Many questions for starting up a firearms business?

[lbmii]

I am looking into starting up a firearm business where I sell firearms at gunshows or at personal protection training seminars. I have some questions:

What is involved in obtaining a FFL?

What is involved in obtaining new firearms? Do you buy directly from the manufactureer or do you go through a wholesaler? What volume does one buy at a time? Is there a mix that the manufacturer sets for you (25% 45 ACP, 35% 40 S&W, etc.)? What shipping costs do you incur? Do you have less than full truckload crate shipment or do you go by UPS and Fed X?

How do you obtain foreign military pistols and rifles in quantity?

How do you obtain ammo?

What is a typical markup?

How do you sell pistols at gun shows when there is a waiting period and the gun show that you are selling at is not in your town?

What experience have you had in advertising? Do you think a radio station or cable company will run pro-gun personal defense ads?

What is involved in being able to let customers pay by credit card?

 

[mnrivrat]

OK - It's been awhile since I held my FFL but I will try to give you some info here.

1.) Contact the BATF for forms to obtain your FFL . They have a web site or you can call them. Regulations regarding the license should be available from them.

2.) Unless you have big bucks you will likely have to purchase guns from a wholesale source. In order to obtain firearms from the factory you have to be a distributer which requires certain stockage levels and types from most manufactures. Through wholesalers you can buy 1 or as many as you want.

3.) To import military surplus you need both an import license and a special license from the BATF (again see their web site)

4.)Ammo can be obtained the same way as you do firearms but is less restrictive. Wholesalers mainly , I'm not sure what quantitys you would have to buy to purchase derect from the manufacture.

5.)There is no set typical markup. The prices vary with location because of the cost to do business varys. In the same location the compitition sort of helps let you know what you can charge.

6.) The selling of handguns at gun shows will vary in method depending on state law. In my state the buyer can obtain a permit to purchase which allows the buyer to pick up the gun at the show and leave with it after the federal background check is done by phone.

7.)Advertising can be done in normal channels such as radio and newspapers. There are some that are anti firearm and will refuse to run adds, that is there choice and nothing in the law prevents it.

8.) Credit card ? What's a credit card ? ( I don't know and I don't use them )

 

[Sir Aardvark]

What is involved in obtaining a FFL?

- Check out the BATF website, as previously mentioned by mnrivrat, but you must also comply with all state laws and regulations.

What is involved in obtaining new firearms? Do you buy directly from the manufactureer or do you go through a wholesaler? What volume does one buy at a time? Is there a mix that the manufacturer sets for you (25% 45 ACP, 35% 40 S&W, etc.)? What shipping costs do you incur? Do you have less than full truckload crate shipment or do you go by UPS and Fed X?

- Mainly you will purchase from a wholesaler, such as Davidson's, RSR, Jerry's Sport Center, Southern Ohio Gun, etc. A few Manufacturers, like Springfield and Henry's, sell direct to FFL holder's for small quantities, but you must deal in VERY LARGE quantities to purchase from Ruger, Smith & Wesson, and most others. To purchase an item direct from Springfield it is usually more expensive than getting it from RSR, the wholesaler. Usually you buy any quantity you wish and they ship by UPS or FEDEX.

How do you obtain foreign military pistols and rifles in quantity?

- Check out Century Int'l Arms and Southern Ohio Gun, they usually have cheap prices and quantity discounts on most anything you would be interested in. The Type-01 FFL- Dealer in Firearms allows you to engage in the infrequent or occasional importation of firearms, so you don't have to have an importer's license to do this (this was true when I had my license, I'm sure it still applies), your local ATF agent will walk you through the steps.

How do you obtain ammo?

- Ammo is cheap wholesale, but since it is made out of lead, it is expensive to ship. RSR will ship it to you for free if you buy case quantities of any ammo they carry. Jerry's Sports Center will cost an arm and a leg to ship anything, but they almost always have the items in stock. Bill Hicks and Co. will have annual specials for free shipping on ammo orders over $500.00 around hunting season.

What is a typical markup?

- Whatever you want it to be. I charged $20.00 a transfer, not so much to make a lot of money, but because I enjoyed getting as many guns out there as I possibly could legally.

How do you sell pistols at gun shows when there is a waiting period and the gun show that you are selling at is not in your town?

- Check your State and local laws, they vary by locality.

What experience have you had in advertising? Do you think a radio station or cable company will run pro-gun personal defense ads?

- I was very low key and pretty much did things by word of mouth. I ran my operation out of my house and did not want the nuts and freaks to show up at my door. I was lucky that I had a couple of very rich clients who couldn't buy enough stuff from me. You can always get a website and conduct classes at the local range.

What is involved in being able to let customers pay by credit card?

- I didn't do this due to my razor thin profit margin. First you must get a merchant's account from Visa/Mastercard for about a $400.00 start up fee, then pay a monthly fee of about $75.00, and then pay about 2.5% + 0.35 cents of every transaction in fees too. It gets expensive!. The above fees can vary greatly depending on how much you shop around. Quite simply, if people didn't want to pay by check or cash, then they didn't want to buy from me.

 

[lbmii]

Mnrivrat and Sir Aardvark,

Thank you for the info. You have given me some direction as to where to start doing some more research.

That whole credit card thing is crazy. I had no idea how bad it is. The thing is however is the reality of the high cost of a firearm. Many people are unable to come up with $400 to $1000 in cash. I personally do not carry much cash at all and I do not carry checks.

My concern is that the shipping costs by Fed X or UPS will be prohibitive. I wonder about the viability of driving over to the wholesaler and picking up one big order in person.

 

[Sam]

ibmii,
Given how tight the market can be on guns, shipping costs can eat your margin real fast. On the other hand unless you have a lot of capital to tie up in inventory, driving over and getting them will kill you in fuel costs, besides securing your goods while you make a pit stop. You would need a big truck load to make it pay.

Most of the bigger wholesalers have a cost figure where they ship free on something and that is the way to go. I deal a lot with SSI and they are real good on that. They cost a couple bucks more on some things but the shipping makes the difference.

Selling at shows is relatively straight forward. Selling at a seminar is not going to work if it isn't in your regular place of business. You can only operate at your licensed premises or at a show.

Sam

 

[Matthew748]

I cannot advise you on the firearms side, but if you are serious about processing credit cards shop around. A $ 400.00ish startup fee, a $ 75.00 monthly fee, and the typical 2.5-3.0% of sales proceeds is insane. I work at a CPA firm and do all the accounting work for a guy who owns a couple of area businesses. I don't know if he has an "in" with someone at the company, but he only pays the 2.5-3.0 % of credit card sales. It usually works out to about $ 350.00 a month. That is a pretty big cut, but well worth it if you do enough in volume and would lose those sales by not accepting credit cards. The name of the provider is Merchant Services, I can look more closely Monday if you are really interested.

edited to fix a few early morning grammer errors.

 

[rwc]

- Check your State and local laws, they vary by locality.

Your state licensing department may require you obtain a firearms dealer license in addition to a general business license.

Your county may require you also get a license or business permit and may place conditions on it. For example, if you will be stocking inventory at your home in a residential neighborhood they may limit the quantity of ammo you can have on hand.

Good things to check since your neighbors would be naturally curious if the BATmen and your local sheriff show up and cart off your inventory for failure to obtain proper licenses...

 

[lbmii]

There are so many needless roadblocks. It really just comes down to different outfits shaking you down for money. It also comes down to the established finding ways to inhibit upstarts. Wal Mart has their teams of accountants and lawers and politicians to make these deals for them.

Does society know how much all of this crap inhibits the economy?

 

[Bear Gulch]

The best places to start is with the ATF and your local planning and zoning. If you site isn't going to be legal you won't get a license.

 

[Majic]

Depending on your local laws you may need a storefront to even obtain the FFL these days. You need to check into that first before you go any further. You sound like you are trying to get by without a permanent business address and that is exactly what the BATFE have been eliminating.

 

[mnrivrat]

lbmii ,

Welcome to the post Clinton years of trying to run a gun shop. Their intention was to drive out the small dealers and they were very successful at it.
The roadblocks are there on purpose and have nothing to do with economic policy , and everything to do with an anti-firearm agenda.

 

[GreenFurniture]

Setting up an FFL for nothing more than gunshows will get some eyebrows raised. It is best to have a legitimate store front, in a commercial location, and do gunshows when they are available.

We no longer do gunshows simply because it is not a money making venture. When there is a gunshow in town, or nearby, we double staff the retail side and sell 30+ more guns than if we had been at the show.

 

[Bear Gulch]

In fact I don't think that you would get an ffl stating that you only want to do gun shows.

 

[Jim K]

First, unless BATFE policy has changed, you will NOT be able to get a dealer's FFL unless you have a fixed place of business. You cannot obtain an FFL to sell at gun shows or seminars. So make up your mind to really go into business or forget about it.

Second, you ask about experience. How much experience have you had running a business? If the answer is none, then forget about the FFL and how to buy guns, until you take courses in business management, accounting, taxes, etc. Incorporate a business. Get a properly zoned business premises where you will do business. You can still go to gun shows, but you need that fixed address, and it should not be your home. (If you set up a gun business in your home, even if it is legal, you are exposing yourself to thieves and burglars, not to mention guys who come around at 2am wanting to buy a deer rifle.)

Make sure you can get all the city/county/state licenses you need to run a gun business. (Some cities will not allow establishment of a gun business.) Make sure you comply with OSHA, IRS, and EPA regulations. Make sure you can get good insurance, not only to protect you if a gun you sell is misused or dangerous, but against the loss of your stock in a fire or other disaster. Hire a lawyer on retainer, and a bookkeeper if you cannot handle that end yourself. You need to worry more about the IRS and state tax weenies than you do about BATFE.

Jim

 

[GreenFurniture]

Ok. Let's pretend for a moment that you were wanting to start a "standard" gun store and do seminars and gunshows on the side.

First you'll have to find suitable commercial space that won't drain your bank account to keep open even when business is slow.

Then you apply for your FFL, and in the meantime sell accessories and such just to keep the lights on and the water running. We'll get to "how can I get accessories" a little later.

Once you've been approved for your FFL you have about 30 days until it will arrive and by that time you'll need to have your distributor network set up.

Distributors don't care if you buy one or one hundred guns. Some will give discounts and/or free shipping once you hit a magic purchase dollar figure.

You can buy accessories from most companies with just a business license. Some won't sell unless you have an FFL.

I started my company two years ago with a $500 investment and today we are the #1 firearms dealer in the area. It's possible, if you want it and do your homework.

 

[lbmii]

Thanks for all of the replies. You all sort of brought some reality to me that I had not thought of. I need to really think this out.

GreenFurniture comments on the profitability of gun shows help confirm some thoughts I have had on gun shows. I do not see many people walking out of gun shows with firearms. Also I go to different gun shows and see the same vendors with the same inventory as before. My thoughts are that this might be due to the firearms at many booths are so called classic collector items that in reality are just worn out junk that someone bought at estate auctions and then priced way up.

Jim Keenan, Bear Gulch, mnrivrat, and Majic all point to the big "You need to first get a chicken before you can get an egg but you need an egg to get a chicken." problem. I need a storefront to get an FFL but to get a storefront I need to get an FFL.

My original thought was to do the gun shows and also teach classes for concealed carry permits and sell at the end of the class, gear and pistols designed for concealed carry. It sounds like this might not be possible.

 

[garrettwc]

I started my company two years ago with a $500 investment and today we are the #1 firearms dealer in the area. It's possible, if you want it and do your homework.

Green Furniture, when you have time could you elaborate more on this statement, either in this thread or via PM. To go from $500 to what I saw on your website in two years is most impressive. I would be very interested to hear what challenges you faced and how you turned them into opportunities.

 

[Bobarino]

can't help you with the guns side, but here's a little more info to add to Matthew's post about credit cards:

equipment: ebay. WAY cheaper than anywhere else, its refurbished but the one i got comes with an 8 year warranty and 24 hour turnaround if i need a replacement and it was less than half of buying directly from the manufacturer or a processor. a business in today's world cannot operate without taking at least Visa and Mastercard. some of the equipment vendors also offer processing. whoever sells you your processing, they will likely sell it NOVA immidiately afterwards. most of them are just brokers.

anyone paying over 2.5% didn't do their homework. you can have it one of two ways.

1) a transaction fee (usually $.25-$.50 per) and a lower rate around 1.7%-1.9% or:

2) a "blended" rate with no per-tranaction fee but a higher percentage rate. i pay 2.41% for instance and i have a $25.00/mo "statement fee" and no per-transaction fee. some places will waive the statement fee if you agree to electronic statements meaning email only.

the higher your average dollar amount per transaction, the more it makes sense to have the per transaction fee and lower rate.

Debit Cards: get yourself a credit card machine WITH the PIN pad so people can use their debit cards by punching in their PIN instead of signing for it and processing it like a credit card. these can be around $.35 per transaction plus a few extra cents per depending on the network (Cirrus, Exchange, Star etc) so maybe around $.50 per transaction with NO PERCENTAGE DISCOUNT. this is the bee's knees for higher dollar transactions. if you sell a gun for $600 for example, it will only cost you $.50 to process a debit card whereas it will cost you ~$12.00 or more for a credit card for the same sale. thats why gun shops have different prices for cash/credit.

credit cards are a necessary evil to do business nowadays. just wait until you get that joker that wants to buy one bullet for $.45 and use his credit card and you'll see what i mean.

good luck with your new business.

Bobby

 

[GreenFurniture]

Green Furniture, when you have time could you elaborate more on this statement, either in this thread or via PM. To go from $500 to what I saw on your website in two years is most impressive. I would be very interested to hear what challenges you faced and how you turned them into opportunities.

Started out with $500 and a single part-time employee. We identified a very broad niche and filled it. With aggressive marketing, superior products, helpful staff and lots and lots of time we were able to expand to our new digs (15,000 sq. ft. w/areas only indoor range) and expand our operation.