Starting a gun shop

K

KY DAN

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Jan 10, 2019
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The back story is I have applied for my ffl, my state sales tax, ein number, have a cpa, and I am keeping every receipt.

Let's talk about the reasonable expectations of a gun shop that buys, sells, and trades.

I understand that money is made when you make a purchase and not when the sale is made. I feel when buying out right I should only pay between 50-60% of its real market value i.e. what a live auction on gunbroker commands.

I understand when trading I should always take money in with the trade or make it a even trade for a more valuable item.

I understand new gun sales suck and do not make the money one needs to stay in business, furthermore I only plan to buy and stick items that are quick selling.

What I don't understand is how to tell some one a $1200 Smith and wesson 29-2 can't be sold to me for $1200, without sounding like I am trying to take advantage of them. I expect a $400 profit on a 1000 dollar sale.

Other than providing support and services that other shops do not How do you think I can stay ahead in the game?
 
I am not a businessman. However, I spend a fair amount of time/$$ at gun shops.

Good customer service is key! No one comes back if they are treated poorly. When I moved (which I did often), I hit all the small shops in the area. Just looked around and watched what was going on and how people were being treated. Then, I picked the shop which fit me the best and built a relationship there. The ones which treated people poorly or seemed like their private clubhouse I didn't go back to again.

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

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

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.

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.

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.

Lots to ponder! Good luck with it!
 
Encourage new gun sales where you order the customer’s desired gun from your distributor and you get free shipping from the distributor.
The customer pays up front.
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.
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.
Keep your transfer fee as low as possible, about $25.
Keep your markup on accessories reasonable to capture sales away from the big box stores.
Do not buy odd accessories that will sit in inventory forever.
Keep a record of what customers come in looking to buy to help when ordering inventory.
Consider a 5% discount to any former or current military, law enforcement or first responders including EMTs, nurses and doctors.
Gun buyers like patriotic-themed decor.
Almost all gun buyers do not care about woke issues.
Treat female customers like any other male customer.
Do not treat them like they are idiots about firearms issues.
I personally will talk to female customers about the firearms preferences of my wife, daughter and other female relatives and friends.
Do not automatically steer customers to higher priced guns, show them mid-price, high-price and cheap.
They already know what their price range is and will pick the price they are comfortable with.
Do not be a LGS that thinks everyone should fire a .45ACP or .357 Magnum.
Lower calibers are fine for customers with limited dexterity in their hands or are recoil adverse.
Older customers will be very happy if you show them semi-automatics that are easy to operate, especially Smith&Wesson EZs, M&P 22, Ruger SR22 and Ruger Lite-Rack LCP II in 22lr.
Not everyone needs a micro nine for carry.
Not everyone needs or can effectively operate a shotgun for home defense.
A Glock 19 or 17 can be all the home defense firearm needed.
Carry lower price guns comparable to the Glocks like Taurus or Smith&Wesson.
During the Pandemic a lot of families could only afford Hi-Point pistols, don’t be afraid to carry them.
A person that works full-time at a convenience store, Walmart or Burger King would be happy to be able to protect their family with a lower priced Taurus or Hi-Point.
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.
Be kind, friendly and affable with everyone that walks into the store.
Have clean restrooms.
Staying open after 5:00pm at least one or nights per week does bring in customers.
Most businesses do not survive without some expenditure on effective paid advertising.
Plan to have a heavy social media presence.
Have new magazines for purchase for guns you stock on display; offer them when you sell the firearm.
Ask every firearm purchaser if they need a cleaning kit for their new firearm. It doesn’t have to be a $50 kit; thre are plenty of kits $15 or less.
Always have ammo in the calibers of firearms you have in stock.
There are “absolutely no stupid questions”, everybody has to start learning somewhere.
If there are gun ranges in your area that rent firearms, identify customers that should try different firearms before making a purchase.
Always remember that most people are recoil adverse.
If possible, have space where you can have concealed carry classes and other training, or lectures/demonstrations on firearms.
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.
Clearing a stuck unfired round from a firearm, without making the customer look stupid, and handing it back to them, no charge, will make them a customer for life.
Offer local gun store advice and recommendations, no charge.
Listen to customers’ stories; sometimes they just want someone to talk to.
Never let yourself, or other customers, act like gun snobs.
 
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You need to sell lots of guns for a small profit each, not try to make $400 on a $1000 sale. You won’t, at least not often. Most shops I have any knowledge of keep their prices pretty low and try to make money on accessories and ammo and holsters rather than on guns. If you want to take business away from the online super discount retailers you need to offer something they don’t, while at the same time you’ll need to also support customers who want to use them to transfer guns bought online, and not act like it’s a huge PITA or charge more than about $25 IMO.

I’ve never worked in retail so take that for what it’s worth.
 
A good way to make sales without any outlay of cash is to consign guns. My LGS consigns guns for 10% if you buy a gun and 20% if you just want to sell. Another local LGS charges a flat 15% to consign a gun. Put your ffl on Gun Broker and don't charge an outlandish fee to complete a gun transfer, maybe $25. I'm not a ffl owner but this has been helpful for me as a customer to sell a gun periodically.
 
Who is the competition in your area? What are their prices?

As with any business keep your overhead low so everything you earn doesn't go to pay the expenses. Plan on loosing money for at least the first year. Try to find a niche that the competition isn't filling. Why would someone want to buy from you rather than the next guy? Look for connections with local ranges and clubs. Be open at times when people that actually have jobs can go to your store.

Good luck, you have more balls than I do! The only thing I have been to a gun store in the past 20 years is person to person transfers. Paying 80% - 90% of retail for a used gun makes no sense to me.
 
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SterlingBullet said:
Do not treat them like they are idiots about firearms issues.
Offer gun cleaning for a very low fee, $25 or less.
Click to expand...

I like the idea of a gun cleaning service but there are idiots that will bring in a loaded gun and point it in your direction without thinking.
 
KY DAN said:
The back story is I have applied for my ffl, my state sales tax, ein number, have a cpa, and I am keeping every receipt.

Let's talk about the reasonable expectations of a gun shop that buys, sells, and trades.

I understand that money is made when you make a purchase and not when the sale is made. I feel when buying out right I should only pay between 50-60% of its real market value i.e. what a live auction on gunbroker commands.

I understand when trading I should always take money in with the trade or make it a even trade for a more valuable item.

I understand new gun sales suck and do not make the money one needs to stay in business, furthermore I only plan to buy and stick items that are quick selling.

What I don't understand is how to tell some one a $1200 Smith and wesson 29-2 can't be sold to me for $1200, without sounding like I am trying to take advantage of them. I expect a $400 profit on a 1000 dollar sale.

Other than providing support and services that other shops do not How do you think I can stay ahead in the game?
Click to expand...

Hire knowledgeable, personable people. Nothing loses sales faster than a curmudgeon who knows a lot but is gruff and inflexible, except a tactical pewpew type who only knows one thing, and will only try to sell that.
 
MikeInOr said:
I like the idea of a gun cleaning service but there are idiots that will bring in a loaded gun and point it in your direction without thinking.
Click to expand...

They're going to do that anyway when they need to sell or trade a gun, or buy a holster.

Other than providing support and services that other shops do not How do you think I can stay ahead in the game?
Click to expand...

Are you starting right out in the business opening a new store? That's brave.

There's a fireman north of me who started up selling guns in his garage. He would buy a lot of stuff from police departments- police trades and seized/evidence guns. He sold online, and I assume he did gun shows. He did transfers cheap. He did it for a long time before he had a brick and mortar store.

He just bought a gun range last year and does a lot of business through that. Does concealed weapons courses. Gets a boatload of money for ammunition, targets, classes, etc. I don't know what it costs to run an indoor gun range, but it definitely brings people in the door.
 
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I had my own business years ago, not selling guns and accessories, but some ideas/strategy's transfer from business to business

SterlingBullet said:
10% markup on a thousand dollar gun gives you a one hundred dollar profit without any capital expenditure,
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This is a good one. In my business (installing/repairing auto glass) my goal was to make $75 on each job I did. That was an average, some jobs I made more and some less. My prices were at least competitive and usually better than other glass shops. Don't try to retire on a single sale, be fair and have a price range for a given gun, with a preset minimum that you will take.

SterlingBullet said:
Do not buy odd accessories that will sit in inventory forever.
Click to expand...

This is another good one. Being a small (one man) business, I only kept a few windows in stock, maybe ~10. I didn't keep odd stuff that wouldn't sell, those things I ordered as needed and would have on the next business day. In your case, you would probably want a few Glocks, Smiths, 1911's, AR-15's, etc... based on what people in your area like to shoot and are willing to buy. You might also want a few different guns, to draw in "niche" customers. The same goes for accessories, carry a few of the common things, and one or two items for the "niche" customers.

1KPerDay said:
You need to sell lots of guns for a small profit each, not try to make $400 on a $1000 sale. You won’t, at least not often
Click to expand...

Another good point. If your prices are too high, customers will just go somewhere else.

MikeInOr said:
Plan on loosing money for at least the first year.
Click to expand...

And yet another good point. My business showed a loss the first year, and then a small profit the second year. Profits got better from then until I closed down (due mostly to my now ex-wife).

A few other points, have a business plan. I suggest writing it down, and then revisit it in a few days or a week, and see if it still makes sense. If it does, great, if not then make adjustments. Once you think you have a good plan, stick with it but be prepared to make changes if and when changes are needed.

Know your expenses. This is important. Know how much it cost for you to be open every day, and that you need to make that amount to break even. Rent, utilities, the guy you hire to sweep the floor, everything, know what it costs on a daily basis. You don't have to be exact to the last penny, but you do need to be pretty close. Let's say you need to make $100 every day to break even. Late in the day you've only made $50. A customer comes in and wants to buy a gun, but the price is too high. You can lower the price to make the sale or you can stand firm and lose the sale. Might be the difference between breaking even that day or falling short.

And finally, greet your customers and be friendly. I enjoy shopping at places that make me feel welcome. Maybe have a coffee pot set up, with some styrofoam cups, or a friendly dog people can pet, or whatever makes people comfortable in the area you plan to set up your business.

chris
 
My Daughter runs a pawn shop, her gun section has new and used but the general rule is to pay 20-25% of dealer price for used firearms, sometimes she pays a touch more for quality items but most people know the drill when they come in the door.
 
If you are going to make $400 profit on a $1000 gun I'm probably only going to visit your shop one time. FFL fees, shipping, Any Extra Fees have been deal breakers for me many times. Fair deals, get what I pay for deals, after purchase service, Honesty will get my business and return Business every time. It tickles me to no end to see any business have to shut down because it could not treat it's customers Fairly and Honestly.
 
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.

Used guns sold to you- first ask how much customer wants for there gun. The answer may suprise you, how low it is. Ask if it works correctly.

Your used buy price. Dealer cost of new, less 20% is your offer for used, as new guns. Rough or damaged, a lot less. Guns taken apart. Parts in plastic bag. Very little $. But when assembled, lots of $ to be made.

Consignment- a fee is charged to safety check & clean guns & test fire, even if not sold, returned to owner.

If stolen guns are confiscated by police, your out the money, unless the crook makes restitution. Here you add the $30 or more for safety check, cleaning & test firing, to what you bought the gun for.

Good Luck.
 
I know pawn shops are a little different than a regular gun shop. In the pawn business the shops will usually pay 25% to 30% of the resale value if the customer is pawning an item (to include firearms) and will normally pay 40% to 50% of the resale value if buying out right from a customer. If you are running a regular gun shop then you definitely want to pay more than local pawn shops when buying used firearms.

I will give an example from when I had my Type 2 FFL. If a customer brought in a gun that I could sell for $250 then I would offer them $125 if they were wanting to sell it to me. If the wanted to pawn it for a loan then I would only offer them between $60 and $70 for the gun.

For a regular gun shop you will want to stay between 50% and 75% of the resale value when buying used firearms. Condition and the uniqueness of the individual gun along with how quickly you can sell it will determine the price you pay. Always offer to pay more that what pawn shops pay for used guns but don't lose money either.

And with any business, you will probably not see much if any profit for the first few years. And remember that friendly and knowledgeable staff along with good customer service will make or break any business.
 
There are 3 lgs that I visit. The times I have purchased a gun from any of them are the times they have posted their various inventory on their Facebook pages.
Of the 3, the one I go to most often is the one where I don’t feel like I’m being stared down the whole time. They are all very small and I’m never more than 15 feet from the owner/employee. It can be a bit unnerving.
None of them are that great for browsing because of their small setups. My favorite time to go to any of them is when I know exactly what I’m looking for.
At one of my lgs, most rifles and pistols are not in a glass case and you can easily handle them. That’s a nice plus.

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. There are multiple employees behind the counter but they don’t hover. Very friendly. Ammo is clearly organized. Reloading in a separate room. Too bad this place is over an hour for me.
 
1. Do you have training on running a business outside of just guns - taxes, legal needs, personnel management? Staff can kill you. You said you were a CPA. Are you capitalized for your stock? Are you ready to be there almost every moment of the working day until you get trustable staff. Have you done what is necessary to determine if the physical location is conducive to attracting customers? What about security?

There's more to it than just the gun markups.

2. An industry resource with good tips: https://shootingindustry.com/
 
SterlingBullet said:
Plan to have a heavy social media presence.
Click to expand...

This one is key in my area. There are a couple smaller lgs within 20miles of me that I wouldn't know existed without thier presence on social media.
Safely navigating the rules of FB market place and others concerning guns takes a little effort, but they have been successful.
 
KY DAN said:
The back story is I have applied for my ffl, my state sales tax, ein number, have a cpa, and I am keeping every receipt.

Let's talk about the reasonable expectations of a gun shop that buys, sells, and trades.

I understand that money is made when you make a purchase and not when the sale is made. I feel when buying out right I should only pay between 50-60% of its real market value i.e. what a live auction on gunbroker commands.

I understand when trading I should always take money in with the trade or make it a even trade for a more valuable item.

I understand new gun sales suck and do not make the money one needs to stay in business, furthermore I only plan to buy and stick items that are quick selling.

What I don't understand is how to tell some one a $1200 Smith and wesson 29-2 can't be sold to me for $1200, without sounding like I am trying to take advantage of them. I expect a $400 profit on a 1000 dollar sale.

Other than providing support and services that other shops do not How do you think I can stay ahead in the game?
Click to expand...

A sale and a purchase are really superlative and you should make money either way only if you treat your customer fairly. Do that and you will be successful.

Purchasing used guns from a prospective seller is a dual edged sword. You are trying to buy merchandise fro re-sale. You're not adding a piece to your collection. Tell the prospective seller up front what the real skinny is from the average of 3 sources. Book and completed online auction sales is a great place to start. Try not to use a single source or a live auction because bidding hasn't ended yet and understand completely how to grade condition.

Appearance, Cleanliness, Completeness, and probably most important of all does the prospective purchase Function as it should and does it go bang as it should?
Then you can talk price.

Everyone has a story and a scarce item for sale. I used another superlative term to drive home a point here. Terms like scarce and rare are what I'm talking about. Try and steer clear of them when buying and selling an item unless you have the provenance to back up the claim. Otherwise it is just a good story and everyone has a story and think they are the expert or heard it from someone who is.

Remember you have an overhead of your own. So giving a percentage of what your bottom dollar is will be really irrelevant because that will change from sale to sale and the seller has their own bottom dollar. Then condition is ultimately the determining factor. 30% to 60% seems to me to be more realistic. But Condition will be your determining factor.

Establish a network. Look for others who are in the same business and may specialize in an area that you aren't versed in. For example; you may be a S&W expert and really know nothing about Side by Side Shotguns and the guy across town does. Establish a network.

Expect to loose your butt in the first year or two until you get established and attend every gun and trade show you can to get your name known. Talking to your competitors will instantly let you know who you can network with and more importantly where you should specialize.

That's just my 2 cents worth of advice.
 
The most successful shops in my area cover the full range of firearms- original flint/percussion pieces all the way to the lastest polystriker wonder gun. They maintain a healthy mix of new, used and consignment. Interesting pieces are out on GB and yield great results.
 
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