Starting a gun shop

[dogtown tom]

I think used stuff is key! I can look at new stuff online all the time.

While used guns have the greatest profit margins, the majority of retail buyers want a new gun.

Don't put things on gunbroker too quickly. I have stopped going to shops who put everything on GB as soon as it comes in the door. They will kill themselves over time as the locals (and their used guns) will stop coming in. Doesn't need to be a hard policy, but let a used item sit on the shelf for a month or so to sell locally if possible. Now, if Al Capones transferrable Thompson comes in (if there is such a gun) that is different......

I disagree strongly. A gun store isn't for displaying old guns like a museum until by chance, a guy walks in thats looking for a Remington Model 51 or a Colt Bankers Special. Your local collectors.....they have the internet as well. Holding guns off the market on the off chance that a local is just going to pop in and buy? Oh heck no. I fully understand that YOU want to find those gems before anyone else. What you dont get is the dealer needs to flip guns fast, often and get the highest price he can realize. Listing on Gun Broker before millions vs displaying in a dusty gun case waiting weeks? Give me a break. That ain't good business.
That doesn't preclude the dealer from emailing locals about his most recent acquisitions or waiting a day before his listing begins. It also doesn't stop the dealer from listing on GB with the notation "gun is available for local sale until first online bid". That means a local can come in a buy it before some GB bidder reaches the reserve auction price.

Have what your market wants, not necessarily what you like.

Gun shops are chock full of inventory that dealers bought because customers told them "you should stock more ____".

If you sell on GB, accept C&R FFL's on things which qualify for them. You'll get more $$ for your items that way as people bid higher since they don't have the transfer fee on the other side.

They won't have a transfer fee but they'll have higher shipping costs. A dealer can't use USPS to ship a handgun to an 03FFL. That increases the collectors cost 3X. Not to mention verifying a C&R takes more time. Its a headache that many don't want.

Not sure where to be on the transfer fee for guys who buy online. Depends on local market and how far away the next shop is as well as how much you want to be doing that.

Ive been blessed for the last fifteen years to have local gun stores with exorbitant transfer fees. They just don't want the business and want people to buy their in stock inventory. Fact is, getting butts through your doors for any reason should be a priority. No in store traffic, no in store sales. Thats why having a range helps the bottom line.

Consignments can be good, like used stuff, they are more interesting to some people. Plus, gives you inventory to sell and fill the shop up with no $$ tied up on your end. Do have to have things figured out there though regarding helping people price stuff and how to hand the guy who wants to put stuff on consignment with crazy high prices on them which sort of make you also look bad.

True.
Unrealistic pricing means someone elses gun takes up the dealers display space. A sales commission with a minimum. The key to successful consignment sales is in-store traffic. If you don't have hundreds of walk ins every week it won't matter how many consignment guns you have or how cheap they are.

 

[GEM]

Amen on that.

Another customer relationships point. If a customer politely asks for a better price, don't have a poop fit about your markup, don't you want me to make a living, blah, blah. Bargain if you could or explain that you can't and your margins.

I can point to two local dealers who lost sales because of having a fit. Another sold me the gun after a nice talk and $5.00 off. At coin shows, I ask - is that your best price and usual can get a few bucks off.

 

[ballman6711]

Fact is, getting butts through your doors for any reason should be a priority. No in store traffic, no in store sales

This is so true. When I had my business, it wasn't through the door, it was by phone. No phone calls meant no work scheduled. No work scheduled meant no money coming in.

A retail shop has to have traffic. No traffic means no sales. Period.

chris

 

[Mauser fan]

There has been a lot of excellent advice thrown out there and will take some time for the OP to compile into a great business plan for sure.

 

[dogtown tom]

Encourage new gun sales where you order the customer’s desired gun from your distributor and you get free shipping from the distributor.

Onesies and twosies don't get free shipping and the lowest wholesale price.

Your markup will have to be very low to be in the same price range as the big box stores, say 10% to 25%. 10% markup on a thousand dollar gun gives you a one hundred dollar profit without any capital expenditure, handguns arrive at your FFL in two days, long guns can be 3-6 days.

On what planet is new gun markup 25%?

If you expect a $400 profit on a thousand dollar sale as a LGS, know that you will be taking advantage of unknowledgeable widows, senior citizens and poor people. That reputation will spread.

No it won't. The "unknowledgeable" will remain that way, but when someone supposedly "knowledgeable" finds out that Grandma sold Grandads Python for $600 he blames the gun store. He also doesn't know what the dealer told Grandma. If the dealer is upfront that he pays 60% of the retail value.......that isn't taking advantage.
Anyone coming to a gun store to sell their used gun chooses to accept that price or not. Its damn easy to Google gun prices or visit a pawn shop or another gun shop for counter offers.

Keep your transfer fee as low as possible, about $25.

How do you know what is "low as possible"?
Do you know how a dealer calculates his transfer fees?
Do you know $25 is earning him profit, breaking even or costing him time and trouble?

Customers that think the dealers transfer fee is "gravy" have never operated a business. It isn't just the five minutes spent in front of me filling out the 4473, my recordkeeping, time to unpack and log in the gun or anything other step in the process.........its a fee I charge BECAUSE I hold an FFL.

Keep your markup on accessories reasonable to capture sales away from the big box stores.

Please. You have no idea what Academy or Cabelas pays for widgits, so you have no idea what their markup is.

Do not buy odd accessories that will sit in inventory forever.

That should be common sense. Nearly all reloading parts, dies, tools fall into this catagory.

Keep a record of what customers come in looking to buy to help when ordering inventory.

If you don't have it now, they ain't coming back when you do.

Consider a 5% discount to any former or current military, law enforcement or first responders including EMTs, nurses and doctors.

Consider that a 5% discount means you make zero profit on that new gun you just sold. Now, explain how you stay in business. Volume?

Gun buyers like patriotic-themed decor.

Huh? Gun store "decor" is free. Every manufacturer will fall over themselves giving you banners, posters, counter mats and all manner of POS. If you still have room for decorations a 1980's pinup stapled to the wall is all you need. (pro tip.....have your video cam right above Farrah Fawcett)

Almost all gun buyers do not care about woke issues.

Then don't bring that up.
Every word out of your mouth that isn't directly related to the gun you are selling is wasted breath. Long conversations about politics, conspiracy theories, woke issues, Beanie Babies or beans/no beans is taking you away from your job.

Treat female customers like any other male customer.

I disagree. "Honey, Get yourself a Glock, lose the nickel plated sissy pistol" is a tried and true sales pitch.

Keep a list of customers looking for higher-end firearms or military collectibles; when you find what they are looking for give them a good deal, they’ll be back.

Absolutely.

Staying open after 5:00pm at least one or nights per week does bring in customers.

7pm close at the earliest. Here in DFW, a guy who works downtown Dallas is looking at a 45min commute to get to Plano.
The oldest and closet LGS closes at 6pm. Do you think he knows his market? I don't think he has a clue.

If there are gun ranges in your area that rent firearms, identify customers that should try different firearms before making a purchase.

You might lose sales sending them to the competitor with a range. If he rents guns, he sells guns.

Offer full gunsmithing services; contract with an off-site gunsmith if needed.
Offer gun cleaning for a very low fee, $25 or less.
Offer to install accessories on firearms for free.
Offer laser bore sighting for free when a customer buys a scope.
Fix little issues for free.

I disagree. Those free services cost the dealer time and $$$. Gunsmithing is a skillset different than salesmanship. If business is so slow that you have time to install accessories or boresight a scope than by all means do it. But full on gunsmithing will be a massive time killer.
The OP sounds like he's going to be a one man shop. Its one thing to be a Glock armorer and know how to swap parts, but "full gunsmithing services"? I'm not taking in guns to hand them over to a third party/off site gunsmith. If he breaks, loses parts, ruins a gun or does a poor job it's me going to get the blame.

 

[dogtown tom]

Reloading supplies, tools are another big draw. I go to several local shops to see what's in stock and buy to replenish my supplies.

Powder, primer and bullets yes, but reloading parts and tools are dust magnets in a gun store.

 

[dogtown tom]

New guns in your show case- full list price. Hard to get or in demand, more then list. Receive new for customers online purchase- $50.....

Wow.

 

[GEM]

I've mentioned that there should be no politics. Your patriotic themes may not be someone else's. Your right but business is business. Take it or leave it.

Women should not be discriminated against but they are not men and have different issues. The pros in the training world and marketing world know this. Anyone who says differently is a fool. I mentioned the resources for training and marketing. There is a good deal of social science research on gun buying minorities and gender issues. There is a surge of female, ethnic, religious and folks of various sexual/gender orientations entering the buying and training market. A store owner has to get with it. For example, many women who enter the gun world have experience with threats and attacks. Kill'em dead, little lady. Shoot their ding dong - etc. Not what they want to here. Trainers are cuing into this in their class presentations.

I recall a store with a sign in front: Perverts parking only.

In another store, the guy behind a counter wasn't taking care of customers because he launched into a big diatribe how he was disowning his daughter because she voted for Obama. Like I care.

All the aspects need to be researched from respectable business, marketing and industry sources as not just from a dude on the Internets telling you how to sell and charge. Good advice from many here.

 

[12Bravo20]

Powder, primer and bullets yes, but reloading parts and tools are dust magnets in a gun store.

Graf and Sons is a prime example of this. Not too many people actually go to the retail store front to buy reloading presses, dies, etc. Most people will just order that stuff online. Now powder, primers and projectiles do sell quickly in the retail store and online. I have noticed this trend over the years as a customer and from having family that works there.

 

[d2wing]

I thought about being a gun dealer but only as a hobby. It takes money to start a business and a long time to make a profit in retail sales. Businesses fail by not making enough money timely and by failing to keep track of money and not being strict with dedicated funds. Don't use proceeds as a personal piggy bank. Bookkeeping is the heart of any business. I Not only ran a couple businesses but worked in finance and taxes. It is sad to foreclose some nice well-meaning guy with his savings tied up in a business he was not prepared to run. It happens alot. You sound overly optimistic about profits on sales. I am not sure if you mean this as a sideline or are going to invest in a store or what. I would plan on selling lots of ammo and other related products to keep the doors open. Good luck.

 

[PzGren]

When you have your FFL you will need to find as many distributors as you can and get on their mailing lists to be informed of their prices and especially their sales. When you take used guns in, whether in trade or on commission, you need to be familiar enough with them to check them out very carefully to ensure that they work. You should also be able to make minor repairs and adjustments. Since you will have a brick & mortar store with a mostly local customers, you will have to learn about the likes and budgets of your customers.

A good inventory that is custom tailored to the local clientele will draw people in and get negotiations started. A high turn over will make it possible to have always new guns in and keep customer interest up. Finally, one hundred thousand Dollars don't go far these days ...

 

[pharmer]

I thought about being a gun dealer but only as a hobby........

Well that ain't happening. I did the "hobby 01 FFL" from 1982-1995, converted the garage into a "separate premises" and did pretty well...Until 1986 when ammo/components were "deregulated." No more supplying several local "shooting clubs" (read that: "Good 'Ol Boys" that liked to shoot). Then 1991 Florida got FDLE "background check" and "Sales Tax Collection Requirement." Folks liked my low prices, but I had to add the tax because I had to send the coupon from the book with a check every month. The AWB in 1994 didn't help a bit and Sen, Lloyd Bentsen (Mr $15,000/plate breakfast) drove a stake through the heart of the "Hobby FFL" with his schtick. Take a run at it, it's only money. Joe

 

[dogtown tom]

Graf and Sons is a prime example of this. Not too many people actually go to the retail store front to buy reloading presses, dies, etc. Most people will just order that stuff online. Now powder, primers and projectiles do sell quickly in the retail store and online. I have noticed this trend over the years as a customer and from having family that works there.

Graf's is great!
Back during the first Obama Ammo panic I had a customer hounding me to find him some oddball ammo......and Grafs had it in stock. They also had 7.65 Argentine in stock and on sale........I bought ten boxes for myself.

 

[12Bravo20]

Graf's has had ammo when other places did not. Though getting primers during the plandemic was another story. Having family working there didn't even help me get primers.

For the OP. Starting and running any type of business can be tough and most people don't see much if any profit for the first few years. Make sure you have a good business and financial plan in place. As other's have mentioned, don't mix business finances with personal finances. Please do your homework before jumping in head first.

 

[WestKentucky]

A buddy of mine bought a local shop from family and he explained some of the mentality that has kept the store going for decades.

Do things with buckets of money. That sounds horrible, but it makes sense the way he explained it. If you plan to have $25000 in inventory on firearms, have the same in ammo and the same again in accessories. There’s your first set of buckets. Now, again you split those buckets. 25 grand in guns isn’t much for a business but it’s a good starting point. Break it down into shotguns, rifles, carbines, revolvers, pistols. Math works out to about 5 grand per bucket. Now this is where I saw some interesting decisions being made… the next set of buckets is THE CUSTOMERS budget. Look at pistols for instance. You can’t have many high end 1911s laying around. Great guns and there’s a market, but it takes a special buyer. Can’t have 50 hi-points laying around either. That market is for a different buyer. So you want a $300 budget group, $500 budget group, a $1000 budget group, and one really nice pistol for people to drool over. You’re gonna turn the money over in the lowest price the quickest, but there will be some in that midrange that buy better. Not everybody is gonna buy a hipoint and a single box of defensive ammo and never come back, but you want that customer. Cheap guns are also impulse buy guns. Colt gold cups are not impulse buys. But anyways if you have your money split into tiers like that each bucket will have different customers and it helps you to serve the bases. It also keeps you as a Sig or Glock fan from personally laying a bias towards that brand and stocking overly heavy on that. Same for shotguns, everybody can afford a maverick88 but less folks will drop the money on a beretta but the ones who want a beretta may settle for a CZ…

be aware of the seasons. Stack youth guns DEEP before upcoming seasons, and especially before Christmas. Old farts can make do with what they have, but little bill doesn’t have anything and grandpa wants to take him along this year.

last but far from least, don’t stock junk. If it’s a choice between Wanhunglo 12ga shotguns for 150 bucks or maverick 88s for $200 then buy the better guns for slightly more money and a lot less headache with warranty issues. If you wouldn’t buy or use it, you shouldn’t sell it. Period. Including used and consignment stuff.
Dont get a reputation as a junk dealer. There’s a local cook who keeps opening new restaurants but can’t shake the label of being the guy who made the worst pizzas ever. His food is good, but nobody will try it because it’s his.

 

[Frulk]

I live in a fair sized metro/suburb in the intermountain west. Past 3-4 years I’ve seen 3 LGS’s fold. One was a high volume dealer on a Main Street into town. Also had a huge internet presence. All 3 were brick and mortar. No FFL out of a basement or garage.

 

[rperyam]

Consignment at my LGS is you get 100% of the selling price if you use it for store credit. If you want cash, they write you a check for 80% of the selling price. Most use it as store credit, LGS prefers the store credit.

 

[Mark_Mark]

Consignment at my LGS is you get 100% of the selling price if you use it for store credit. If you want cash, they write you a check for 80% of the selling price. Most use it as store credit, LGS prefers the store credit.

Same with my favor gun shop. He makes about 20%. and is upfront with consignment seller & buyers. It’s a fair deal for all! and he MOVES tons of gun. Everyone knows to go to his shop to move their Estate guns fast.

Were does he make a good chunk of $$$ … selling range brass, $90 primers, powder, retail Dillions, house made bullets, holsters,!

 

[SterlingBullet]

dogtown tom,

Thank you for commenting on many of the items listed in my post. It appears that the FFL you operate has a little bit of variation in business conditions then the local gun store that I have worked at in Florida for a number of years. It always very helpful to hear of other FFL experiences and what they do to stay open for business and thrive.

I see from many of the posts, that other LGS have had similar retail experiences; other FFL stores, such as yours, have had a different retail environment requiring different sales approaches.

I thought about addressing all of the points you made in your reply. But it seems rather silly when every retail gun store has their own unique business conditions. The practices I mentioned in my post have worked very well for the owner of the LGS where I work since they opened a decade ago.

I am copying all of the the replies to the original post for future reference. There have been some excellent advice and best practice recommendations for any new business. I hope any of the members here that are thinking of opening their own business in the future do the same. It’s always less stressful to copy others’ success than trying to reinvent the wheel yourself.

 

[Old Dog]

As a customer, my needs are simple.

I simply want handgun counters that have tags on each handgun with the price readily visible (and the model number).

As an older dude with bad knees and back, I surely don't want to have to get down on my knees to view the handguns on the lower shelves -- and if I can't read the tags, I'll never visit the shop again.

 

[hoardingthemanual]

Everyone is using this thread as a chance to say their shopping preferences instead of how to manage a store. It’s a funny waste of time.

 

[Jim Watson]

I simply want handgun counters that have tags on each handgun with the price readily visible (and the model number).

As Grandma said, that's the dyin' donatin' truth. In a market with so many lookalike guns and multiple submodels within each, a good tag is essential, but seldom seen.

 

[vindag]

As a customer, my needs are simple.

I simply want handgun counters that have tags on each handgun with the price readily visible (and the model number).

As an older dude with bad knees and back, I surely don't want to have to get down on my knees to view the handguns on the lower shelves -- and if I can't read the tags, I'll never visit the shop again.

I am also an older person at age 68. I have no interest in long guns, whether they are rifles or shotguns. I collect and shoot handguns only. Your post really hit home with me, when I visit a gun store. I will slowly look at the glass counter at just about every single handgun, and if I have to keep asking the clerk to turn over the tag, because I can't see the price, I will not return to that store. I want the handguns displayed exactly like you described.

 

[TomJ]

In another store, the guy behind a counter wasn't taking care of customers because he launched into a big diatribe how he was disowning his daughter because she voted for Obama. Like I care.

I own a business impacted significantly by politics (the energy industry). When we discuss how politics impacts the market we never take sides as I don’t want to lose a customer because I wanted to win a political debate. Ask Bud Light, Target and in the past The Dixie Chicks how entering the political/social fray worked out for them. I’ve been in LGS’ where the owner’s friends were hanging around the counter spewing their political opinions to anyone who would listen. Given that they don’t know the political/social leanings of customers in the store they’re risking driving away business.

 

[Madcap_Magician]

My favorite gun shop which is much larger than any of my lgs has a great setup. Perfect for browsing. Each and every long gun is positioned around the perimeter of the store and you can pick up any of them at any time. Although the pistols are in glass cases, each price tag is clearly visible and it’s easy to tell what gun it is.

This is actually a great tip. I have a local gun store that has really expanded in the last ten years. They added an archery range and ten lanes of indoor rifle-rated shooting with fairly advanced target systems. They're carrying easily 10x the number of guns they used to have in stock.

But the pistol case is arranged so the pistols are in racks with the tops of the slides facing you, and the tags are often covered up or jumbled together so that you can't see prices or even the make and model, and sometimes there's so many handguns in there, it's kind of a guess as to what gun is in the back of the pile. So it's difficult to browse.