Should I Open A Gun Store?

[Rovert]

Howdy, folks.

I'm hoping some of you who are FFLs, or manage a store and know the books, might be able to help me with a decision I'm trying to make.

For some time, I have been toying with the idea of applying for an FFL and opening up a gun store of some sort. I'm not sure exactly where yet (geographically), but it would probably be in Northeast PA.

I do think I'd like to focus on the shooting sports, not so much on hunting or general sporting goods like bait or fishing poles or general recreation stuff. I would want to be more 'purist' in focus catering primarily to CCW and self defense, Competitive shooting Bullseye/DCM, and the accessories and gear that go along with it.

I realize what I'm going to ask is confidential, so if you're not comfortable answering in public, feel free to PM or Email me to discuss sidebar if you're willing.

Anyway, what would be helpful for me to know before I take the plunge to help me balance the obvious risks (investment, economy, this administration) versus any potential upside, would be the following.

• What sort of capital did you have to invest to get yourself going?
• What is your customer/market base like (hunters? sport shooters?)
• What is the square footage of your store?
• What is your approximate annual Gross Revenue?
• What is your Gross Profit by Category in $ or % (i.e. guns, ammo, accessories...)
• What is your average sale per customer?
• If you had it to do all over again, would you? If yes, what would you do differently?

I know that markets vary widely - a store in Butte Montana will look different than a store in Bergen County, NJ. I also know that commitments to various types of dealer programs bring with them benefits (Glock's program comes to mind) that can enhance the bottom line in the form of free samples which can be sold, and so on.

But even having a sense of whether or not it makes sense to do this would be helpful. I'm just trying to get my head around whether or not it makes sense to tie up my money and take the risk.

Thanks in advance!

 

[BitcoinBoy]

The short and easy answer is no.

Your prices will always be higher than the average internet gun. I barely even consider local places anymore because buds is ALWAYS cheaper.

Ammo is always cheaper at Walmart or online (especially in bulk).

And your variety of guns can't compete with online. You'll have 10% (at best) of a good online shops selection and get a couple noobs who don't know what they want over people who know exactly what they're looking for. You'll have a couple models of each manufacturer, online with have every model plus each with night sites, different versions without safeties or decockers, etc.

Only way to compete will be if you have a range.

 

[CoalJack]

Great questions Rovert, and good timing for me as I'm considering the same thing in western Ky. I think the only way to make it (and do well financially) is to go big. I don't think selling guns will do it, has to be a wide variety of accessories. I'm thinking it will take at least 4000 ft2. $250,000 initial investment in inventory, display cases etc. IF I go for it I think an indoor range would be wise, as I think decent money could be made on rentals. Insurance will be fairly expensive, and regulations will be a PITA. However, I'm already in the underground coal industry so insurance and regulations will seem easy by comparison.

 

[returningfire]

Indoor range is a great idea.
But the timing is all wrong for just a gun shop. The internet has taken that market over.
But if you are a shrewd gun trader you will find a market that the internet can't touch.
Rentals for the range are also a good idea, just make sure you have the same models for sale as you have to rent.
Good luck.

 

[monk d]

The more guns shops the better, internet or no internet, but I agree that you have to be more than a gun shop alone. Rentals and range are good ideas, and yes, have for sale the same models you rent out. Accessories, accessories, accessories, and take advantage of the internet by charging a modest transfer fee...you make money without having to carry inventory. If you did 100 transfers a week or even a month, at $40 per, that is $4K in revenue, that you did not have to stock inventory to achieve. Do your homework and carry the accessories and guns that you think will have the broadest appeal to your customer base

 

[Midwest]

From what I am reading so far, maybe it would be better to just open a range, get your FFL and mainly do transfers.
.

 

[Sunray]

This gets covered on every shooting/firearm forum regularly. Generally speaking, you're asking the wrong questions of the wrong people.
Ask yourself if you can live on minimum wage? Do you have enough money for you and your's to live on for 5 plus years? Do you have enough money to pay, on a COD basis, for everythingyou buy for the shop? Do you have enough money to pay to keep the doors open with little or no money coming in? Do you have any experience running a small business? Are there any local ordinances that pertain to a gun shop? Any experience dealing with irate customers?
"...Indoor range is a great idea..." Yep. Costs a fortune to set up though. Plus there's usually a bunch of local environmental ordinances. You cannot just vent range air outside. If not ordinances disallowing a range at all.
"...only way to make it (and do well financially) is to go big..." Lots of empty retail spaces left by people thinking that. Big isn't necessarily better. A big shop with empty shelves is as bad as a small shop with stuff on shelves that doesn't sell. 4,000 sq/ft is a huge space to fill too. Roughly 63' x 63'.
I'd bet 250 grand isn't enough either. You will get no credit or credit terms from anybody. Everything will be sold to you COD until you've proven yourself for be reliable, then you might get 30 day terms.

 

[wojownik]

I tend to agree with the idea that - in today's market - a range or similar facility could be a more attractive business prospect than a classic pure-play brick and mortar LGS.

Location, location, location - Try and ascertain demand and competition in your target area for a new range or sporting facility. Research your local license and zoning requirements too. For an indoor range you may even need to build a new building from scratch, unless you can find a building that meets local zoning and code requirements and that can be upgraded to an indoor range.

Financing - The capital needed for a range will likely be substantially more than just for a storefront, particularly if an indoor range is going to be built from scratch. Do you have access to adequate capital (cash, lines of credit)? One range that was built inside an industrial office park in my area invested well north of $1 million for their first build, and then ended up doing additional enhancements. A $1 million range would need over $50,000 in range fees just to service the interest payment (assuming mostly debt financing). At $10-$15 per hour, you'd need a substantial customer base to cover prinicple, interest, not to mention all the other operation costs (utilities, maintenance, insurance, salaries, facility lease - assuming you don't build our own) ...

But that's the joy of building a business - conquering the seemingly insurmountable

 

[Captcurt]

Invest in T-shirts. They are a better market.

Guys, it is a rough row to hoe. I have had an FFL for a little over 5 years. If I can make 5% on a new gun , I am lucky. Compound that with the lack of a sale rep who cares about a small store and you have a lot of money tied up in guns that can be purchased online at a price less than your wholesale price. Couple that with all of the popular guns being allocated and you are lucky to get 10% of the guns you need. I have given up on trying to compete with new product. Used guns hold a lot more profit and if they are unusual and in good condition they will bring a premium. I am to the point where if a sales rep calls I know that he is at the end of his list.

 

[rule303]

For the most part, what has been said is right on. Selling new guns is a volume game. If you aren't buying a lot of guns (10+ of the same model at a time) your wholesale cost is going to be within a few bucks of what you would pay online retail. Stocking dealer programs can bring the cost per unit down, but in most cases you are going to pay for a large number of guns up front, and they aren't all going to be popular models. Ammo is the same way. If you can buy by the pallet, you can get decent pricing. Buying a case or two at a time and paying shipping, it will cost you more than buying it at wally world.
If you are serious about it, join NSSF and have them do a market study for your area. Also, sit down with a business planner and get a feel for what all it is going to cost just to keep the doors open. Initial inventory for even a small store is going to be several hundred thousand dollars.

 

[TomJ]

In our area, I've noticed that the LGS' that have ranges always seem to be busy. Those without ranges seem to be almost always empty. This is due in large part to there not being that many ranges here. I don't know how competitive it is by you. As other posters pointed out, it's tough to compete with prices from Buds and other online stores. One of the owners of a LGS told me that most of the web sites sell guns at prices below his cost. You'll need another draw, whether it's a range or something else.

 

[RustyShackelford]

GunInsurance.com ....

I looked into starting a small business/ammunition production firm a few months ago.
The plans were on hold/delayed due to issues with supply/logistics/$ but I'm still looking into it. I'm a US armed forces veteran so I can get the Patriot Express offer & other VA programs-support.

One bit of gun industry advice is to contact/check out: www.Guninsurance.com .
The firm has a wide network of US gun industry resources and can advise you or you & your partners/company re: insurance, licenses, legal issues, zoning, environment regulations, sales, etc.
The business office is in NJ near New York City.

The SBA, www.sba.gov & your local-state agencies can support you too.
My state has programs & resources for entreprenuers & new small business owners.

In closing, Id suggest you keep good records/document your business process(see Red Jacket Firearms, ), know the laws & regulations, keep your business & property well lit, secure, safe and train your employees/staff.

 

[george burns]

It depends on many things, like where you live, how much money you have to lose, what your time frame is to start making money or drown, how much money it costs per square foot and if you are zoned for a range or gun store in the first place and a whole lot of other things, from the size "1 man operation or 20", and scope, other sporting goods or just guns, classes, transfers, gunsmithing, etc. Also insurance, it's expensive now a days, especially if you have a range.
Also are you mixing business with pleasure, "that can be a good or bad thing..
Also can you go back to what you did before if this doesn't work out?

 

[Potatohead]

Sell reloading supplies.

Reload Ron here at THR used to own one and would be glad to offer advice I bet.
I say if you're having to ask a bunch of strangers on the internet, then NO.

Looks fun and all, sitting around playing with guns all day but do you have any idea how hard it is to run a small business? If not, I'll tell you...ITS HARD! It ain't for the weak of stomach.
But good luck.

 

[Baron66]

If you are going to compete over pricing then you should get a small cheap building and post all of your inventory on the internet as well as in your store. Don't fear the internet resellers - you are one of them!

I take a different strategy in business though. I never compete on price - I offer a better product.

Remember, Mercedes is not in competition with Kea. They have different customers.

Find a nice location in a market where people have money and spend money. There you will be able to sell your products at a price where you will survive. You will have to keep your store clean, organized, well lit, and offer great service.

Don't try to compete with the dirty little LGSs or the internet. Be better than them and offer great service and a store that people like visiting. It doesn't have to be big or expensive.

The Gander in my area is the largest gun store in Florida, which is saying alot, and they don't compete on price. Guess what, they sell tons of guns, classes, accessories, etc. I have bought two firearms there and paid more for them because I like the store and the people who work there. Some people will pay for better service and be loyal to a place that they like. I will spend an extra dollar on ammo so that I don't have to stand around for half an hour at Walmart waiting on someone from sporting goods. Target customers who actually have money and want good service.

Also, keep in mind that if you sell a gun for $400 plus tax that it's going to end up the same price as the internet place that's selling it for $350 + shipping + insurance + FFL transfer fees.

 

[BLB68]

Your prices will always be higher than the average internet gun. I barely even consider local places anymore because buds is ALWAYS cheaper.

Oddly enough, the LGS I go to always has prices very close to Bud's. In fact, if I want to get a price, I usually check Bud's instead of calling them, and don't pester them until it's actually time to buy. They use a cost + 10% mark up, and have for years, even before moving and opening a range.

I don't have any idea how they do it, really, but it can be done.

On the other hand, the nearest LGS consistently has overpriced products and seems to be doing well anyway.

One thing to make sure of is to stock plenty of stuff that has more margin than the guns themselves. If you've ever bought a computer and had someone ask you if you needed some cables, or ink for a printer, etc. you get the idea. The add ons are what have all the margin. Same with guns and their accessories. Knives generally have a good bit of margin, too.

 

[Onward Allusion]

Margins on new guns will be thin. Focus on used guns. Lot's more wiggle room.

Have a business plan - market analysis, financial forecasts, marketing plan, exit strategy...

 

[dprice3844444]

file for welfare,you will make more take home,less work.then you can use government job assistance to take the gunsmithing courses,management courses etc

 

[BitcoinBoy]

Also, keep in mind that if you sell a gun for $400 plus tax that it's going to end up the same price as the internet place that's selling it for $350 + shipping + insurance + FFL transfer fees.

You pretty much have to base your model after buds. Very simple, buds doesn't charge tax, shipping or ffl transfer.

You wouldn't open a bookstore or general store and assume you don't have to compete with amazon.

$350 gun or $800 gun my ffl charges me $20.

That's roughly 6% and 2.5%. If you can compete with those percentages after tax and whatever else feel free to open a gun store.

Another poster mentioned you can make money on accessories. Again, I buy mags and everything else from midway, brownells, buds, etc so over charging for that stuff only works against the uninformed.

To be clear I'm fairly wealthy and don't need to bargain shop, but I'll be damned if I will overpay for anything from some local gun shop shmoe.

The range I go to tries to force me to use ONLY their ammo. They charge $20/box of 5.56 and $29/box of .40cal.

At bulkammo.com I get them for $8 and $8 respectively. So I buy one box from them, keep the receipt, and then take the cheap ammo out of my gun bag to reload and never use their over priced ammo.

It's a tough world and tougher owning your own business. Have a good product with good pricing and you'll make it but anything less and you won't.

There's no over charging in 2014. That stopped 10 years ago when online shopping became the norm.

DO NOT OPEN A GUN SHOP.

 

[barnbwt]

The trick is you can't sell guns alone; you'll never compete with volume retailers; online or brick. Find out what you can offer that they can't, be it a range, quality smithing services, or even <gasp> quality information, advice, and assistance for new buyers who have more need than the mere products themselves (non-newbs will rapidly outgrow the most profitable portions of your enterprise, as they learn where the best deals are).

Primary gunstore rackets (read: must have's);
-FFL Transfers for less than your competition (locally, mine was 35$ a gun, new store does 'em for 20$. Guess where I go, now?)
-Bore Sighting; for some reason, newbs think scope mounting or iron sight adjustment is a black art. Indulge them, but for a fair price (40$ is a bit much, I think )
-CCW courses; I don't know what being certified costs, but every class around me has been booked each weekend for years, now, at 200$ a head
-Pistol Range; the demand for these seems near limitless, bounded only by the constraints of local ordnances. Pistol rental probably goes here, too.
-Low-rent gunsmithing; lots of newbs can't mount an ARMS red dot onto a pic rail --but you can, for 60$ or more an hour! Flashlights, shell holders, you name it; bolt on 'smithing' seems to be booming since black rifles came into their own
-Tactical or Whatever training; I have to assume at least some gunmanship courses are easy to qualify for as a teacher, and will provide an invaluable service to new and untrained shooters

Obviously few of these things appeal to veteran shooters, but who cares? Newbies are there to be taken advantage of, and no one should feel bad about that so long as it gets them shooting and learning about shooting in the process. They'll correct their own foolishness in time

TCB

 

[BitcoinBoy]

The trick is you can't sell guns alone; you'll never compete with volume retailers; online or brick. Find out what you can offer that they can't, be it a range, quality smithing services, or even <gasp> quality information, advice, and assistance for new buyers who have more need than the mere products themselves (non-newbs will rapidly outgrow the most profitable portions of your enterprise, as they learn where the best deals are).



Primary gunstore rackets (read: must have's);

-FFL Transfers for less than your competition (locally, mine was 35$ a gun, new store does 'em for 20$. Guess where I go, now?)

-Bore Sighting; for some reason, newbs think scope mounting or iron sight adjustment is a black art. Indulge them, but for a fair price (40$ is a bit much, I think )

-CCW courses; I don't know what being certified costs, but every class around me has been booked each weekend for years, now, at 200$ a head

-Pistol Range; the demand for these seems near limitless, bounded only by the constraints of local ordnances. Pistol rental probably goes here, too.

-Low-rent gunsmithing; lots of newbs can't mount an ARMS red dot onto a pic rail --but you can, for 60$ or more an hour! Flashlights, shell holders, you name it; bolt on 'smithing' seems to be booming since black rifles came into their own

-Tactical or Whatever training; I have to assume at least some gunmanship courses are easy to qualify for as a teacher, and will provide an invaluable service to new and untrained shooters



Obviously few of these things appeal to veteran shooters, but who cares? Newbies are there to be taken advantage of, and no one should feel bad about that so long as it gets them shooting and learning about shooting in the process. They'll correct their own foolishness in time



TCB

This is a solid post. You won't compete for guns and accessories most likely.

Buds and auction sites will kill you in gun pricing.

Brownells and midway will kill you on accessories. Not only are the cheaper with no taxes but they run $50 off $300 constantly.

So that leaves services. The quote above is rock solid. Offer anything you can't that can't be bought online in addition to guns/accessories. Have an amazing website where you list all your inventory (new and used) and use auction sites to unload your product for extra cash. People want to touch guns, but you have to have a massive inventory to make it worth their while.

Don't get stagnant and don't charge too much. People are fickle and will leave you in a heartbeat. There are 5 gun shops within 25 miles of my house and I NEVER buy ammo from them, rarely go into them and if they had a gun I wanted I would immediately check the internet for a price baseline.

FFLs that charge $25 vs $20 lose my business. It's really just a matter of principle not so much the money.

 

[jmace57]

It makes me want to paraphrase that old expression "How do you make a small fortune in the gun shop business? Start with a large fortune!"

 

[bubba in ca]

Had a friend with a small gun store. After a few years he said it was a great way to turn a great lifetime hobby into a 6 day a week prison sentence.

He said there was no money in new guns, he made the big bucks on fishing lures, etc. and good used guns when he could get them.

Another dealer I new said he didn`t like to buy used handguns. He got burned too many times when they had hidden damage due to amateur gunsmithing. He ran his store during he week and did gun shows on the weekend.

Knew a pawn shop owner who blew his guns off quick. He worked alone and being alone with guns (and jewelry) was too risky.

I thought I wanted a gun store after I retired. I figured I do some customizing to kill the time, even after I heard to touch a new gun before you sold it you had to have a manufacturers license.`I settled for a garden.

Good luck, but unless you have a gimmick, a pension, and something to kill the time I don`t think it will be a money maker. the suggestions from the others that you open a range might be a good one, as long as you have the staff to run the range and the store at the same time.

 

[CWL]

This question comes up all the time here, usually by someone without any firearms or retail store experience.

My advice is for the OP to first get a job at an existing gun store and learn the ropes. This way, you get to be paid as you learn.

I suspect that most will discover how difficult it actually is to run a business, especially with additional responsibilities of firearms & ammo. People typically discover that what they love in a hobby will not translate to a profitable business.

 

[Vodoun da Vinci]

Not a gun shop but a former business owner here. 20+ years we operated a "TV Shop" that was actually a service center for 23 major brands of electronics. We made good money and I learned a lot but the electronics service business just went away - nobody fixes stuff that can be replaced with better stuff. It was just part of the 21st century.

I work in the AV (audio-visual) systems integration business now as a service engineer and I work on some pretty schwanky systems in board rooms, schools, and theaters. The guys I work for used to sell equipment and made enough mark up to basically pay the installers and service/support folks off the profit of selling boxs. Enter Amazon, NewEgg, and a thousand other electronics specialty retailers. My Bosses and the company owners can't compete anymore and make their money on service and support - in a box store, retail place gun shop you'll get your brains beat out by places that sell 1000 guns a day. You can't compete on price with these places.

Your only hope is to offer something they can't get for cheap on the 'Net - you have to have a service or offer your clients something they can't get online for cheap. That's either service, support, a range, gun smithing, training, etc. But if you try and just compete for box sales with a company like Bud's or Grab a Gun you have a tough row to hoe.

I offer my best wishes and luck for anyone who wants to own their own business. But I'd not try it retailing individual gun sales. Sell 'em smithing or refinishing or training...open a range with certified trainers and ammunition etc.

VooDoo