Owning a Gun Shop

[.499 BigBore]

Patriot,
consider you are competing against "on line" sales, like you will find on any gun related BB, i was in the Gun Shop business many years ago in Commiefornia, a patrnership, it done very well as there was no other shop for nearly 25 miles..., but there was no internet then, it is a very tuff business today according to several shop owners i know.

GOOD LUCK if you venture forward.

[Patriot45]

Thanks for the good advice provided on this thread. BigBore, you have brought up a consistent theme regarding the internet, and not simply in the small gun shop business. The problem seems to be pervasive in all other retail industries. That appears to be the nut to crack.

adephue, many laughs! You're a basketball fan...yes? Go Hoosiers!!!!

[model 25]

We have two gunshops that have started here in the last 7 years. One gets alot of business because he offers gunsmith services with his. The other is always whining about the struggle of competition and how little he makes on a new gun.

The gunsmith guy is like you or I and his personality probably brings in most of his business along with his work as a smith. He is honest and stands behind his work and pays a fair price for trade ins. He doesn't try to make a living off one sale. His shop is cluttered as hell with all kinds of trade ins but he knows where everything is He is a decent fellow.

The other guy is a kinda yuppie that set his shop up for the high end guns. His service is fair but nothing special and he only sells consignment used guns.
His shop is small and inhospitable and he has the demenor of "hurry up and buy something and get out". He never has anything special in the shop just the same as any other and higher prices. He talks like he is the only person who knows guns.

25

[Geoff Timm]

There are other ways to operate a Gun Business, example, Stonewall Range south of Cleveland, OH. The owners of a uniform business own the building and the range.

They have a gun dealer operate the range and sell guns and have a gunsmith renting a shop.

http://www.stonewallrange.com/

Geoff
Who would like a similar facility in FL. Sigh..

[sck]

Congratulations on considering opening a gun shop. It is a very courageous thing to do in this day and age. All of the people have offered wonderful advice, but there are a few additional points that you should consider. I have worked in gun shops for over 20 years and I too have considered opening my own. Several years ago, when 3rd large sporting goods retailer I had worked for went bankrupt, I spent the summer traveling through seven states asking the owners of over 100 gun shops for insight into opening my own shop. With one exception, all of them said the same “Don’t do it.” The exception had one of the nicest shops but he went out of business within 10 years. After looking at the situation extremely closely and considering your initial posting, here are some of my conclusions.

First, your statement that “There are countless small arm manufacturers” concerns me. There are many but not “countless small arms manufacturers.” The fact that you’ve made that statement indicates that you don’t have a thorough understanding of the industry, have never been to a Shotshow, and are not aware of the NSSF or any of the other professional organizations that serve the industry. If you were, you’d know that there are fewer manufacturers each year. Winchester is just the latest. If you think that you can do better than a firm like Winchester in your particular market, you deserve to be encouraged. If, however, you don’t understand the forces that led to Winchester’s demise, you need to do a little more homework.

Second, you’re correct that the individual shop owner cannot compete with Walfart, but it’s not just the long guns that are at issue. The accessories and ammunition are additional areas in which you can’t compete. Are you simply not going to offer items such as 9mm and 12 ga. shells? What about paper targets and gun cases?

Third, yes, many local shops are floundering and the reasons are numerous, but can be divided into two or three large categories. One reason for their demise (let’s call it “category a”) is the small time dealer, often operating from his/her kitchen table who will receive guns purchased over the internet at flat fee ranging from $10 to $50. These are the so-called “dealers” who are in not really in business to make a profit, in spite of the requirements for a license, but rather are just there as a means of obtaining guns cheaply for friends and family. A second reason for their demise (let’s call it “category b”) is the relative decline in the percentage of the population involved in shooting, hunting and collecting combined with the decline in the number of places to shoot and/or hunt. There simply aren’t enough people to keep some shops open. In years past, it wasn’t unusual for a person to purchase 5 to 10 firearms a year. Now, that person is extremely rare. Instead, most buyers are one time buyers and those are often motivated by some traumatic event in the community. They see a robbery, rape or murder on the local tv news and respond by going out and buying a gun. They may or may not ever shoot it, but they don’t contribute to keeping the shop in business beyond that one purchase. A third reason for their demise (let’s call it “category c”) is closely related to the earlier categories. This reason for their demise is simply that they can’t or won’t do much that the customer can’t find somewhere else. A shop can’t stock holsters, for example, because a shop can’t afford to compete with internet dealers in terms of make, model and manufacturer. This is the case with every type of accessory, including reloading supplies. The small shop simply can’t compete in terms of inventory.

Fourth, if you aren’t discouraged yet, take the financial numbers involved with running a small shop and work them backwards. More specifically, first determine all the costs of running a shop. For example, rent $1000 per month; utilities $150 per month; payroll for 1 employee $500 per month, which totals $1650 per month expenses without insurance. So, how much merchandise do you have to move to make that kind of money each month? Well, those shops around me which are still in business are operating on about 10%. If you need to make $1650 per month on a 10% margin, you need to sell at least $16,500 per month in merchandise. If you divide that by $450 which is the price of an average hand gun, you’ll find that you have to sell about 37 handguns a month to stay afloat with one employee. Now, you have to remember that this isn’t considering taxes, workers comp., etc. so to account for these let’s bump that to a nice round figure 40 handguns at $450 every month. That doesn’t sound like much, but for a small shop, it’s a huge amount. Still think you can do it?

If you’re still not discouraged, here are a couple of suggestions that may allow a new, small shop to succeed. First, buy a property where you can live and have the shop at the same time. If you can alive on the second floor, or have a small house on the property, the cost of you’re living expenses and the shop expenses are somewhat mitigated. Second, offer something that the other shops in the area do not offer, generally either gun smith service, an indoor range, an outdoor range or all three if possible. The gunsmith service will require another license and insurance, but it may be the difference between success and failure.

After all of that, if you’re still willing to push ahead, I applaud you. Please let me know when and where you open your shop and I’ll be one of the first in line. Best of luck and good shooting -- Steve

[Springfield XD40 Man]

I will say that the ammo prices at my local gun dealer are rediculous. He wants $13/50 for PMC 165 grain FMJ....I can get it off the internet for $9/50. Thats where he obviously makes alot of his money.

[Dust_Devil]

Location would have to be the most important. You can't expect much business in an area that is anti-gun or where the people just don't have an interest in owning firearms.

Once you have your own gun shop or better to know before is to know what types of people interested in firearms are in the area so you know what type of inventory to have. Will they be a mixture of those interested in tactical firearms, hunting firearms and sporting and competition firearms or will they be more one sided such as more towards hunting rather than owning a tactical rifle.
How much money does your proposed customer willing to spend? If you stock your store with $1,000 Leupold scopes because you think they are the best, but your customers are only interested in the $100 Tascos which you don't stock, you aren't going to do any sales.
So basically you will need to know what gun accessories, what brands and what price ranges that those in your area will want.
If you want to bring in money, but also pay for the maintenence of a indoor range in your gun shop is another thing to consider.
Take a look at what type of inventory and what your prices are going to be first. If you project having to have higher prices in order to bring in a profit and you know that people will be able to buy somewhere else or order online for cheaper, then your business will probably fail unless the gun owners in your area are willing to spend the money.

[El Barto]

If I may, please accept my input from the consumer end. The only gunshop that I go to is Turner’s Outdoors, mostly because I don’t know of any other. If you are unaware of the Turner’s chain, you can check them out at www.turners.com.

Anyway, every store seems to be doing a fair amount of business. I have seen everyone from LE and Military, hunters, couples and semi-collectors like myself. I would think that a store that has a range of products would attract a range of customers. You could carry the high-end firearms, LE specials, and a couple of milsurps for people like me.

I would agree that you have to diversify; you won’t make too much by selling the iron. Most of your profit will come from the shells, earmuffs, nightcrawlers, range time, bowling pins, whatever your local market will bear.

As for pricing, most people are savvy enough to compare online first but I would buy from a store if the prices are close. Compare a Stack-on 8 gun cabinet. At LL Bean.com, it is $99 plus $50 shipping (cheapest I found for comparison). At Turners, it is $119 plus tax. Conversely, I got my aluminum gun case off ebay for about $50, whereas Turner’s lowest priced one was around $85. As for the big store competition, check out what they actually sell. I can’t even get gun oil at Kmart or Wal-Mart and I do not go to Big 5. The key for me is knowledge without arrogance and customer service. Treat me like a welcomed friend and I will come back.

[JoshB]

I know this post is over a month old, but I'm considering open a gun shop/indoor range. I'm also considering owning a pub. Now, owning a gun shop definately seems more apealing, but with what little research I've done, it seems risky to say the least. Owning a pub [or some kind of establishment that primarily exists to serve alcohol] seems more financially secure.
Any thoughts?

[leadcounsel]

I would guess NO, not profitable for YEARS.

Can't compete on price with the warehouse stores, as a result you have incredibly small margins on your products and can't afford to hire quality help. I think the competition of the big warehousers would crush the little guy. I'm guessing that any of the local warehouses around here (and I can think of 3 within 20 minutes) each have 500 guns. At about $500 each that's probably about $250,000 on inventory JUST ON GUNS, which have a 10% markup. If you sold your entire 500 gun inventory in one year, which is 2 guns per day, you'd only earn $25,000. After you pay the fees on the loan let's say at 8%, you'd make a tidy $500 profit! So, to make it worth your investment, you'd have to PUSH accessories like a madman just to stay afloat!

Hard to hire reliable, knowledgable and trustworthy help (think about it, you either hire idiots who we all make fun of, or you pay top dollar and have to charge more for your guns and nobody buys from you, they go to the warehouse stores);

HEAVILY regulated business and you could go to JAIL for making a small mistake;

INVESTMENT: You either have to have an business where you have NO inventory and just order stuff for people and charge a small markup OR you have to have a HUGE inventory to attract people. Small inventories don't work because people like to pick things up and hold them and dry fire them, etc. Large inventories, like Gander Mountain or Sportsmans, require a monstrous investment in $, bookkeeping, etc. and could sit collecting dust for years before you sell one.

Your business is subject to the whims of local and federal politicians who are subject to the whims of voters and the flavor of the month regarding guns and ammo -- a few bad shootings with hunting rifles and suddenly their outlawed and you have to close your doors;

ATF: To get an FFL, you have to open your LIFE to the BATF which means your business, residence, vehicle, everything are subject to surprise searches at any time day or night. If your books and inventory are not correct, you could be JAILED or FINED;

Theft and liability issues:
Here in Denver, actually Aurora at Daves Guns which is a large privately owned gun store, about 5 years ago, crooks rammed a vehicle right through the wall and stole 50 guns, some of which weren't recovered to my knowledge. That's a large insurance claim, both for damage and theft. Say an average of $1000 per gun and another $50,000 to clean up the mess for a total of $100,000. I bet that makes already high premiums jump. Then what about if one of those guns is used in a crime? Is there still liability attached? Probably no (intervening criminal act), but maybe.

Convinced?


If you were set on doing it, you'd have to have a niche. Around here, in addition to the supermarket gun stores, there are a few successful small shops with niches. One shop has a very small inventory but he will order anything for you and specializes in military and LEO equipment for cops, departments, etc. One shop offers pistol ranges and a smith; another shop has a smith; you get the idea.

What I would do is to hire a few very knowledgable gun people, offer a smith service, offer a gun AND rifle range, offer handgun and rifle classes, sell unique items like civilian body armor (nobody around here does that), get some land and offer tactical courses, etc. Get people to become members of something. Maybe offer free on sight repairs on the gun for life or 5 years or whatever. Anybody can sell you a gun, but give them something else and get them coming back.

Not gun related but:
As far as pubs, liquor licenses require time and money and pubs fail regularly. Do your market research first.

Liability, quality honest help, laws... just a few hoops you've got to jump through.

All it takes to shut your doors is a bad bar fight or a sale to a minor if you get caught. Bartenders and waitstaff theft is very high so plan on working 16 hour days and all of your weekends until 2am and wreaking of smoke and booze regularly.

[pipoman]

I have read all of the pros and cons in this thread. It can be done, obviously, others do it. I would suggest getting your FFL, buying some guns from classifieds, auctions, pawn shops, anywhere you can find a bargain. Find a missing niche of new items at the gun shows, they are there if you look. For instance Houge grips, 1911 mags, Shurefire lights are well represented at most of the shows I go to, OTOH I couldn't find a single range bag or molded leather holster for my j-frame at the last show I was at.

Then after you have a small paid for inventory begin setting up at gun shows in your area. This will allow you to get the feel of the gun business without massive debt. Take the proceeds from the show and put it all back into stock. Keep doing this a few years until you have a pretty good inventory that is not financed.

This inventory and the experience you gain will help you decide if the gun business is for you, it will help you if you want to borrow money to go "bricks & mortar" later.

Just my .02.

[steelheart]

If you can convert your garage into a gun shop, that will go a long way to keeping overhead down. In my area, we had a couple of gun shops that were housed in the garages of homes - it seemed to work out well. Both were out of town, though. If you live in town, you may run into zoning problems.

A friend of mine who ran an at home gun shop told me his approach was to tell the county bureaucrats that he had to get a license from that he was going to open a "sporting goods shop," not a gun shop. They eventually got wind that it was going to be a gun shop though and tried every dirty trick in the book to keep him from opening it. He did open it though, and ran it successfully for several years before closing up to go into another business.

[JoshB]

Thanks for the input guys.
I actually made a purchase in this guy's garage in NY. Although it sounds like a great retirement scheme, I was thinking a little bigger.
It seems like you have to go big to make it. Why can't you go big and be a supplier like Bud's Gun Shop or something? Is it even realistic for someone like me to take on such an endeavor?
I know this isn't the forum to discuss this, but what about starting a CHAIN of pubs? Does anyone know a forum I could discuss this on or where I could find some stats?

[leadcounsel]

Does an FFL REQUIRES a separate storefront or can you use your home? And do you have to ensure your home can be zoned as a business storefront?

[dfaugh]

Does an FFL REQUIRES a separate storefront or can you use your home? And do you have to ensure your home can be zoned as a business storefront?

My understanding is that a FFL can be anywhere, like out of your home. BUT, you need to check local zoning laws about this, and probably have to apply for appropriate permits and such. Many, if not most, will require some kind of storefront, or commercial location (high overhead). Some areas are much more restrictive about home businesses than others. There's also the issue of security when operating out of your home (Do you wanna make your house a primary target?)