Posted: 9/27/2005 1:03:40 PM EDT
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I'm laying the groundwork for opening a gun store (oh I'm sorry, "A Sporting Goods Retail Establishment") here in Wisconsin. Competition is nil if you don't count WalMart, which would kill me on the sales of Ruger 10/22's and Mossberg shotguns. <okay, my sarcasm switch is off now> Anyway, I’ve looked around and can’t find a good discussion group on the tricks, trips and traps in this kind of a venture. My location is such that any gun enthusiast currently has to travel 45 minutes to an hour to arrive at a decent establishment. I’m looking to cater to law enforcement cliental as well as those looking for quality firearms (*ahem* - Springfield Armory, Colt, Bushmaster, etc). Said business would also have mail order and internet sales capability sometime shortly after startup. Maybe I’m over stepping my boundaries? Maybe I should start from the house? These are the kinds of items I’m currently addressing. I know there must be a number of retail proprietors in the ranks of the readers that would like to share and discuss ideas for beginning, maintaining, marketing and growing their business. Any thoughts? Thanks to everyone in advance. |
| A well written and thorough business plan would take you a long way. Visit 'Entrepreneur.com' for access to material you can order for a fee. Depending on where you are in Wisc., you may have easy access to S.C.O.R.E., which is a group of retired business people who may offer some insights. Check the SBA for information and don't forget your local community college for classes on running a business. Good luck. |
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Zoning is the first thing to check. ATF won't approve an FFL at your house if the city and/or county prohibits it. If you have a retail store front, you either need to own the real estate or get your landlord to sign something that says he knows and approves of you running a firearms business. BTW, don't use "Blood Bath & Beyond" as your store name, I want to use that. 
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First I applaud you because entrepreneurs are the backbone of the American economy. And second because I love gun stores. It looks like you've done some good thinking about your idea. You asked for input from anyone who has done retail, so here goes! I've launched & managed a retail business, helped my bro start his (now very successful) business, my father had his own business -- where I worked every weekend & summer when I was a kid, and I worked at 2 other startup businesses. So I've seen what can help & hinder startups. Random thoughts. You may already know these, take them for what they're worth: * Don't underestimate the capital ($) required. Purchasing inventory, getting licenses, insurance, leases, etc. all cost a LOT money. Be very critical/conservative in your estimates about expected sales in your first 6 months. IOW assume it will take you at least that long to ramp up in clientele and sales in order to break even. * Re: inventory, this is a tricky one. These days people expect a lot of choices (= lots of inventory) But inventory = your $ tied up sitting on the shelf so you want to minimize it. So you want to have as many inventory turns as possible. What to do? Try to understand as well as you can what types of guns, equipment, etc. the local gun nuts are into. For example you might be an IDPA guy but if the locals are mostly hunters, well you'll predominantly want to stock bolt actions & RealTree versus Fobus holsters and range timers. * Focus on keeping costs as low as possible. If/when you're flush with cash from your seed money it might be tempting to spend on many things. For instance one startup I worked had a lot of startup capital and some early success so they hired tons of people. BIG mistake. They really only needed some salespeople and some operations people. Result? They lost one big customer and closed in 6 months. It didn't have to be that way. Last point: I think a lot of the small gun stores I've been to were started by guys who like guns but really didn't know what to expect re: starting a business. I think that's what leads to their reputation as dingy places with poor selection and lousy customer service, etc. Just wanted to say that.
I still like "Alcohol, Tobacco & Firearms" as a possible store name 
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Better yet, I loved an idea I gleaned from www.shootingindustry.com. Turn a negative into a positive.... Customer: I like this gun but I see you don't have it in 9MM. Retailer: Let me get one in 9MM sent here from the warehouse (technically, your wholesaler IS the warehouse). And then you'll have one brand new in the box that no one else has ever handled. Admit it, from the customer standpoint there's something sexy and alluring about having a virgin firearm in your hand. Okay, here is where I stand..... I have my business plan 80% complete and I have a handle on startup and recurring costs. What I'm banging my head against the wall with is predicted sales. I have 1700 SF with 30-40K in inventory consisting of firearms, accessories and clothing. * I'd like to see at least 10 turns a year but what is reality? * What can I expect in gross sales in the first 6 months and then annually there after? * I know there should be 40-50% margin on accessories (where the money's at) but what is realistic for firearms? The dealers won't give me the time of day without an FFL and a storefront. * Is there a "real" ration to be maintained between handguns and long guns? I don't want the work done for me, just looking for a little mentoring from a fellow sporting arms entrepreneur. Man-o-man, if anyone thought opening a business was just a storefront and junk to throw in the window you're sadly mistaken. |
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Some tips from my local stores (and tips I may use myself someday) Markup on guns 20% + shipping on that piece. Markup on goodies is up to you. (You'll be surprised the prices you actually pay vs what we pay) Have lay-a-way(10% down) and/or financing program(15% interest or greater for 4 months/payments) Don't be a dick! Don't sell it if you don't know anything about it. Don't use car salesman tactics ("This here Vulcan is the exact version used by Delta Force and LAPD SWAT. MSRP is 4500 but I'm letting them go for 3000 out the door") |
I'm not sure I understand your question...do you mean what bad debts (i.e. uncollectable accounts receivable) you will expect from your customers? If this is what you mean, then it should be near $0.00 if you accept only credit cards or cash. Part of the value proposition of taking credit cards is that you offload the risk of fraudulent transactions onto them (i.e., they guarantee to pay you regardless of whether the person presenting the cc is legit or a fraud...as long as you follow the cc company's processes for validating). Cash of course is, well, cash, not debt. The only "bad debt" I could see you incurring are bad checks (though this is protected somewhat by the bank issuing the check) or if you offered credit. Don't offer credit, at least not yet. You could offer layaway, which is risk free to you and actually can make you some small interest income if you manage it right. Oh one other thing, off topic here. Look into doing consignment sales of used guns. You can make a great markup on these if you price them & negotiate it right. The seller benefits because you can sell it more efficiently than they can, and you don't incur any inventory costs (e.g. as opposed to buying & reselling used guns). |
It won't be much. Like hartmann said, don't offer credit. At least for a little bit. Once you get to know the client base you can start extending some credit. Just using common sense will keep most of your losses to a minimum |
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I knew I was covered for credit cards and cash (unless the ink was wet) but I wasn't sure about checks. I just wanted to assign a percentage value to the overall revenue which would be could be considered "Bad Debt". As there is no way in hell I will accept sales based on personal credit (well, maybe from my wife... MAYBE) I don't foresee a problem. A big thanks to all for all the input. My business plan is up to 36 pages and a may have another small question or two to round it out. My only other issue is what the local PD will want in the way of physical security outside of business hors. Thanks again to all. edited to add late breaking information.... "Right now, the (firearm) market is pretty soft nation wide, with even the big distributors saying that things are slower than they normally are this time of year." This is coming from a major AR manufacturer. Can any of the retailers present confirm or deny that their business has been or is soft? |
One gun shop I go to has been relentlessly attacked after hours by scumbags, so far unsucessfully. The owner told me that they've gone so far as to cut the outside power ( I think by damaging the meter/box that's on the wall outside....I'm not an electrician so bear with me) so they could try to break in without the alarm going off. But I guess the bars he had in place held them back. However, the adjacent tenants were pissed at the owner b/c of course the power was knocked out to their businesses too. I think they tried to get in from the roof as well. Poor guy, it's such a small shop I wonder how he hangs on. Overall the gun business seems like a tough one. I know the margins on guns themselves are thin so (as you probably know) your margins have to come largely from other stuff. |
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a few random thoughts... I'm a pawnshop owner that deals with fireams and we do a 90 day, interest free layaway with 25% down and 3 equal monthly payments on anything in the store and currently have about a 65% pickup rate on these which is good for us. We do most lay aways at the price marked with no discount - get very few complaints....When you get your FFL, get signed up with several large wholesale distributors - Ellot Brothers, Sports South, Jerry's Sports Center, etc. On ordering new firearms, unless we know the person VERY well, we require a deposit of 25% to 50% to cover our costs in case they don't follow through with the deal. Bars on the windows are mandatory in Ga for pawnshops and we also have a pretty good security system with IR motion detectors. Cameras with a monitor that the customer can see are good also. Hide the recorder for the security system and put a vcr close to the monitor - have it turned on, dummy cables run somewhere and a blank tape (or a cheasy porno) in it - IF you have a break in, they might just grab that tape... We lock the higher priced weapons in the safe every night - PITA but might be worth it some day... ETA - NO CHECKS!!!! We have warrant out for a guy on a $100 bad check - been waiting over 2 years to resolve this one... IF he ever gets picked up, IF he gets out of jail on probation, IF he pays restitution, we might get 5 or 10 bucks a month on it.... |
Well, that was a rough average from the businesses around here. The dealer I use is 10% period. The 10% covers shipping. He also sells hundreds of thousands (if not millions) of bucks worth a year, so he can do that sort of thing. Another dealer across town does at least 25% markup...I think i saw him sell something for almost 50% one day...that was when i stopped going there. |
| I am not really familiar with the gun business specifically, but one thing i can say about most small businesses is that they aren't successful at advertising and marketing. I would imagine in the gun business, it is equally important to identify your target market, figure out where the frequent, what local publications they read, and what types of advertisements would catch their eye. You need something to lure in customers in order to build a good customer base. Word of mouth due to good customer service is ALWAYS the most effective way of generating return customers, and bring in the types of customers you want to serve. Advertisement can separate you from the dingy, hole-in-the-wall place to a customer who has never been to either shop, or alert the prospective customer to your shop if it is in his local area due to convenience. |
Three snaps and a twist for jmindler. The worst mistake for not growing a business is sitting in the corner and catching the occasional customer who just happens by. A survey of small firearms retail stores show that only .75-1% of their annual sales is dumped back into advertising and marketing. I see a number of shops which fall into this catagory and it shows with zero business growth over the past five years or more. It's not that most businesses are unsuccessful, they just don't do it. |
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Big George, Comgrats on being a business owner. It is the life! Now then, I am not sure what numbers you have for total inventory, but my friend owns a gun shop in rural Alabamar and he started with $100,000.00 in inventory and his store was only half full! He stated to me flat out, he would have preffered to have had $250,000.00 in startup inventory. Also, he finally is seeing day light after three years! He is very shrewd and sharp as a tac when it comes to dealing, so he's no dolt! 10 turns a year would be nice, but don;t count on it! I don't know if your in a fishing area, but once he added fishing supplies and clothing lines (i.e. Mossy Oak apperal) he had a lot beter time... I wish you the best of luck. |
1/2 full with 100K? What size was his place approx or was he into the uber high end stuff? Ya, I know 10 turns is tough but it's a target if nothing else. I come from 15 years of master scheduling and inventory control so I wanted to be aggressive. If the stuff sits, it's not making you money. I was going to handle clothing lines but you gotta sell what you know and fishing isn't in my repertoire. It's still food for serious thought though, thank you very much. |
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Have you thought about a website? A website is two fold. It's advertising and it's a second store. Let me know if you're interested. I have much experience in various web applications for people, businesses and organizations. Also I saw you were talking about accepting checks. I have worked in the Cash Control Dept. for an amusement park for the past 5 years as a manager. The yearly cash flow is more than 30 million. Anyway digital check authorizing is a great way to stop/detour fraud. Since you only will have a couple registers, the software/hardware for this wouldn't be too extreme. |