How to open a gun store? Selling firearms is a great opportunity to engage in a lucrative business and be your boss. This article will outline what issues you need to consider and what steps you should take to ensure the successful opening of your gun shop.
Consider The Pros And Cons Of Starting A Gun Store Business
First of all, you need to decide if the gun industry is the right choice for you. After all, you must have a good understanding of what you should expect from your enterprise to be able to deal with all the hardships that usually come with starting up a business.
Follow these steps to know if your passion can also become a source of income.
Get A Grip On The Industry
Without any doubt, the firearms industry is an essential US business. About one-third of Americans currently own a gun, with another third claiming they could see themselves owning a gun sometime in the future.
IBIS World reports that the firearm dealing industry has been growing in the last five years. This trend is expected to continue.
The current socio-economic and political situation seems to be beneficial to the market trends, as more people tend to seek a purchase a firearm when they feel an increasing need for personal protection due to the events of the past few years.
Conduct Market Research
Consider your potential customers. While opening a gun store won’t plunge you into a market as competitive as it is for many other business ventures, you need to have a good understanding of the potential demand for firearms sales in your location.
It is a good idea to base your store in areas with a lot of potential gun owners, such as shooting ranges, hunting grounds, etc. However, there are even more factors you should evaluate. Are there any competitors in your area? Does the demographic in your area tend to purchase firearms? Should you adopt a B2B or a B2C business model?
Moreover, the demand for firearms may vary significantly on a state-to-state basis.
Industry Volatility
Many Americans are quite passionate about their right to carry firearms as per the 2nd Amendment, finding it an integral part of protecting their freedom. However, as a person looking into starting your own gun store business, you must understand that the current politics regarding gun ownership may always change rapidly.
For example, the introduction of stricter regulations for gun ownership may mean a decrease in customers and more legal hassle for you to obtain a federal firearms license for your gun store.
Entering The Business
Perhaps the main thing you need to prepare yourself for is adhering to all the protocols and regulations that gun stores must face. Federal laws that dictate how to sell firearms are, understandably, rather strict, as it is a potentially dangerous activity. Therefore, to enter the industry you must first pass all the legal requirements for opening a gun shop.
That includes passing background checks to prove you do not have any kind of criminal record, choosing a proper location that meets the safety criteria, storing and handling your goods according to all regulations, etc.
You must commit to entering the firearms industry and opening your gun shop. However, if you believe being a gun dealer is the thing that suits you best even after careful consideration, then let’s proceed with the process of getting started with firearm sales.
Personal Skills And Qualities
To start your own business, you need at least a basic level of understanding of marketing, accounting, finances, and human resources.
You also need good networking skills to build up a solid customer base.
Last, but not the least, to enter the firearm business, you must know how to handle guns yourself. Knowledge of gun regulations and laws would be a great asset as well.
Education
Firearm manufacturers tend to prefer people with at least high-school diplomas or GEDs as their business partners. Experience in the field is another advantage you might have that will give you an edge over competitors.
Gun store industry trends
Industry size and growth
- Industry size and past growth – As of 2023, the U.S. gun and ammunition stores industry boasts a valuation of $20 billion, with an impressive annual growth rate of 11% over the past five years.
- Forecasted growth – Projections indicate a 1.9% growth in the U.S. gun and ammunition stores industry for the year 2023.
- Business landscape – In the same year, a total of 16,396 businesses dedicated to gun and ammunition stores were operational in the United States.
- Employment figures – The U.S. gun and ammunition stores industry provided employment to 118,697 individuals in 2023.
Getting Started With Your Gun Store
The process of setting up a gun shop starts with careful planning. It is in your interest to consult with a licensed specialist and ensure every aspect of your entrepreneurship is accounted for. However, in this section, we’ll list the most crucial things that must be in a gun store business plan.
Location Scouting
One of the first major factors in determining your business plan is the location of your shop. Unlike an online gun shop, a classic brick-and-mortar store comes with a few additional issues and costs to consider.
- Local Laws
As mentioned previously, gun stores are heavily regulated. Choosing a proper location that would meet the legal requirements is a crucial process. You might need to consult a lawyer and a real estate agent for the optimal result.
Gun stores cannot operate in residential areas. Instead, you should look into the locations in the commercial districts of your city or somewhere out of town. Many gun shops choose to open near a shooting range to meet the location requirements and secure a client base at the same time.
The first step in getting a Federal Firearms License (FFL) to start operating your gun shop is finding a suitable location that meets the legal requirements, as well as creates good opportunities for business. A federal worker will come and assess the location of your shop to decide whether it meets the legal criteria and can be allowed to operate.
- Security Measures
A big part of the additional costs that come with a physical store is security and storage costs. To get an FFL for your gun store business, you must ensure the firearms are protected by good security systems and are not easily accessible to just anyone walking into your store.
Of course, as you are most likely going to handle ammo as well, it is important to have proper conditions for storing dangerous explosives in your warehouse.
- Target Market
While adhering to local regulations is crucial for gun stores, it is also necessary to consider things from a business perspective. Your business location should consider your target demographic and the presence of competitors.
You want your location to be in a convenient spot for the people who are most likely to be gun owners or interested in gun purchases.
Getting Your Federal Firearms License
Perhaps even more important than your location choice, although heavily tied to it, is being approved for gun sales by the government. You can plan all you want, but gun stores cannot operate without business licenses after all.
The process of getting your FFL costs around $3k and can take up to several months, so it is recommended to start in advance.
A vital requirement for getting an FFL is having no criminal record. The government will conduct background checks to ensure that you are eligible to operate a gun store.
Your gun shop location must be in an allowed area to guarantee the safety of your operations.
In addition to that, you must then pass another check regarding the ways your store handles and stores its firearms.
After a federal worker has conducted all of the three inspections and decided that your gun store meets all the requirements, you are free to start your gun sales.
Funding The Start-Up Costs
Another obstacle in the way of firearms sales is securing a starting capital for your business venture. There are several ways you could fund your project.
How Much Does Opening A Gun Store Cost?
The average estimated cost of starting a gun shop is about $61k, with a range of $44k min and $77,5k max. Most of the money goes towards inventory and inventory management, but you must also remember that insurance, marketing, security, and employee salary are also a vital part of that sum.
Acquiring The Funds
Self-funding has a great number of benefits for an individual starting a new business. But most people don’t have the necessary amount of money to cover all expenses in their savings and have to resort to other means of getting the required sum.
Bank Loans
A loan might seem to be an obvious solution to the problem. However, you usually need to have a high credit score to be able to provide the bank with collateral. The banks can also take a long time to approve these loans.
Although such a method has some obvious upsides. You are looking at an opportunity to loan a larger sum of money at a lower interest rate. You will always have full access to your business bank account. You may also choose between different kinds of loans to find the conditions you believe to be most suitable for your business, e.g. SBA (Small Business Administration) Loans.
Revolving Loan Funds
Aimed at those, who are not able to secure a conventional loan at the bank, RLF gives smaller amounts of money to lenders, with the benefit of less strict conditions for securing a loan than those you’d find in a bank.
Of course, the interest rates for you will be slightly higher.
Other sources of a loan for people who can’t get approval from a bank include alternative lenders, such as online lenders, and P2P investments.
Investors
Similar to P2P, another way to secure the necessary funding is to find investors who could be interested in your business project.
If you feel you have an original business concept or a unique idea for your entrepreneurship, you may even try to start a crowdfunding campaign for the opening of your gun store.
Family and Friends
If you don’t want to get involved with loans from any financial organization or pitch your ideas to investors, you can attempt to find the required amount of money among your relatives and friends – provided they have it and are willing to lend.
A deal with a person close to you can mean that you won’t have a strict payment deadline and a sky-high interest rate. Such benefits are great for starting your gun shop.
However, you should always remember your responsibilities and make sure you fulfill the obligations you have for this person.
The Process Of Licensing Gun Stores
There are a few steps you must follow to get a local business license and start your gun shop. Choosing the right legal structure can ease the process of registration, taxation, and personal liability. What structures can you choose from?
- Sole Proprietorship
- General Partnership
- Limited Liability Company (LLC)
Most small business owners gravitate towards sole proprietorship. There is no legal distinction between you and your company in this structure, so all income is considered yours, and you are supposed to pay the taxes on it as your tax return. But that also means you are liable and solely responsible for any damages, losses, and liabilities of your business.
A general partnership has a lot of similarities to the previous category but includes multiple people who share the burden of taxation with the owner.
LLC combines the best parts of a corporate structure and a smaller business structure. You, as the owner, are not personally liable for debts, however, you can enjoy the benefits of choosing your managerial structure, freely distributing ownership of the company avoiding double taxation on salaries, and many more.
We believe that the LLC structure is the best choice for your business entity, as it helps you deal with many issues opening gun shops might present you with.
Afterward, you must register your business, and its name, and register for taxes.
Marketing Plan For A Successful Gun Store
When you are finished with acquiring all the business licenses, the next step of your business plan would be developing your marketing strategy.
You must understand your potential market to ensure your promotional materials bring back the biggest amount of paying customers. Even if you are the only physical shop situated next to a location with plenty of gun owners, such as a shooting range, you will always have competition in the form of online retailers.
In this day and age, a powerful online presence speaks volumes about the business. Advertisements on social media platforms are a key element in popularizing your brand and establishing a steady flow of customers.
Moreover, proper marketing strategies and search engine optimization for your website can guarantee that your advertising will reach the intended audiences, based on their age, location, etc.
Proper Pricing For A Gun Shop
A big part of any business is a good pricing policy. It is quite tough to balance the amount you charge your customers between the prices of your competitors, the price your customers are willing to pay, and the price you need to maximize your profits.
A big factor in your gun shop being profitable is, of course, the optimization of your supply chain. Still, you are supposed to decide whether you want to follow the MSRP (Manufacturer Suggested Retail Price) or make up your retail price.
You might be surprised, but people purchasing firearms are not the biggest source of profit for the business. Market research shows, that a gun store tends to earn the most from related accessories.
The mark-up price on such items is usually much higher than on guns. So, ironically, it is more profitable for a gun shop to sell ammunition than guns themselves.
Finding Employees
As an owner of a gun store, you’ll have to handle several tasks. A firearm business needs accounting, and marketing, someone who manages the logistics of your supply chain, security personnel, and someone who is assisting customers.
We do not doubt that you are a talented individual. However, one person can’t possess a deep understanding of all of those areas of business ventures. To create a truly successful gun store, you will have to hire employees.
The number of employees to hire depends on your budget and ability to manage different tasks.
Security is one of the most important aspects of a gun shop, as governmental regulations dictate that a firearms dealer must ensure the guns cannot be accessed easily.
Accounting is also a vital area to cover, perhaps even more so than security. To avoid legal problems, and manage salaries, spending, and taxes, it is best to hire a specialist who will be responsible for that aspect of your gun store.
A marketing specialist can be a good investment in the future profits of your gun shop, especially if you wish to make a web page for your business.
A person, knowledgeable in marketing, can better cater to your potential customer base’s interests and promote your business with maximum efficiency.
To further enhance the performance of your business, you can look into investing in some corporate software. Such programs streamline many business practices and help you manage all processes in your gun store more clearly and efficiently.
FAQ
Conclusion
Now that you have a general understanding of how to open a gun store, you should be able to decide whether it is the path you want to commit yourself to.
If you have the determination to pass the lengthy process of getting a seller’s permit, perform market research and analysis, and tackle the starting costs, we wish you the best on your journey to successful entrepreneurship in the firearms industry.
