Thinking about starting a business.

[Big_E]

MidwayUSA is an extremely successful company and after ordering so much $$$ worth of products from them it has got my brain juices thinking of starting a business modeled after them.

I know that starting a business is very expensive and that a lot of new businesses fail after startup. I am working on a business Minor so as I progress through the degree I can make some more well informed decisions if I want to go through with it. Shooting/guns/hunting/etc. has been my favorite hobby ever and has turned into a lifestyle for me and I might as well make money on what I enjoy doing.

This company would probably start out as a smaller shop, selling optics, ammo and guns. Eventually try to start hosting local shooting competitions to help get some recognition. Sooner or later I would expand to larger internet transactions with a sweet website with forums, thorough reviews of products and I wouldn't sell any products if I tested them out and turned out as junk. (Sort of how Liberty Optics operates)

I don't think it would have nearly the stock that Midway has, just selling excellent products and some cheaper products that aren't complete junk just to fill the niche of people that don't want to spend a whole lot. Fast shipping and excellent customer service are paramount to me especially in dealing with online sales.

What are your opinions on this? Is the market dominated by the big dogs (Midway, Brownells, Optics Planet, etc) that I wouldn't stand a chance? I wouldn't mind being a "mom & pop" store for awhile that still does small scale transactions and can still provide the community with thorough reviews and competitions. I have just always wanted to run a small/medium business, but right now I am thinking about starting a bar as well.

So please give me your insight here. Think of it like a mix of AIM, SWFA (forum example) and other smaller businesses. I don't really want to be on the scale of Bud's Gun shop or Midway.

 

[langloisandy]

E,

Interesting idea... I think many people get into the gun biz to do just this, expand and work upwards. I am unsure what makes so many fail.

I sell the slings that I make to Brownells and they make do well with them. There is money to be made.

I suspect if you cut deals with manufacturers and got distributor pricing from the beginning you might have a great chance to succeed.

Andy

 

[Buck Snort]

About 50% of startup businesses fail in the first year due to undercapitalization.

 

[CraigC]

I think one factor is realizing that even veteran shooters don't necessarily make the best salesmen. Plenty of them are very knowledgeable but horrible at dealing with customers. If you are not good with people and would treat it like your own personal club, like so many do, you will only ever get so far. Best to be realistic about your own abilities and hire folks that make up for your weaknesses. Rather than just hiring all your shooting buddies.

 

[snubbies]

Key Word!!!!!

Location location location

 

[Big_E]

No I wouldn't hire my shooting buddies to be salespeople. I would make sure that each rep. is knowledgeable to an extent, but they need to be personable. I have met too many shooters that know a whole lot, but have no people skills whatsoever.

Andy, thanks for mentioning your making slings and selling them to Brownell's, if I find people that make excellent products and buy them I think it might add a nice touch to "made in USA" sorta thing and not mass produced junk, like I have encountered before.

I still need to learn about legal forms and contacting manufacturers, but this idea is just in the brainstorming stage. I think a lot of people think that starting a business is: 1. Find a location to sell/store products 2. Get those products 3. Sell them. They don't realize there is a lot of overhead and extra employees, lawyers, taxes, downturn and advertising have a lot to do with a thriving business.

I figure if I went out and did some research/advertising locally before setting up a true shop, it might help me direct the business before I take the final plunge. Also, I think small time advertising on the numerous gun forums can draw in a crowd since it seems like most users prefer to deal with a company that is active in those boards because they are "one of them".

 

[oneounceload]

What do you know about running a retail business? Permits/taxes/fees, inventory carrying costs, lines of credit, wages/benefits, marketing, accounting are all causes of most business failures because the folks did not have a business PLAN and did not know much a bout any of the above-mentioned areas.

Have you ever worked in retail? It isn't easy. last stats I saw show 85% of businesses fail in the first year, and 85% of the remaining fail in the second. Do you have enough operating capital to last that long? Do you have the ability to secure a line of credit for 100-250K? Have you done market studies for your area and know your demographics?

There's a lot more than just putting a name on a door and turning on the "open" sign.......do your homework first......

Good luck

 

[doc2rn]

I would recommend Leather! Come on, some of the skilled craftsman that make good holsters have a 8-12 month wait! They wont even put tool to leather until you pay for it!
If I was gonna design a business I would recommend one of these!

 

[SSN Vet]

IMHO, if you are going to start a business, you worst enemy is overhead! And the worst kind of overhead is the cost of servicing debt.

Start small with a niche', and let your customers tell you where the growth potential is. I think the guy selling Solar Force flash lights is off to a good start.

You've got to work it night and day, doing as much as you can yourself. Being an employer involves a lot of paperwork, taxes, insurance, hastle and substantial risk exposure. Avoid being an employer as long as you can. Try to have trusted family and friends help you.

No one can succeed in small business for very long unless they can manage their cash flow. You can't spend money you don't have and you must get paid for your products and services. You must be very careful about extending credit or putting your products on someone else's store shelf without being paid first.

It helps a lot if you like dealing with people.... all kinds of people, even disagreeable, cantankerous, manipulative people.

All that said.... it's the American dream.... at least for me it is.

And when you get older.... it's job security, as you won't get fired and replaced by someone younger who's willing to work for half your pay.

It's a LOT easier to pull off if you don't have a wife and kids looking at you every night for their provision.

I've conspired several business plans... and have come very close to pulling the trigger. But I have not successfully come up with a plan to go from pay check to no pay check, to pay check again, without putting my families security at great risk. Hence I'm still an employee.

Good luck,

 

[Hawthorne2k]

Gun stores fail because shooting enthusiasts open them up, thinking it'd be cool to work in their hobby 24/7, but then it turns out all they're doing is running a shoe store with more paperwork.

I know plenty of people who are good photographers, but the list of people out there who make a living from their photography is REALLY short.

 

[wvshooter]

You mention Midway's inventory. I certainly don't know how much money they have tied up in inventory but would not be surprised if it exceeds five million dollars. It's good that you don't want to be as large as Midway or Bud's because they are both big business.

The key is to start with something you know something about and that you can afford. In what area is your knowledge base? In what area is your experience? Have you worked in a similar business?

You say you've thought about starting a bar. Speaking for myself, if I wanted to start a business I'd rather be involved with a product that is in demand in the majority of households. Can't say that about beer or shooting supplies. IMO the easiest business to get of the ground and keep off the ground would be pizza.

Almost everybody is going to buy pizza from somebody. Why not you. It's a simple product with universal appeal. Start with one shop and if you make a good product people will start preferring your pizza over the competition. Then open additional shops until you've got enough to make you happy. If size is important to you don't stop until you've got fifty stores.

 

[Salty1]

I own a small firearms business (home based), the problem is that most people see no value in buying locally when they can internet shop and not pay sales tax. People these days are watching every dollar spent. I had a customer buy an LCR on-line to save a total of $9.00 although he did give me the option of matching the price, would not do that to make a grand total of $21.00 profit and tie up my money when I made $20 for the transfer. We stock hard to find items and firearms that move quickly, anything else we can have in a day or two.

Here most FFL's charge around $20.00 for a transfer, the sales tax on a $500 gun is $41.25 if we sell it. The biggest problem is that you will need to buy large quantities to get the discount that the big boys get. Our margins are in the 7 to 10% range, you would need to sell large quantities to just pay the overhead of a store front. My suggestion would be to start from your home (if you can) and grow the business and get a loyal following your cash output will be less and if it did not work then would not be out a ton of cash and be breaking leases. We have great customers and meet a lot of very nice people. Ours is a side business so when I finally get tired of corporate life I will have some income and be able to retire with an additional income. I wish you the best of luck if you move forward with this venture...

 

[Bubba613]

Gun stores fail because shooting enthusiasts open them up, thinking it'd be cool to work in their hobby 24/7, but then it turns out all they're doing is running a shoe store with more paperwork

Word.

I say in our business here, "we don't sell guns, we sell people." Merely liking the product won't make for a good business plan.

 

[snubbies]

Home Business

I agree with salty. I run a small firearms business from my home as does salty. Even with no considerable overhead the profit margin is low. If you are well financed to start a business at home begins with getting your FFL. Learning the business before you go in business is the only way to go. I made many mistakes in the beginning and you will too.

 

[Red Cent]

No location.
No store front.
No guns
Just to start.
No bullets
No powder
------------------
= slow moving inventory OR cash setting on shelves.

Internet. You would need a line of credit with suppliers. Or pay upfront. Cumbersome.
Small cheap warehouse and dropship. Guns themselves are not profitable. New ones that is. You can make some money in buying selling used guns. All accessories have a tremendous markup. Can you buy a gun from Midway? Nooooooooo. Have you ever seen Bud's shop. Look for some articles.

Someone posted about the lack of capital. Keerect! Ever heard of "crack the nut". ? How long will it take you to sell XXX amount of stuff to pay the bills plus food. Build your plan and then back into it.
As an eperienced commercial loan officer (amongst other things) , I required most all start ups to produce a sensible five year cash flow and balance sheets with six months spacing. Some never came back. I believe some found it difficult to put on paper. Probably good thing. Some saw the difficulty and did not hve the desire.

 

[HGUNHNTR]

I combined personal interests with work and ended up dissatisfied. I spent 8 years managing 2 different gun shops, one in the midwest, and one on the east coast. If you want your hobby to be a job, thats what you get...a job. The times of the year you would really like to get out and enjoy your hobby are the same times of the year you need to be present to run your business. Just some food for thought.

 

[Big_E]

You guys are making a pretty convincing point. I will just finish my Biology degree for now. It's one thing when you are salesman in an electronic store, but to be an owner seems like way to much company politics and paperwork.

I do like the pizza idea though, I have lots of friends who are pizza chefs and I can also open up a bar in that as well... Now I am getting off topic.

So if I started a home business and got an FFL making $20 off each transfer that sounds much easier to make small bills and still I could work around firearms as a side job. Oh, and I wouldn't need to find/pay an FFL for the transfer, but I really don't want the feds breathing down my neck.

 

[Win1892]

I would guess that Midway has no less than 10 million in inventory. They probably get floor planning from vendors of big ticket items like scopes and AR uppers. They get extended terms from most of the other vendors and will pay less for almost everything than their competitors. They clearly finance their catalog by selling position and advertising.

This is the best example I've ever seen of a catalog/internet company. It is also a company with a conscience. Unusual these days.

 

[Captcurt]

Another thing that you must contend with is buying power. Midway and ALL of your larger stores are capable of purchasing in quantity. What you pay $200 for they can buy 50 at $150@. Plus they don't have to pay the same shipping that you do. Your behind before you start.

As SSN Vet stated. If you must get into the business you need to find a niche.

 

[snubbies]

FEDS Breathing

I have been in business 4 years and I haven't seen the ATF agent since he interviewed me. If you abide by the law you may never see him/her. Free advice finish school get an FFL, if your over 21, treat guns as a part time career for now

 

[quatin]

I don't know which University you're going to, but most of the larger ones have "entrepreneurship programs" with school resources that help you get started. IE office space, group secretary and etc.

You need to write a good business plan. I'm guessing like 99% of all businesses based on physical sales that you would need to fund or borrow money to get started. A bank or investor would want to see your business plan. (In fact that's all they will read before even asking you to present) If you've never written a business plan, it's a daunting task. I can recommend you a book to get started or better yet ask one of your professors at school to help you. After you're done, you will need someone with experience to proof read through it. You might consider paying someone to do it, again ask your professors or look for the entrepreneurial program. There are several key points that you need to get absolutely right, or your plan will never make it past the initial screening.

 

[ZCORR Jay]

One thing that you might wanna consider including in your business is a service. If you have some spare time try offering some gun smithing as another form of income. Like mentioned previously the big guys get quantity discounts and shipping discounts so a nich market is a great place to start. And remember offer what your customers want... not what you like. People get all excited about "tactical weapons" but their business is surrounded by shotgun deer hunters.

From one business major to another.

 

[dshambli]

I just started my own company distributing various cleaning supplies to gun shops. And like everyone is saying, gun shops fail because a lot of owners have really bad attitudes. I have one shop I won't go to because the guy yelled at me about five years ago when I asked about a concealed weapon permit. Then there's another shop that started not even two years ago with five guns. They're just as big or bigger than the other guys and are still growing. They have great costumer service. They always tell me, "We're not selling guns, we're selling an experience." But look at your market and do things differently.

 

[hometheaterman]

It's already been stated most of the negative things, and as much as I hate to say it I do agree with them. I have thought about starting a business also and even thought about a gun shop, but I just don't think that it would be a good business to have. Reason being, is that there are already tons of other stores in most area's. You have Walmart in most areas to compete with who likely sells guns and ammo cheaper than you can even get them. So while you may sell some of the rifles and shotguns or ammo Walmart carries, I wouldn't think you'd sell much. So that pretty much leaves you selling mostly pistols, reloading supplies, accessories, personal defense ammo, etc. Then with all of that you have to compete with online stores like Natchez or Midway who buy in such large volume that they get a lot better prices than you will. The majority of customers especially in this day and age would rather online and save money. You likely won't be able to compete price wise with the online dealers. The only things I see you really making money on are services like gunsmithing, and ffl transfers. The rest of the things there are just too many competitors that offer stuff a small business wouldn't be able to.

 

[gearhead]

Research what the going rate for doing transfers is in your area and see if you could position yourself as an FFL that could do quite a few transfers if you get the FFL. You could get your feet wet, so to speak, by operating the business as a sideline for a while and see how it goes. Do some internet buying and selling, handle transfers, work the gun shows in the area. There are probably some tax advantages to operating a business out of your home, especially one where you're required to be licensed and inspected since that would certainly go a long way toward satisfying the IRS that it's a real business.

Depending on your skills, you might be able to pick a platform and carve out a niche for making custom parts and accessories for that weapon. Not something that everyone and their brother make custom parts and accessories for, you don't want to compete with everyone.