Reloading for profit

[joka667]

I notice that all the good ammo for 5.56x45, xm193 or xm855, is always sold out and commercial ammo is usually underpowdered and/or unreliable. In addition, I cannot even find boxed green tipped ammo, only xm855 PD which I understand can be quite unreliable.

I have a lot of cash for investment into top of the line reloading equipment and my goal is to meet the demand and provide high quality ammunition equivalent using standard LC brass, military primers, powders, and bullets. I'll even add sealant so it will be just like the military ammo.

I'm pretty new to reloading, I would like to know how feasible this undertaking is and if people will trust buying ammo from an individual as opposed to a big established company like federal or lake city.

 

[Father Knows Best]

There are lots of small businesses that sell reloads, and apparently the proprietors make a decent living at it. They are known as "commercial reloaders." Here in Memphis, a local outfit called "Tennessee Cartridge Company" is well known. Every gun shop stocks their products. They are cheap and come in "Volunteer Orange" boxes. Another local reloader is AmmoDirect, which sells mainly via the web at ammodirect.com.

It's not as easy as buying a press and getting to work evenings and weekends in your basement. You'll want to incorporate (for liability reasons), and will need to get a business license and liability insurance -- lots of it. You also need a federal license to manufacture and sell ammunition. It's a special type of FFL. You'll spend a lot of time and money on paperwork before you ever sell your first box of ammo.

Then you need to figure out your distribution. Will you sell direct or through stores? If through stores, you need to find ones willing to stock your product. Many already have established relationships with other commercial reloaders. If direct, will you set up a website? That takes time and money, and you need someone to download the orders, process the payments, and pack and ship. Or you could advertise in publications, with many of the same expenses and hassle. Or you could sell off a table at gun shows. That means paying for tables and travel to/from shows.

Finally, you have competition to deal with. Like any business, you should start by doing your homework. Go around to your local gun stores and a couple of nearby gun shows. See what is currently available, and what the asking prices are. That establishes your market. Figure out what it is going to cost you to get started (presses, supplies, incorporation, advertising, insurance, licensing). How much do you think you can sell and at what price? Will it cover your time and expenses?

 

[The Bushmaster]

And to add to FatherKnowsBest...You neeed to be an experieced reloader.... As noted in your last paragraph...

 

[Father Knows Best]

And to add to FatherKnowsBest...You neeed to be an experieced reloader....

Good point. If you've never done it for yourself, you have no business trying to reload for others. You may think that there is money to be made in tree trimming, but you shouldn't invest a lot of money in starting your own tree trimming business if you've never trimmed a tree. And the consequences of screwing up in the ammo manufacturing business are a lot worse than the consequences of screwing up somebody's favorite magnolia.

Buy yourself some loading gear. Spend a year or so using it. A LOT. Find out whether you really enjoy it. Figure out how easy it is to make mistakes, especially when you're tired or in a hurry.

Then and only then should you revisit the idea of reloading commercially.

 

[joka667]

I'm an engineer pretty good at math and physics so I think I can handle reloading. Of course I'd make sure my ammo passed milspec tests before I sell it. My aim is selling a product equivalent to XM855, XM193 nothing less. What concerns me most is the whole legal/liability, sounds like a might need to consult a lawyer == expensive. Any links on where I can find the paperworks for FFL?

 

[~z]

There is not a lot of engineering math and physics necessary in reloading. If you are interested in the hypothetical side of it, then yes. No one is questioning whether you are capable of reloading as it is a fairly simple process, though often shrouded in mystery. Find a mentor to learn from, find out if you enjoy it and then consider expanding from there. Would you get your brakes done by a guy who has no mechanical experience and no tools? Brakes are pretty simple too.
~z

 

[Infidel]

I'd suggest that you start reloading, load a lot of your own ammo, and when people start incessantly pressing you to load some of that excellent ammo for them, or to sell them some of your excellent homemade ammo, then, and only then, consider getting into it as a commercial venture.

 

[The Bushmaster]

Besides being a reloader I am also a horsemen. I spend a lot of days riding with a very accomplished engineer. And I wouldn't want him to start reloading just because he is an engineer. He, like all beginners, would need training.

~z is correct as to the simplicity of the basics of reloading and close as far as the physics of reloading. For those that reload for themselves only, it is quite simple. Mostly a matter of what case, primer,powder and bullet we want to use this time. As for reloading for the public it gets very complicated. Not just the paper work, but also the absolute understanding as to what you are doing...If you are just starting out reloading, being an engineer is not going to make you a reloader over night. It might help though.

 

[Car Knocker]

Don't forget the zoning and fire laws since you're going to need to buy primers and powder in bulk to make your business feasible. Can you legally store a couple hundred pounds of powder where you are?

 

[dmftoy1]

I'm an engineer pretty good at math and physics so I think I can handle reloading. Of course I'd make sure my ammo passed milspec tests before I sell it. My aim is selling a product equivalent to XM855, XM193 nothing less. What concerns me most is the whole legal/liability, sounds like a might need to consult a lawyer == expensive. Any links on where I can find the paperworks for FFL?

I have no doubt you could handle the "precision" aspect, but the volume without making a mistake is the hard part. (eg. can you hold your concentration and not be distracted such that when your girlfriend walks into your reloading room and starts talking to you, you don't forget to index the press and double charge a case, etc. )

I believe you can find the FFL forms, etc. here:

http://www.atf.gov/

I think your biggest expense will be the insurance, but that's just a guess.

Have a good one,
Dave

 

[Jim Watson]

Of course I'd make sure my ammo passed milspec tests before I sell it.

Oh, really?
Do you know what the milspecs are? I don't know them all, but they definitely include muzzle velocity and chamber pressure; maybe specs on port pressure, bullet pull and waterproofing.
Do you have or plan to get a chronograph? Pressure gun?

I like Infidel's approach. Get so good that people want YOUR ammo.

Do you mind working for minimum wage? Commercial reloading is not a real high margin operation, the reason brands seem to come and go.

 

[BigSlick]

Cabelas has it in stock

Surplus Ammo has it in stock

And others.

While you can argue the differences between SS109 and M855, actually the differences are few.

Getting into the reloading business to supply one, two or even ten specific cartridges would be a pretty thin business plan.

What happens when specs change, the war is over or you can't keep up with demand ?

I can't speak for everyone, but most of the shooters I know buy several cases at a time. How long do you realistically think it would take you to turn out 10 cases of ammo ? Most non-commercial machines at best will realistically do 1000 an hour, with everything prepped ahead of time. On a larger scale, Camdex machines turn out ~ 5000 rounds per hour. The base unit runs about 35,000 + 6,000 or so for caliber conversions. With these, you have to deal with the issue of space, power and maintenance - not cheap.

How many people do you think buy M855 (or ??) per day ?

How much profit do you anticipate making from each case ? Divide that by the number of hours invested in the actual reloading, case prep, packaging, shipping, accounting, documentation and everything else that goes with it (lawyer, accountant and insurance fees) and you will probably feel the way many do; it isn't worth the investment in time or resources to get it done.

Do you happen to know (or ever heard of) any reloaders that were filthy rich ? If there are any, I would bet you it didn't come from reloading.

Expand your offering, find out your facts from somewhere other than a Internet forum (as in GSA) and get a damned good lawyer who is versed in dealing with gov't red tape.

Or, go to Cabelas, Surplus Ammunition or one of the many places who have the product available. If you buy enough of it, you might be able to mark it up enough to get a free case or two of your own.

If you want to take up reloading, great. If you want to cash in on the perceived (temporary) shortage for a specific type of ammo, save the time, effort and headache.

In the beginning of your post, you say you have a lot of cash for investment, in a subsequent post you indicate your concern over attorneys fees... which is it ?

In any event, to get your ammo certified as the equivalent or equal of XM855 (or ??) isn't going to come in a week or two. Going thru the process of gaining a gov't standard/quality approval will take MUCH longer than you would imagine. Certainly longer than it takes for Winchester to get it's new plant in Mississippi online, or the war to end, at which time there will be millions of rounds of surplus available all over the place.

Good luck with it

BigSlick

 

[joka667]

Well I think i've gotten enough information from these forums. I will have to plug in some numbers and see if this is a profitable venture. But the undeniable fact is, there is a shortage of good quality 5.56, the junk is always there, from cheap commercial ammo to the questionable PD stuff you find on cabelas. Boxed xm193 can disappear in a weeekend and I can't even find boxed xm855. In the end, some people end up shooting wolf in their ar's. This is the problem I want to address.

 

[YellowLab]

Starting a business without a business plan?? WRONG!

I started an ISP back in 1997. I took my business plan to three banks (locally) and thier comments were:

One bank said my Business Plan was so through, complete and detailed that I would have easily gotten 3-5x what I was asking (I was looking for $50k). The number of people who want a loan with no plan boggels thier mind. And if you show up to an interview without a plan, they simply take your name/number and issue you the form letter denying your request for funds.

I wrote my plan with the help of the local Small Business Development Center at Wilkes University. Free government program... look into it. They can do all the finicials for you, but you have to do the nuts/bolts of costs, laws, production etc.

Since you are simply saying you want to sell reloads, on a BBS, that really leads me to believe that you did not even contimplate a Business Plan. So you idea is not even in the planning stages... more like you are hoping to get rich with an idea. Ideas don't make money.... well executed plans to supply a product make money.

There is a reason 90% of the business started fail within the first 3 years. No business plan is generally given as the most common reason.

 

[jeepmor]

Reloading is the easy part

I think the reloading itself is the easiest part of this particular equation. You seeing a need and willingness to fill that gap is noble and likely an avenue to yourself some income. I've foreseen many potential dollars to be made by my ideas spawned out of my hobbies. Namely in the offroad fabrication arena when I was completely restoring a jeep. I envisioned most of the products that now fill 100 page catalogs. Simply because I was building my jeep about 5 years before outfits like 4wd hardware really took off. Had I chucked this corporate job and pursued that avenue, I have no doubt I would be manufacturing some off road doo-dad by now. But I have a decent corporate job that affords me a lifestyle lacking in most of America, I have 3 and 4 days a week off, so I'm spoiled.

The engineering would be manufacturing process control, not necessarily mechanical engineering of the tooling itself, at least not in the beginning unless you have a much bigger budget than I'm thinking of. As a person with an engineering degree also. This would seem to be the enjoyable part, the driving passion for putting yourself through the rest of the business process.

As a technician in the semiconductor industry, I've been operating and maintaining revenue producing machines all of my career. Most of the machines worth much more than I'll ever make in a lifetime. This part would be quite easy for me, the administration portion is usually more daunting, requires more patience, and dealing with local government agencies is rarely something pleasant.

Not only do you need to generate a sound business plan, but you have to run the equipment also. I have seen one automated loader on ebay or gunbroker. I would not choose to use a handloader unless I was banking significant margin per round or could generate my required output in less than 20 hr per week. And your arm is going to become prone to repetitive stress issues to generate the volumes you will need to become a double tap or buffalo bore operation.

I would pursue the business plan and start doing the research on the details of how your production area needs to be setup to meet all those pesky codes that the homeowner can otherwise blatantly ignore. I think this particular part of the process will either fuel you to pursue it further, or prove to be so much hassle that it might be too much for a single person to pull off. I have always been aching to do something just as you mention, provide a product to a niche market.

However, as I've stated, I do have lots of free time to have hobbies, dig into them with some bite, and decide if I'll have it 5 years from now. Handloading has bitten me the same as you, however, as a person who has worked as a production worker in former positions. I think you would need some help to enjoy life at the same time. It does create quite a hectic pace marketing and manufacturing a product line.

 

[Travis Two]

You will need a class 6 FFL. call your local BATF office. Be aware that once you get a license that you entire operation is subject to unannounced searches during buisness hours by the BATF. You sign away that right when you apply for the license. If your home is on the same property or its in your home they can search that also. Liability insurance? GOOD LUCK! Incorporation? absolutly! and don't forget as many do that you have to factor in FEDERAL EXCISE tax into the final product. About 12% i believe. Can you do it? sure but only if you are aware of ALL the pitfalls.

 

[Master Blaster]

I know someone who does this as a sideline. He has a warehouse location, pressure test gun, smelts his own lead, and makes his own jacketed bullets.
He has to do this and deal in lots of powder and primers too large for a residential setting. In order to make the relaods at a competitive cost, and still be able to pay himself $10 an hour for his time.

First off you are going to need a commercially zoned warehouse location with fire protection. You cannot do this in your home, because you are going to need to store more than 25 lbs of powder and 10,000 primers, which is usually the limit imposed by the fire marshall for a residential setting.

The ATF and the local fire marshall will need to inspect your premisses before you can get a manufacturing license and a business license. Not to mention Insurance, and what the loss protection specialist will require before an insurance co will write you as a risk (hint all fire codes will need to be followed, sprinklers, vented storage cabinets for explosives etc).

If you are buying bulk powder you will need a pressure testing gun so you can make sure that your reloads are safe to fire.

 

[YellowLab]

Lots of good tips... and even more work. You haven't even considered advertising (can't sell it without customers).

Now you know why everything is off shore production. Heaven forbid you actually manufacture something in the USA. All that dirty water, dirty air and trash... how dare you!

If you think you can get a nitche market.. do it. Odd calibures, large calibures etc are always in demand. There is $$$ to be made.

 

[The_Antibubba]

No offense, joka, but I wouldn't buy ammo from you, not yet.

First off, you're new to reloading. Mistakes happen, and you're too inexperienced to have made them yet.

Second, you don't seem to have worked out the magic formula yet. All you have is a notion that you can make these rounds.

Third, these rounds aren't scarce because the Gov is trying to drive the price up. It's scarce because so much of it is going to the war. Do you think with production going full blast that there are warehouses full of "milspec" bullets, brass. powder, and primers just waiting for use?

And don't forget, you're going to need some fancy equipment to test and certify it.

And by the time you get everything going the war might be over, and the stuff won't be scarce anymore.

Build it. Prove it. Load for yourself because you love reloading and not because of an ephemeral profit. Then have a real business plan in place. If it's good, and reliable, people will buy it. Look for a niche that isn't filled, like match-grade 7.62 X 54R-I'd buy that!

 

[MCgunner]

Best way to ruin a hobby is to try to turn it into a business.

There are commercial automatic reloading machines, very expensive, even commercial bullet casting machines. If you wanna profit, you about have to spend a lot of money to do it IMHO. Even a hand operated progressive don't crank 'em out with any real speed. You also need to be very diligent about checking EACH AND EVERY powder charge. I mean, a missed charge in your own ammo is one thing, but you don't wanna be selling it to someone. Factory ammo is very uniform. Diligence requires time and time is money.

 

[taliv]

you know, if you wanted to make money you could produce 5.7x28 ammo, which is truely in short supply that is not at all related to iraq. it's selling at a tremendous premium.


the other thing you could do, is not make loaded ammo, but make bullets. look up the corbin swage press stuff and turn yourself into a boutique bullet maker. just try to find a 28g bullet in .222 diameter and you'll see what i mean

 

[Cherokee]

Been there, done that, never again. Liability!

 

[MCgunner]

Been there, done that, never again. Liability!

Amen to that!

 

[~z]

taliv has a good point there, you would limit your liability. If you were making bullets and not ammo, I'd probably buy some from you. Seems like you could get the niche market easier. Develop into an ammo manufacturer with your bullets in the future if that is what you want to do. But be careful, look at how many cast bullet manufacturers were out there last your...less now.
~z

 

[MCgunner]

taliv has a good point there, you would limit your liability. If you were making bullets and not ammo, I'd probably buy some from you. Seems like you could get the niche market easier. Develop into an ammo manufacturer with your bullets in the future if that is what you want to do. But be careful, look at how many cast bullet manufacturers were out there last your...less now.
~z

You could set up an ebay store for bullets. Shipping 'em isn't near the hassle.