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Posted: 5/5/2017 9:39:07 PM EDT
Looking for some advice from those that are experienced with FFLs, here is my situation:

I have thought about getting my FFL for a few yeas, I currently own other businesses not related to firearms but guns, shooting, hunting, and fishing are my true passion so I've kicked around the idea of a retail firearm business. It obviously wouldnt be my only business or source of income, (my 100% primary focus) I would however intend on basically making some  supplemental income from it, likely focusing mostly on online sales aND transfers (I've had less than  stellar experiences with our local FFLs that do transfers as have many others). Part of this decision is I may already have a building that's paid for to do this out of, I have to look into the zoning. If it's not zoned correctly, or cannot be approved I will likely nix the idea.

Continued below...
Link Posted: 5/5/2017 9:39:39 PM EDT
[#1]
So here's my question, is it worth the trouble? Can you make a profit, even a small one that's worth your time doing limited online sales and transfers if it's not a full time main focus for some supplemental income (I know much of this depends on rent/overhead)?

Edit: the more I research the regulations the less clear some become, not surprising of course lol. Considering the market, I wouldn't jump into it with a lot of risk (inventory etc), would take it slow and if it works it works if not no big loss. That being said, if an FFL/SOT is starting out and were to focus on transfers, nfa (I drive over an hour currently for my new dealer as he's the only good one around), and used guns and that dealer acquired some transferable and/or pre dealer machine guns....if it's not working out or worth it business wise in a few years is it a problem to have bought especially the dealer samples? Or is it fine because the business was legitimately attempting to make a profit? I don't plan on closing shop, but if it doesn't work out how I plan I don't want to end up in a bad spot on the regulations either.
Link Posted: 5/5/2017 10:25:06 PM EDT
[#2]
I had am FFL for 5 years and closed it down a couple of years ago.  Online sales of new guns is tough.  There are several people selling on Gunbroker that price their firearms at $10 over my cost, at that time.

The big online dealers make $10 -$30 per gun that they sell, so as a small dealer you can not compete on price.  

Doing transfers can bring in a decent cash flow, but the going rate where I live is $20.  It takes a lot of $20 transfers to even cover the electric bill each month.  I probably averaged 10 a week.  Unfortunately, while most of the tranfers were easy money, you will have many that try your patience.  Guns that come in with no name of the customer or the shipper were the most frustrating.

It is possible to make money in the business, but pretty difficult.  Gun guys in general are pretty cheap, although there are exceptions.  They also can have the highest expectation regarding customer service, especially for a $20 transfer.

As a SOT, I think you will have to register with ITAR(I wasn't a SOT so I could be wrong) that is $2500 a year I think.
Link Posted: 5/5/2017 10:31:48 PM EDT
[#3]
Read the other threads in this Subforum.  

Start with this one.
Link Posted: 5/5/2017 11:33:17 PM EDT
[#4]
You're asking a lot of the right questions. Unfortunately, this is a very tough market for FFLs - a lot of them are considering closing shop. This shouldn't discourage you from getting your FFL, though. You should just plan out your business properly and you don't have to jump in all at once. For example, you could start with a few online sales and transfers here and there and slowly grow it into something bigger.

The three main costs to consider for getting your FFL and becoming an SOT are the initial license cost, the renewal cost, and SOT registration cost.  A manufacturer's FFL is cheaper up front but the renewal makes it more expensive than a regular dealer's FFL.

As mentioned above, the biggest cost would be DDTC/ITAR registration - but this only applies if you are a "manufacturer" according to the State Department's definition (this is its own discussion).  Merely being an SOT does NOT require DDTC/ITAR registration.  In fact, you could have a manufacturer's Type 7 FFL and a be a Class 2 SOT and you don't need to register with DDTC under ITAR until you actually start manufacturing "defense articles."

All the costs and considerations for FFL license types, SOT classes, State registration, and even excise taxes, are broken down here: link removed by mod
Link Posted: 5/6/2017 5:29:27 AM EDT
[#5]
How much money you can make will depend on what the competition in the area looks like and how much effort you're willing to invest in building up a customer base, either in person, on-line or both.
If you're flying under the RADAR as a tabletop, you can make a few bucks and meet some interesting people.
Take it for what it's worth......
Link Posted: 5/6/2017 6:26:34 AM EDT
[#6]
Link Posted: 5/6/2017 7:40:45 AM EDT
[#7]
I definitely think there's a market in my area for someone knowledgeable with good service. Good enough to open a full store aND do it full time? No, but good enough to make some money with the right focus if I take it slow and am smart about it definitely.

the more I research the regulations the less clear some become, not surprising of course lol. Considering the market, I wouldn't jump into it with a lot of risk (inventory etc), would take it slow and if it works it works if not no big loss. That being said, if an FFL/SOT is starting out and were to focus on transfers, nfa (I drive over an hour currently for my new dealer as he's the only good one around), and used guns and that dealer acquired some transferable and/or pre dealer machine guns....if it's not working out or worth it business wise in a few years is it a problem to have bought especially the dealer samples? Or is it fine because the business was legitimately attempting to make a profit? I don't plan on closing shop, but if it doesn't work out how I plan I don't want to end up in a bad spot on the regulations either...what's really unclear about that is, is there a real regulation as far as what they consider "to enhance a personal collection" or is it something they review based on sales, purchases, the agents mood that day lol and will just "ask" you not to renew your license type of thing. My plans would be to deal in some nfa and it's a risk this may not work out business wise or may not be for me so the situation of giving up a license while having nfa items is possible enough I want to be clear on the laws.
Link Posted: 5/6/2017 9:41:48 AM EDT
[#8]
You must intend to make a profit. There is no requirement that you actually do. If it's a bad market, or you're a bad businessman, that's no interest of the atf's and that doesn't change that you intended to make a profit. If you've made an honest effort to engage in the business of dealing firearms, even if that's one transfer every so often, then you should be able to easily show that you intended to be engaged in the business.

If you did nothing but acquire guns for yourself, that you don't have offered for sale, and you haven't done any transfers (or advertised any), then it might be hard to prove you needed an FFL.

If you get post-86 machine guns, I strongly recommend actually demonstrating them to the LE agency from where you got your demo letter. If they decide not to buy, that's their choice. At least you tried to sell.

If you get rid of you FFL, those post-86 machine guns will have to go too.
Link Posted: 5/6/2017 10:59:32 AM EDT
[#9]
Out of the box here.
you say you have a building cheep or free. No such thing really. Taxes, Water, Power, etc...you still have to generate enough income to pay for those things. Ok. Brick and mortar location for reasonable cost is available. You already have Busniess interests not too far removed from FFL/Dealer, etc.
Why not consider a consolidation into one location. Diversified income helps cover the bills until you either see it working as planned or shit can the idea and then you still have the other Busniess interests going in an established location.
FFL/SOT thing not work out. Sell off the inventory and or transfer some to yourself and be done. Depending on how some of the items are papered. You may or may not be able to keep when Busniess is shut down.
Link Posted: 5/6/2017 10:04:40 PM EDT
[#10]
It would be one location, existing business that I won't be getting rid of. If I do an FFL it costs me literally nothing more to do FFL paperwork out of an existing office that all the bills are paid for regardless of running an FFL out of it or not. I even have an LLC that I use for nothing but have kept in good standing so I can use that for the FFL company. Only additional cost would be FFL licensing fees, etc...building and all associated bills are paid for.

Obviously if it grows I would look at another building to separate possibly but with the above mentioned opportunity it's very low financial risk, one of the reasons I'm considering doing it
Link Posted: 5/7/2017 4:13:57 PM EDT
[#11]
Discussion ForumsJump to Quoted PostQuote History
Quoted:
It would be one location, existing business that I won't be getting rid of.
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Check with your current insurer to see if they will continue coverage if you get an FFL.  Many want nothing to do with businesses that deal in firearms so you may have to switch.
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