Gun shop owners: What will I need to start my own business?

[Airman193SOS]

I live in Central PA, and I see a considerable market for a gun dealership. The only two gun shops in the area do gunsmithing and deal in a very small quantity of used guns. The nearest dealers are 45 minutes away in either direction (Gander Mountain, Bass Pro, and a local, Trop). That leaves a huge void that I would love to fill.

So, how do I go about doing this? Obviously I need an FFL, which is easy enough to obtain as I have a clean history. However, I need a storefront. How do I convince a bank to loan me the money to buy a building in advance of my FFL? How much will I drop on inventory? What am I looking at with regard to security?

In essence, I'm asking how much this will cost to start. I genuinely have no idea. In don't even know where to start.

 

[harmonic]

High risk, so unless you've got a couple mil in liquidable assets, no bank's going to take the risk.

You'd probably need a half mil cash to start.

 

[Nomad101bc]

You are supposed to be able to get 100k from the Small Business Association the (SBA). Venture capitalism or a wealthy partner is not a bad idea either. If you really want to make money do what my range does which is sell guns and have an indoor range. People tend to do alot of renting then buying. But if you give us exact numbers we can better help you, maybe opening a Bass Pro shop franchise might not even be a bad idea.

 

[Tom Servo]

$200k in inventory is about average.

Zoning can be a hassle. Make sure you won't be within 1000 yards of a school zone--that includes day care facilities. Expect to carry very high liability insurance, and you'll need to line up an attorney to keep on retainer. An accountant wouldn't be a bad idea, either.

I can't stress this enough: get someone who knows bookkeeping. If you'll be managing the store on a day-to-day basis, you won't have the time to keep the logs up, and you cannot ever make a mistake. If you do, the BATFE will be around to make it very unpleasant.

Bear in mind, profit margin selling guns only is meager at best. You'll have to compete with the prices of the big-box shops and the internet. An indoor range is a tremendous source of potential profit, but it carries a whole other set of concerns.

For that, you're looking at an uphill battle in terms of zoning. Construction costs will be much higher up front, and as soon as you think you've got it set up right, OSHA and the EPA will come by to tell you it's wrong.

You'll need a service for cleaning and removing lead, and of course, you'll need another hefty liability policy. You'll need an attorney to draw up airtight customer-release forms.

One last thing: find a large-scale reloader you can recycle brass through. We use Atlanta Arms. We gather spent brass, and they take it off our hands, reload it, and sell it back to us as range ammo at a very nice markup.

Bottom line: you really have to love what you do to be in this business.

 

[ieszu]

As someone who has been there where you are now, you do not need to buy any property. You can lease it, and to start you need about $100K, with accounts with all the major distributors (Amchar, Ellett Brothers, RSR). You do not need every model gun... 5 or 6 different Glocks (different calibers and barrel lengths), a few S&W's, some XD's, some 1911's, a few "black guns", and maybe even some cheaper stuff... CZ's, EAA, NAA, etc. and some variety depending on where you are.... if you are in a hunting area and want to service that market, some decent bolt-guns.

Above all, offer decent prices, customer service and a willingness to eat nothing but cheerios for a year or so

 

[Zedicus]

I can't stress this enough: get someone who knows bookkeeping. If you'll be managing the store on a day-to-day basis, you won't have the time to keep the logs up, and you cannot ever make a mistake. If you do, the BATFE will be around to make it very unpleasant.

And make sure the book keeper isn't a VPC or Brady Bunch Plant that plans on making such mistakes happen.

(Have Heard about this happening)

and a willingness to eat nothing but cheerios for a year or so

Make that Top Ramen, Cheerios cost to much.

note: by the way, I do not own a Gun shop, wouldn't mind starting one though so I have done a little research.

 

[koginam]

If you are only going to sell guns its hard to make any money, I sold maybe 40 guns a day from three stores, with only a 10 to 20 percent markup, you make more on consignment guns because you have no money involved in their purchase just floor space. You will make more money from the accessories , scops ammo, rings, reloading equipment, stocks, etc... It really pays to have a gunsmith in the shop but it does bring another layer of cost to the picture.
Get some business classes they are very important.
If you want a bank to loan money you will need a very good business plan and some of your own money to put up. Banks and the SBA are good sources for money, also look into your area for government help, many locations have incubator programs where you can get a reduced rent rate and other help.
Select your location carefully, traffic is important but high traffic areas cost more to rent, shelving is expensive unless you can buy used, good signage is also important. Advertisement is expensive, unless you have lots of money stay away from TV, get a good yellow page ad, and use the local paper to push sales, Penny Saver adds are cheap, advertise a few guns and accessories each week, Radio is a good way to get out the word but pick your air times to get maximum coverage, 6-8 am, 4-6 pm are prime times, that and the yellow page ad will work the best. A sign on your auto is also a good cheap ad. I sponsored a sports report for one of the talk radio stations in my area cost me around $100 a week and was well worth the money. I had several thousand targets made up with my shops name and phone number at the bottom, I gave hundreds to the local ranges and I have a stack at the check out counter I charge .50 each for them but I always give several to customers who buy $20.00 worth of merchandise. Sponsor gun safety courses, and join chamber of commence and other business related groups, its a good source of info and very good place to network.

Know your customers, don't carry $1500 dollar shotguns if you don't have the clientèle to buy them its a wast of your capital, same goes with black guns. I don't carry any cheap Saturday night specials, Make sure your customers know you will special order what you don't carry but always get half up front.
Lots of light if the customer can't see it he won't buy it.
Keep thing together, shotguns near decoys, and shotgun ammo, scopes near rifles, etc... We were really getting into the Cowboy action trade very good money their.


Insurance is a must over at http://thegunsmiths.com/phpBB2/viewforum.php?f=31&sid=83a7539bee92cbd16af88b9084f65899 (you may have to join the forum to get this section ) they list several insurance co. that Handel 90 percent of gun trade.

Get to know your suppliers by name. and pay on time many give a discount if you pay within a certain time.

Security is important no windows less the 3 feet off the ground, bars on all windows and doors, motion detectors everywhere, put the counter out of arms reach of any guns on the wall, never have more then one gun out for inspection unless you have a clerk to watch it, same with any high dollar item,
Don't try to go head to head with box stores you can't win so carry better products then they do, and once in a while Put 3 boxes of each caliber of ammo (Rem, Win CCI) and advertise it for 1/3 your cost one day only while supply lasts. then make sure your customers know Wall mart & Kmart will beat your price, I would usually go over and get a cart or two myself.

Their is a lot more to consider but I'm sure others here will mention them to you.
Be prepared to work long hours and make little money for a while but I did pretty good for myself and I liked the work.
Good luck

 

[takhtakaal]

You mentioned Trop. One of the reasons that they do as well as they do is because of the fact that they have a 'smith -- I'm not sure if he's 1099ed, or if he rents space out from them, but it's a great advantage.

koginam brought up a great point. Don't try to out-Wal*Mart Wal*Mart. It pays no dividends. You gotta offer better and different. And get used to the idea of having to make right on other people's mistakes -- it's common for folks to mess something up bought from a box store and then bring it to you to make it all better.

 

[Kim]

Do not forget the ladies!!!!!!!

 

[v35]

First of all, I wish you success and I'll promise to come buy something at your shop. I agree a considerable market exists in Central PA. You CAN compete with Internet dealers. Although I look for a deal like anyone else I've bought ALL of my guns at retail shops. Why? Their prices were competitive. Confidential price information that was so difficult to obtain in the past is now child's play. This has lowered margins on everything: guns, bullets, boats, houses, cars, airplanes, food, books, movies, everything. If you're going to survive that's something you should acknowledge right away. Don't fight it or you'll die.

All the successful gun shops I know of survive by selling stuff other than guns. Hunting and camping gear and apparel seems to be their lifeblood. I don't know of any that sell only guns. One that did near my home, staffed by well-trained and educated professionals with extensive law enforcement experience, with a top-notch showroom and attached indoor range, closed its doors a few months ago. So if you're going to have a gun shop and survive, I suspect your core business, the one that pays the bills, will really be something other than guns. Joe's Ice Cream, Coffee, Bagel, and Gun Shop, perhaps? Now there's a place I'd go every day!

Don't laugh, central PA is in dire need of good bagels.

One last suggestion: All the gun shops I know look like adult book stores from the outside. I know security and zoning present challenges but could you PLEASE find some way to make your storefront look inviting? Please?

 

[ilbob]

Its not a lot different than any other business.

Around here, I can think of four dealers with actual stores that went bust in the last decade or so.

I don't think it is any riskier a business than any other kind of business, but specialty retail in general is pretty high risk.

Get some solid business and accounting education first. Guns are secondary to running a gun shop. Its a retail business first and foremost. If you don't understand that going in you will certainly fail.

A few months ago, I was having an interesting chat with a local dealer whose father had the same location before him. He said between them they had sold more guns than the number of people living in the county in that 30 some years. There are about 275,000 people that live in this county. That would mean that over the years they averaged around 10,000 guns sold per year. Thats a LOT of guns.

I am not saying you would need to sell that many guns to make a go of it, but look at some basic numbers to get some feel for what you are up against.

building and grounds. doesn't much matter if you rent or own. it still costs money. lets say you rent a smallish store, maybe 5,000 SF. You will probably pay something along the lines of $5-10/year/SF. The exact amount depends on a lot of things, but lets call it $5. That means you will be paying $25,000 per year in rent.

inventory. figure you get much of your inventory from consignment sales. but you still need maybe 50 new guns in inventory. call it $15,000. You will also want ammo, reloading supplies, etc. maybe another $5,000. Call it $20,000 total. If you borrow the money to finance the inventory, you are looking at paying another $1-K a year interest, depending on how good your terms are with the distributors, and how good your credit is with the bank.

liability insurance. probably $5-10k/year. lets call it $5k for now.

health insurance. not cheap these days. often costs $10k a year for a family man.

you will probably have some startup expenses, legal, accounting, fixtures, etc. maybe $5,000 will cover it, maybe not.

so before you have sold so much as one gun, you are going to have to pay out at least $5,000, plus another $3-4k per month of ongoing expenses before you ever see a nickle profit.

Even if it is only $3,000 a month, you would probably have to sell maybe $10,000 a month worth of guns to break even, being as the margins are not all that good. Something like 20-40 guns. You still have not made any profit.

See where this is going?

 

[Nomad101bc]

Offer other non tangable services such as concealed carry classes, hunter re-certification, internet pick up, etc. I know my used guns store makes a killing simply having the internet deliver it to them then charging you 75 $ just to pick up your gun. In addition to what you paid on the internet because CT law requires a liscensed FFL be involved in the transaction.

 

[bogie]

Be prepared to order ANYTHING in the catalogs. ANYTHING. Because you won't have it in stock.

 

[TAB]

Also if your state allows it sell hunting/ fishing lic...I'm sure its a hassle and your not going to make money off it, but anything getting some one in the door is a good thing.

 

[TAB]

Joe's Ice Cream, Coffee, Bagel, and Gun Shop, perhaps? Now there's a place I'd go every day!

you know there is actually a store not far from my house that sells ammo, porn and hard alcohol. When I was a kid it sold guns aswell.

 

[buck00]

Airman, there are some good points above. Hey what city or area are you looking at? Central PA meaning York? Just curious.

- Remember, making your hobby your "job" can take the fun out of it in a hurry. If you are around guns and numbers 24 hours a day, you might not find yourself choosing to relax with firearms like you once did.

- As someone pointed out, you only make a small profit on each gun (like anything else in retail). One of the most successful gun shops in my area makes a minimum on Glocks. I got a brand new G30 for $519. Meanwhile, the mom and pop gun store up the road wanted $585 for it. I even mentioned this to the place I bought from and the guy said (as the gun shop owner) "well you have to decide, do you want eggs everyday or chicken once a week?" The mom and pop store had to max out and squeeze every nickel out of each gun, but in doing so he also was driving away business. On that note, just because you sell a $1300 Kimber doesn't mean you see much more profit than say a Glock. Overall its volume, if you can keep prices reasonable, you can move guns on a regular basis. You need to make steady profit, not rip off a guy here or there to make ends meet.

- Website. Yes you probably don't have time for it, but at very least have a web site that advertises where you are at, your HOURS, what you specialize in (why should I visit) and your phone number. I'm not saying keep your inventory online (that is difficult to update constantly) but have info and PICS on the net... and a way to email you questions. Oh, and on that note- I've emailed stores and gotten gruff on sentence, impatient replies and that turned me off right then and there and they lost my business.

- Someone already mentioned security. I know a guy who owns a small gun shop in a sleepy town, yet his shop has attracted burglars and criminals unfortunately. It drew them in from the nearby big city- guns are idea to steal as they can be sold quick on the streets. He not only had one or two break-ins, but at least 2 or 3 times situations where he had to draw on perps in the store.

- * Here is an alternative idea to consider. Another place I've bought from (locally) is an online store a guy runs out of his house in a rural area. You look at the web site and its impressive and full of every gun and accessory you can imagine with plenty of pics. But the way he generally runs it is he drop ships from wholesalers direct and turns a profit- he keeps very few actual guns around.
The pros of this would be you wouldn't need a sitting inventory and you don't need a "bricks and mortar shop" (run it from your basement). The cons are you need a very attractive web site and the skills to maintain it. However, if and when your online store took off- you always could parlay it into a real store.

Good luck.

 

[phantomak47]

Come to Houston , all of our gun shops suck and are way overpriced. We need a decent gun shop, as I could buy guns cheaper in Boston need I say more?????????????

 

[mp510]

Offer other non tangable services such as concealed carry classes, hunter re-certification, internet pick up, etc. I know my used guns store makes a killing simply having the internet deliver it to them then charging you 75 $ just to pick up your gun. In addition to what you paid on the internet because CT law requires a liscensed FFL be involved in the transaction.

Who are you using for transfers? $75 sounds insane. Newington Gun Exchange charges $30, and I know places in Eastern CT that charge as low as $15.

 

[plexreticle]

Selling guns is a cutthroat business right up there with selling used cars. You will be competing with the likes of Walmart and what ever other sporting goods super store that is within 50 miles. The security system you need will cost more than your inventory. Insurance will be high as well.

 

[Claude Clay]

MP510 I was going to post NGX, ua beat me there .
PRKT...i am felling that way also, even thinking of relocating far from these restrictive & absurd laws/taxes & politics.

 

[Airman193SOS]

So, we have pretty much established that to operate a conventional brick-and-mortar business will cost an arm and a leg, with little return unless I were to open a side business related, like a range. I figured as much.

I have a couple of places scoped out in the Carlisle area that would be ideal, with space for a proper indoor range if properly modified, but I certainly don't have the coin to bring it to fruition myself. The potential exists that I may be able to pull it off in the future once my wife gets a job (she's sitting on a Master's Degree), but I suppose I should shelve the idea for the time being. Mores the pity.

 

[RPCVYemen]

You'll need an attorney to draw up airtight customer-release forms.

Is there really any such thing? In a very different venue, a liability lawyer said that those forms were almost all bogus.

The first limitation is that that two parties cannot form a contract that is binding on a third party in these kinds of situations. It turns out that the customer and the business cannot possibly enter into a contract that prevents a third party from suing.

So for example, if a customer sends one through the roof and that injures a third party, there is nothing that you and the customer can agree to that would limit the injured party's right to sue you (the business owner). And since you probably have deeper pockets than a customer, you almost certainly will get sued.

You and the customer may have agreed that the liability is the customer's, and not yours. Maybe he signed in blood under a full moon in the second week in September that he was 100% liable if he put one through the roof. Who cares?

Since the injured party was not a party to the contract, he is not bound in any way by any terms of the contract. You may be able to sue the customer, but the plaintiff's attorney's couldn't care less - you have the deeper pockets.

According to him, it's very hard to contract away you own right to sue. He said those forms are mostly useful because people who sign then think the can't sue. His claim is that those forms don't even pose the slightest challenge to a skilled liability attorney.

This all came from an attorney whose daughter was renting a horse a stable in a group with my daughter. The stable had liability releases, and he was cracking on them. Maybe things have changed.

Mike

 

[Tom Servo]

We've had to rely on the liability waiver once, and we were OK. Guy had an ND into the floor, and chunks of concrete embedded in his buddy's leg.

Guy's buddy had to search high and low for an attorney that'd prosecute a case of, "my friend was being an idiot with a gun, and I want to sue the people who provided the venue for doing so." He finally found one, who called and talked to the owner. After doing so, even that lawyer dropped any hope of suing us.

Buddy ended up suing the guy who injured him. Since they both looked like barely-employed losers...well, best of luck.

Two other things to consider: a gunsmith and an instructor. Someone previously pointed out that instruction brings in business, and it's very true.

If you can find a good gunsmith, he'll be happy to have a dedicated workshop and the steady flow of work. 90% of retail gunsmithing is simple stuff, mostly parts damaged from cleaning errors, scope/sight mounting and trigger jobs.

 

[doc2rn]

I have seen the same shop switch owners 4x's in 6 yrs. Long story short offer other services and keep it simple. You do not have to have a brick and mortar business to qualify for a business liscence like FFL. You do however have to have other things like insurance, a storage facility, and records keeping. The last is a must, should have put that first.

 

[Rustynuts]

Be prepared to do a lot of FFL transfers from internet purchases! I would see those as almost pure profit. A little paperwork and a phone call for $35-$45 around here!