Question for some of the small FFL holders out there

[BearBrimstone]

I am hoping that someone here with an FFL can give me some advice. I have been looking at opening a gun shop for the last year or so. I already have just about everything lined up, but I keep talking myself out of it due to feeling like it will not be possible to compete with the prices of some of the larger online shops. I live in a small town which comes with its advantages and disadvantages. No city ordinances is a nice advantage but the big disadvantage is little local traffic which will mean online sales are a must, but I'm worried a shop just starting out cannot compete with the larger shops online. If one were willing to accept making only a very small profit per sale is it possible to match the prices of places like Bud's and PSA while only ordering one or two cases of a specific firearm at a time? I already own the building that the shop would be going in so that will help a lot with the bottom line. More than anything I am just not sure if buying small numbers early on will be enough to get low enough prices from distributors to be able to turn around and make sales to customers that could have bought from somewhere like Bud's. Any FFL owners have any advice? If anyone would be willing to give some examples of average distributor prices that would be awesome, but I can understand not wanting to share that information. I am mainly trying to figure out if its possible to build the business from the ground up or if having 7 figures to put into the business from the start is the only way to really start get into the game now. Thanks for any replies.

 

[CapnMac]

I cannot speak as an FFL, but I can opine on being a Small Business Owner.

Overhead is constant, the product varies.

Does not matter what you sell, just that the sales have to be greater than the sum of: Rent; Utility bills; insurance; labor costs; taxes; licenses; and advertising. And your wages.

Every expert on small business operation will tell you an absolute about that: You have to pay yourself first.

Because you have to pay all the other bills, physically, first, it's far too easy to pay yourself "last." But, let's say you only make $1000 at the end of the month. Can you, would you, do that job for only $12,000 year?

This is the question to answer.

 

[BSA1]

You want to know how to make a small fortune in the gun business...

Start with a large fortune.

You will not be able to keep the doors open just selling guns. The profit margin is too small. The Internet is a killer as anyone can check the price of guns. It makes it tough to price match big dealers like Bud's.

The profit is in selling accessories, ammunition and such. That is where doing transfers on the cheap is a smart strategy. One new LGS close to me is doing transfers for only $10.00. Do the transfer and get the customer coming back for their other shooting supplies.

The bad news is stocking a good selection of ammunition, cleaning items, accessories such as gun cases, targets, holsters, yada, yada, yada takes a lot of cash out lay up front for items that may be slow to sell.

The gun business is really slow right now with manufacturers having lots of unsold inventory.

I have been there and done that. Never again.

 

[Captcurt]

BSA1 is right on. I have been working out of my home for seven years and learned early that it is a good way to starve. The internet has made it easy to compare prices. I have a good friend who has a LGS that has been in the business for 40+ years. He makes 10% over cost on guns. I am lucky to make 5%. Accessories bring 30%-40%. I don't even try to sell locally. I started to list consignments online with GunBroker and can make more selling other peoples used guns. I don't have my own money tied up in inventory and have little overhead. Plus, I get to see some really nice stuff.

 

[Everready73]

Stock accessories, reloading equipment, cheap transfers. Gunsmithing could also help bring in extra customers and revenue. I travel almost an hour because I found a gunsmith I am comfortable with.

Try to make yourself standout from any competition. What can make your gun shop stand out and bring people in?

I see a lot of the smaller shops also aggressively selling on GunBroker and other sites. Helps move inventory even at small margins it can help. Try to buy specials the distributers offer if you can sell them. If they have but 4 get one free etc take advantage and offer a lower price because if the deal. That will help obtain and retain customers.

I live in a fairly rural area and one thing a lot of the dealers miss as far as advertising is a good website. Many people use the internet to find businesses and products and a good website is a great resource and essential imo. WordPress, Weebly and somesome o sites offer easy building and low cost websites. They also offer search engine optimization so people can find you result

A good used selection can really help as well. Used guns usually have higher margins if you are smart with what you buy (good deals, high demand guns). You can even sell in consignment where you take 10% of the sale price to keep well stocked on the used guns. The key is getting consignment customers to list at s price that will sell

 

[George P]

Inventory turns is the key to your success. Stuff you buy that sits is a loss. Advertise a good rate for online sales/transfers. Carry the stuff that the big boys won't because of low volume margin. Know your local/regional demographics - stocking ARs in quail plantation areas isn't as good as stocking some SxS (or the ability to order them in). What gun clubs are near you? What do the folks in your area like to shoot? Don't try to compete with Wal-mart, but complement

 

[BearBrimstone]

Thanks for the replies everyone. Most of my suspicions are sounding like they may be true. I'm thinking that its time for me to put the thought to rest. Either that or don't quit my day job and just open up really small just to get my feet wet in the business. Eh I can't make up my mind over anything.

 

[George P]

If you have a good day job - KEEP IT; start by doing FFL transfer for online sales and then get a feeling for what your customers want from a LGS. Maybe it is ammo, reloading stuff, holsters and accessories or whatever. Transfers and consignment sales are a great way to start without a huge investment in inventory

 

[dogtown tom]

1. If you haven't written a business plan do so.
2. This is the worst time in American history to invest your savings in a retail brick & mortar gun store or inventory.
3. If manufacturers are filing bankruptcy to reorganize their debt, ask your self "why?"
4. Sure, you can compete with the Bud's, Palmetto, and other internet giants......if you spend $100,000 a month.
5. Ask yourself "If its profitable to compete with the internet gun giants, why aren't more people doing it?"
6. If you plan to buy onesie and twosies from a distributor you will fail.
7. Keep your day job.
8. Profit margins on new guns are tiny. At one time many manufacturers vigorously enforced MAP policies. With the decline in gun sales that has drastically declined.
9. A successful retail brick & mortar gun store will either be located in an area with a large population and affluence.
10. Having a store with a range gives people a reason to come back every week.
11. Want to know distributor pricing? It's not that easy, as volume purchases get discounts.
12. Eventually, there will be another gun buying panic and accompanying ammunition panic. Your distributors will favor their larger accounts and you wont get any allocations.
13. Can you find item X on amazon? Then don't stock it.
14. A hundred people will tell you to stock reloading equipment, holsters, milsurps, Single Action revolvers, high end scopes...…...listen to them and you'll be OOB fast. People will be happy to tell you what THEY like, but will quickly go online to buy it cheaper and with free delivery.
There are a hundred more things I could list. but if you don't do #1 the rest don't matter.


I'm in Plano, TX, within a twenty minute drive of my home (my licensed premises) there are more than a million people. Within that twenty minute drive is a Cabelas, five or six Academy's, four to six WalMarts with guns, dozens of WalMarts with ammunition counters, seven "traditional" gun stores and over ONE HUNDRED home based/kitchen table FFL's. Yet I've averaged more than 2,000 transfers a year for the last eight years.