$18K - Gun Shop?
I just want to run this past some of you folks to get an opinion.
This summer I may have 18K to play with after selling some property.
There will be a very nice retail space in a great location up for lease at $1900 per month with 2,400 sq. feet. It is also already set up for retail usage.
What Im wondering is, how feasible do you think it would be to start a small gun sales business?
I have worked in retail, but have never been a small business owner.
I dont know what gun dealers pay for inventory, so any info and/or opinion would be welcomed.
To start out, I would focus my stock on lower-medium priced pistols and tactical rifles and shotguns. Focus on the average Joe gun owner. And depending on the season, throw a decent selection of hunting rifles.
I look forward to hearing everyone's input.
wouldn't you rather relocate and open a gunshop in my area? i'll be your best friend. :-D lol
Originally Posted by ocadmirer
Thanks, but no thanks.
I once lived in Florida, and while pleasant, it wasn't my type of environment.
Originally Posted by Sig229
First thing I'd do is get in touch with your state's Small Business Administration for any and all advice I could garner!!!! The LAST thing you want is to enter into this type of venture....only to go "belly-up" because you didn't "test the waters"....
Try to get a bit outside your market area and see if you can get info on what other gun shops are doing....You'll find some owners/ops willing to offer a "leg-up" to an aspiring entrepreneur, while others are apt to snub you - thinking you're "out for THEIR turf".....
You'll discover very quickly that starting a business - of ANY kind - is a LOT more than just having the money....you may well (early on) discover that a partner is an attribute, rather than a liability....not just from a financial standpoint, but the ability to have another perspective on various aspects of the business world: marketing strategies, inventory control, cash flow, insurance, etc.
The list can go on...but I think you get my drift.....Just enter into the project with a totally open mind....and seek out the BEST advice from the most savvy business folks you can find....a bit of careful planning at the start of the "trip"....will pay off "down the road"...
+1 to das38spl. First and foremost contact your local SBA. Then do a market study in the area you are considering, including traffic flow and other similar businesses in your area. Only then will you have an idea of whether the business is viable. Trust me, $18k sounds like a lot of money but in business terms it is not. That might be useful for your first month's purchase of ammo, you know what I mean? Think about it, even if you're going to start with lower-end pistols and defense rifles, that amount of money buys you MAYBE 15 Glocks and XDs, 10 ARs in various configurations (none with toys on them), and a few thousand rounds of ammo. Would you shop in a store with that kind of inventory? And that is nothing to say about furnishings, computers, inventory programs, FFL fees, advertising, and the list goes on and on. You'll need to borrow a good bit of money to start a firearms store. So the SBA is the place to start.
That said, I love the entrepreneurial spirit, so if you can make the moolah work and have the desire then go for it!
At first blush, this economics don't seem to add up. OP said he had 18K to invest. He wants to rent space that rents for 1900 a month. There are other expenses besides rent which will run monthly fixed cost to probably around 2,500 to 3000 per month. This will eat through his available investment money in 6 months; and that is without reference to the need to obtain inventory, renovate the rental space to make it suitable for the kind of shop he has in mind, and the need to pay himself a salary.
A visit to SBA is in order to help learn how to start a successful new business.
At one time they ran an operation with the acronym SCORE; I think it was service core of retired executives. These guys volunteered their time to help newbies.
I don't think SCORE still operates, but there is probably some sort of operation within SBA that serves a similar function.
Many years back I read that it takes about 250 K of investment to create one job.
That is a handy number to keep in mind if you want to start up a business which will be running and profitable from the start. Take that number and double it. Then, you will be in a realistic range.
I'm not saying you can't start a business on much much less. Just that you need to start with much smaller fixed expenses, and not give up your day job.
Hopefully this won't be too long.
First of all about the partner. No, not even if it is family. I have seen too many partnerships/corporations/joint ventures go badly wrong and it only becomes a giant mess.
As far as making a go of it. Here is a simple and quick means to let you know if you have any viable chance of getting this off the ground.
First add up what the rent will be you said $1900 per month. Then add utilities, insurance, supplies, inventory, payroll if your hiring anyone, FFL costs, security system, what you need to live on and anything else you think you will run into.
Then take that figure, say it is $4500 per month and divide that by the profit margin that you expect to make between your firearms, ammo and accessories. I am going to say that average profit margin is going to be about 15 to 20% overall. So then divide your monthly costs by the profit margin, and you get 4500 / .2 and you will need to generate 22,500 per month in sales to achieve your goal.
This is a very simplistic method to determine if it is possible. Early last fall I put together the figures for one of my clients for the SBA to move an existing gun shop from behind his house to along a highway just outside of town. He was able to purchase a building and land where there will be a pistol range set up. He has enough room that he got someone in the fishing tackle business to lease space from him to help cover cost, and there is also enough room in his place where he can have folks teach CHL classes on the weekends. Later he will put in a Cowboy Range. Basically this is going to be a full fledged gun shop, with range, rental capabilities, CHL classes, fishing tackle and even deer processing. There are lots of revenue steams he was able to open up besides simply the gun sales.
I will tell you this, with the prices around here, we came up with figures alot less than what your looking at in your area, and it is a done deal now. Even though he had some inventory to start with, it is a slow process to build it up. For every dollar you put into inventory, that is one less dollar you get to eat out of or pay your personal bills. He was able to open up before Christmas so that helped him out.
I don't know if this helps you any, but if I can give you any more info i would be glad too. Going into business, especially in todays market place is not something that one should just jump into. The ideal timing for the gun shop actually was about 1 year ago in my opinion.
Oh, and the SBA can be a good resource, but I would also encourage you go get in touch with an accountant that has some experience in working with startup businesses that will be able to run the numbers with you and give you a pretty accurate idea of what you can expect. That is going to be required by the SBA anyway, they are going to want projections for the first year or two.
Thanks a lot for everyone's input!
Really great comments backed with experience from you folks.
I will contact the local SBA this week.
As far as going into a partnership with family and friends, I learned NOT to do that a long time ago.
Never do business with a friend or relative is my motto.
Like I said, the store is already fitted with great furnishings for retail. it also includes a large safe. It was once a mom & pop pharmacy and they used the safe to lock away the heavy narcotic medication at night.
Walgreens moved in right across the street and put the mom & pop place out of business which makes me a little angry.
Last week I went to some of the local gun shops and told them that I would NOT be in the same city as them, and I was thinking about starting my own gun shop. They immediately gave me the cold shoulder.
I will look into all of the resources you guys posted about. And see if this would even be feasible.
I have about as much put away as the OP and I have always wanted a small grocery store..I go to them all the time to shop. If I close my eyes I can tell you where everything is in the store. But, without ever working in a grocery(or gun) store I would never try to open one. All of the little details involved in the day in-day out operations that you never see, could very well shoot you in the foot(no pun intended)
I would definitely get a part time job in a store and try to learn the business, while letting my 18k gain at least a little interest in the bank.Of course that may be a little difficult now that your potential competition knows that you are interested in starting your own store..But as always your mileage may vary
$18,000 is too little capital to open a retail store. I have to leave right now, but my personal experience tells me $50,000 minimum, but with your set-up, maybe less, but not much?
The easiest road to failure is inadequate capital. I'll elaborate more later if you'd like.
As Bruce Williams always advised. "Get a job in a like business and learn all you can." In addition to what the others have said.
You'd be better off putting that money back and saving it or finding a good invester and making money on foreign stocks for yourself right now.
It's not a good time to be starting up a business in this economy no matter who says it is even if it's a gun business which is booming, if your already established yes, but to be starting out, no.
Invest, build it up and then think about it or watch it grow.
Originally Posted by Guardian
The ONLY caveat I can think of which would require that you start a small business right now is if you have no other income source. If that's the case then I'd look for space in an industrial area rather than retail because the cost per sq ft is half or less than half.
Don't forget the initial cost of obtaining permits and licenses either. That will take a large chunk of your funds.
Interesting thread! I am considering doing the same thing but ona somewhat limited basis. Like being open 20 hours per week. I have all of the ATFE paperwork and a location I can get on the cheap with alarm system and CCTV etc.
30 years in the HVAC / Mechanical business has taken it's toll on me.
Best wishes for your venture!
Another thought. Almost everyone I know that makes their hobby their work ends up hating the hobby after a while. To work your own gun shop will make you jaded in the long run.
In my youth I played paintball. I was good enough to make a partial living playing for a top amateur and later pro team (I did have another job too). After three years or so it was just like any other job to me. I had to show up for events and sponsors(all the time), I had to travel, I had to practice constantly and I had to play well or someone else would take my spot. The money wasn't even that good, the whole reason I did it was because I loved paintball. After a while I stopped loving painball and it became work. I eventually quit. I don't even play for fun anymore.