new business startup

[Travelman]

After meeting and talking to a highly successful private gun broker in my home town I am seriously considering starting up a small, home-based business selling specific model, highly sought-after guns. He's focused on a very narrow market niche and claims to be turning over between 30-50 guns monthly via a combination of different websites (he doesn't have a store front).
I know this will require a FFL and am reviewing application process while I build a business plan and do some further investigation into local ordinances, etc. but was wondering if any of you could share some insights, guidance, cautions or general words of wisdom. My plan would be to first do some heavy research into best/most collectible guns and then begin scouring internet auction sites and estate sales, then start small and build from there.
Any recommended reading material? Any comments/suggestions would be appreciated.

thanks

 

[1948CJ2A]

Several years ago I seriously considered doing something like this. I spent 6-12 months researching and writing my business plan in my spare time while working a full-time other job.

Essentially, what I calculated was that the margins weren't high enough for me to justify the risk. In other words, I was scared about the actual volume I could successfully move out per month. Even in a best case scenario, there's better ways to earn more money.

Do I love firearms? Absolutely. Would I love to make a primary income based off something I love? You bet. Can I compete with the big retailers? Nope.

I have always said that if I become wealthy enough to retire early, I'd consider opening a store just for fun but not to rely on as my sole income.

Good luck though and hopefully an entrepreneur will come by who has done this and provide additional input.

 

[Ryanxia]

As a supplement to your primary income I say go for it, will be fun. As a means of supporting you/your family I'd do a lot of research.

One thing to find out off the bat is check the zoning in your town for home based businesses. Some have restrictions of FFL's, retail, etc. If they have a restriction on retail, say you're just doing transfers and that may slide.

Remember your cost on guns will be higher than FFL's that have big accounts and do high volume. I would section off an area of the house (garage is best) as your actual store, that way when the ATF comes in to inspect they don't have free run of your whole house.

Just a few thoughts off the top of my head.

 

[Reloadron]

Well during the 90s my wife and I did that. The first FFL License was before things got more complicated. We started by working from home and doing gun shows. That went well and after a few years we moved into a brick and mortar building. That also went quite well.

Ryanxia makes a good point:

Remember your cost on guns will be higher than FFL's that have big accounts and do high volume. I would section off an area of the house (garage is best) as your actual store, that way when the ATF comes in to inspect they don't have free run of your whole house.

Read into that you aren't about to compete with the Mega-Marts of guns. When it came to guns the good money was in used guns. I sought out estates to buy, hell I even started wearing a ball cap (never wore a ball cap or any hat) that said I Buy Guns. Even made T Shirts for summers that said the same.

Another niche was reloading components. None of the local Mega-Marts sold powder, bullets, primers and reloading tools. Once word got out, that worked out well. One of my main suppliers was the old Ashland Buckeye distributor here in Ohio and about an hour south of me. I would drive down and load the truck saving shipping but also those darn HAZMAT fees on powder and primers plus the weight of shipping bullets.

I also specialized in M1 Garand rifles reworking them and building match rifles.

Think of it this way, you need to offer what nobody around you offers, including other small shops.

My wife and I also kept our "real" jobs so weekdays the shop was open 2:30 PM till 9 PM and Saturdays were a 9 AM to 6 PM or whatever it took. My wife managed a small TV station with a very, very nice salary and benefits and I was an electrical engineering type. We were both making a good buck with pensions and investments. While the shop did well I couldn't pull from the gun business what we were making, especially full paid medical plans at the time.

Eventually as the shop became more and more demanding we finally sold the business. We never enjoyed a vacation over the shop years and had a good offer on the business.

There were a few other niches but that is what you need. You aren't about to begin to compete with the Mega-Marts selling just guns.

Ron

 

[Ryanxia]

As Ron said having some stuff that other places around you don't would be pretty big.

I think (and definitely could be wrong) that you would be buying each item up front in the beginning as well, they don't usually open up charge accounts right off for small inventories.

Keeping your customers records safe could be a good selling point too, see my thread here. http://www.thehighroad.org/showthread.php?t=737291

 

[eeh]

I'd say if your friend is selling 30-50 guns a month he doing quite well in fact he doing real good,,take a couple years go to gun smithing school..You could make a lot more money,I don't know a good smith that's not several months behind..

I checked into all this years ago before I retired there is not much money in just pistols.

 

[rule303]

Marketing to one particular "niche" can work great, or it can be a disaster. Collectible guns, cars, whatever have major ebbs and flows in demand. One year Winchester model 12's or Remington Model 8's will be bid up to top dollar, the next they will collect dust on the shelf. As far as new guns, if you are only trying to sell the most desirable guns, you will have a very hard time getting inventory. Distributors allocate the most popular items, and they are parceled out to each dealer based on their overall sales numbers-sort of a reward for buying the more common or less popular items.
Make a business plan, and if you decide to go forward make the decision based on the numbers, not the fact that you love guns.

 

[larryh1108]

I, too, have looked into a similar business. When I retire in a few years and move out of CT I plan to find a place that will allow a home-based business. If you live in an association type development, forget about it. They don't allow it. If you move to a town that is anti-guns, they won't sign off on it, etc.

I researched and found that the best money is in used and consignment guns. With consignment guns you don't put out any of your cash but you don't get the max profit. However, if you have a fair pricing plan like 10% of the sale price, minimum $35, you can do ok. You can also buy used and recondition them to the best of your ability and turn out decent profits. To do this well you have to sell online, be a good photographer and be able to write great sounding descriptions. Be honest and accurate and get enough good feedbacks and you will do well there as well.

Of course, as a home FFL, you can do transfers which cost you nothing in cash outlay. You can charge $20 or $75, whatever you choose and whatever will generate enough business to make you happy. You also have to be competitive in the local market to make it work. So, if the going transfer rate is $45, you can charge $40 or $50. Your choice.

Finally, you should have a small niche like mentioned above. I would sell reloading components but stock mainly the primers and powder which costs the internet buyer hazmat fees. Brass and bullets are more by individual but you can find what the local traffic wants and keep that on hand and offer anybody the ability to order anything from you including new firearms. Have a cost plus $25 or 10% reputation and you may earn some business there. No need to be a Buds or a local big box store but many like the personal service (see the numerous threads on LGS issues).

So, you can do it and supplement your income if you don't decide to be the biggest and baddest home FFL in your state.

This set up allows you to use your home without paying for a brick and mortar store as well as controlling your own hours. You can be a 'by appt only' setup which works well if you don't keep people waiting for their time with you. I know several guys who do this and they are shocked at how well it works. If the business ebbs and flows, like all do, all you have is the extra cost for insurance to pay for so you should not be hurt. I will do this when I retire in a few years. To me, it's win/win.

 

[Travelman]

Larry thanks for the comments, sounds like you're on track with what I'm thinking. To clarify, I don't plan on any sort of retail shop, nor do I anticipate dealing with anyone in person. The referenced gun broker in my home town started his business at home, then rented some office space when it grew too large to handle (NOT open to public). He spends most of his time searching for used guns, mostly rifles, online and at estate sales/auctions. Also sells on consignment. Overall he does very well so I'm intrigued at the idea of starting something small as a second income, then building as I go and seeing what happens.

 

[oldbear]

My plan would be to first do some heavy research into best/most collectible guns and then begin scouring internet auction sites and estate sales, then start small and build from there.
Any recommended reading material? Any comments/suggestions would be appreciated.

I assume your niche is going to be classic/collectible arms, correct?

If this is the case you will need DEEP pockets, I've witnessed serious dealers walk into auctions and shows with tens of thousands of dollars. This was not a check or a credit card, but $100.00 bills. Also be prepared to sit on your inventory for sometime. Keep in mind that some of your compaction has been doing this for years, and have access to deals you and I will never hear about. One bad deal can wipe out a month or more of profits.

Last but not least unless you are one hell of a poker player this may not be where you want to play.

Best of luck whatever you decide.

 

[gym]

I have knocked this around for years. With the laws in my county not allowing doing business from the home, it was not worth it.No matter how I broke it down, the investment in time and money would only pay off if I opened a full service gun store, a small one, but still a store. I don't want to be tied up all day with that so for me it was a pass. I wish you luck.

 

[medalguy]

The secret to any business is finding a need and filling it. Take a long, hard look at your business model in your vicinity and really ask yourself if there is a long-term need for the type business you are considering, and whether you can realistically fill that need on a continuing basis. Can you obtain inventory on a regular basis? Do you have the funding to purchase inventory and hold it long term? Do you have a customer base that will buy your inventory long term?

Lots of people think they can start a business and make a lot of money. Only a very small percentage of businesses make it beyond the first year, and of those surviving the first year, only a very small percentage of those manage to survive past five years. You need to have a business model that will be able to turn a profit consistently for many years, and selling a few guns to friends and acquaintances you know today won't be enough to sustain a business long term.

Whatever you decide, good luck with your decision.

 

[gym]

You never count on your friends when it comes to business. My first salon took a year and a half before it made money. That was in a high traffic area of NYC. If I hadn't had a bankroll behind me I would have lost it all. That was with about 10 salaried employees, I built it up to 35 in that one spot and 200 in all 5, but all of them took time to turn a profit.
That was when times were better. I can't imagine now, with rent and taxes 5 x what I was paying and salaries about triple.
I think with gun stores, you either have to go full service or small, doing something in between seems to fail from what I have seen in FL.
If you are going to have inventory and sales people it is going to get expensive. If you have nothing but a few guns, you aren't going to make anything. It's a tough racket to be in unless you have money and connections along with experience from working for someone in a management position. That's the best way, learn everything on someone else's dime. then you at least know what to expect.
If you have a backer it's always better. I learned from my first boss, who never used his own money for anything. He opened 37 salons over a career that is still prospering, and is on HSN and was on QVC, for several years with his product line.

 

[Palehorseman]

Starting any business is a daunting affair, as most are doomed to failure.

In the 1990s wife and I launched a home based business, the first things we learned was what not to do, and there were a multitude of those. It took about two years of probing, then retreating, try again, and selecting the right venues to sell through. We never made over $30,000.00 profit, but it was fun and quite an experience.

 

[Ryanxia]

Keep in mind the advise everyone is giving you is to caution you to do it the right way, not to discourage you.

You miss 100% of the shots you don't take. Take a chance and do it right I say.