea, but it's going to cost well over $500,000. The guy I'm refering to above verified this.

    If you think you're going to open a store front and sell Glocks, Rugers, etc and compete with Wal-Mart, think again. You're going to be small potatoes and the big guys can sell cheaper than you can buy. This goes for guns, accessories, ammo...everything

    The keys to success are money, money, and money in no particular order. Look at all the threads here..."Where's the cheapest place to buy...." With the internet being so cheap and virtually anything in the world just a UPS delivery away, it's gonna be real tough. Also, you have to work when everybody else isn't (evenings and week-ends)

    If someone offered me a gun shop for free that I had to work, I wouldn't take it. Now, this may sound like a load of crap, but the hours you work (again, evenings, holidays, and week-ends) and the money you make per hour just aren't worth it. I value my free time. My friends that own shops almost never shoot because they're too busy working.

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