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FFL start up
- Thread starter Glonkguy
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dcmdon
NES Member
A SOT is $500/year.
A rounding error compared to inventory costs.
I used to run a home based FFL back when I lived in CT. I had anywhere from $3k to $20k in inventory at any given time. I was an 07 with a Class 2 SOT.
I tried to keep my inventory limited to stuff that was interesting. If someone wanted a Glock, I'd order it. If I bought $20k worth of guns from an estate, I'd throw the majority of them up on Gunbroker or bring them to a local brick and mortar and put them on consignment. Anything truly interesting, I'd reach out to my network of past customers and pistol permit students and share it with them.
If you want to open a brick and mortar shop, I'd budget 100k+. You will need to rent a place. You will need glass cases to shot the guns in, a point of sale system, a safe, and an alarm.
majority of your start up cost will be inventory. And then I would't plan on pulling any income out of the business for 6 months. So you need a pile of money to live on while you build it.
Make friends with local financial planners and estate lawyers. They can be a source of estate opportunities. You can buy an entire estate of guns for typically 40 cents on the dollar compared to used retail.
The small time dealers I've known who made good money were constantly hustling online when there weren't customers in the store. They bought estates, listed them on GB. So they were busy updating ads and shipping stuff out. Used guns are where the money is. You will make $50 to $100 on a new Glock or Rem 700. That doesn't put food on the table, or even pay the rent.
Mesatchornug
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Any business, run properly, can be profitable. The fact that there are still shops tells us that some must be profitable. Make a plan, put your skin on the line, then see if your ideas are as good as (or better than) your neighbors'.
Probably not a great time to get into the business unless you're planning for the long haul. At least things won't be impossible to buy. The biggest cost is real estate over basically everything else.
dcmdon
NES Member
Great point. With at least 4 years of Trump, there won't be any panic buying.
Re real estate, if he rents , little cash outlay is required.
You reference things being impossible to buy. During the Obama panic of the summer of 08, as a small time FFL , I couldnt' get ANYTHING new. What little allocation the distributors got, went to large retailers who bought 100k of guns a month.
Which brings me back to buying estates. That marketplace was unaffected.
In fact, when the world is panic buying scary black guns, the FUDD gun market gets softer. Because all the money is going into black guns. I was able to pick up some custom 1911s, Parker and Fox shotguns super cheap. I sat on them for a couple of years and then sold them for a good profit. (Until Sandy Hook, Obama did nothing on guns. It completely ignored the issue. Which pissed off the gun control people)
Mark from ?
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This totally. And with today's vast array of online retailers.....making money is tough.
I think you have to do it with real estate you own, or a rental property you own and are renting to others, like say a strip mall, so they pay your rent for you.
Paying high volume rent unless your in a real good turnover area is a profit killer.
You make more money on ammo and accessories than you will on out of the box guns as there is low markup on them unless you buy volume.....
If you have a high volume of trades where people are willing to let you take in for 50% value or less...or like Don said, volume buying large estates at 25% value, .and you can turn them over. Its not a bad deal....but that can be a lot of location and luck.
You can make some bucks gunsmithing on top of it all.
In my area, dealers are sucking wind. My FFL just lowered their transfer fee to 15 bucks to get asses in the door.
People are not buying, Boomers are selling old shit they had and can't shoot anymore, and seems with exception of me. All Im doing is buying shit I couldnt in MA, getting my amount of loaded mags up, and boosting up my ammo inventory because prices are down. After that, then I'll be done buying, with exception of reloading stuff which is going down in price finally, and probably selling a few things off as well.
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Rockrivr1
NES Member
I have a friend who is an FFL in Mendon and has a small shop over a CrossFit location. Was talking to him two weeks ago and he was saying how business has already slumped since Trump came into office. He voted for Trump but says that his first stint as president almost put him out of business. Tough decision. Panic buying is good for business.
Some of that is demographics. If you're not in a gun money area revenue is tough. If you're in a region where everyone is a skinflint that makes it tougher.
There are huge swaths of "free america" where the gun shops are pretty terrible partially because of the buyers being terrible and it turns into this sort of horrible feedback loop. I have friends in FL and they don't gush about the gun shops there. One of my buddies has a dude he buys a large burrito for to get his transfer done, guy barely has a "Store front".
Mark from ?
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I agree. For sure Im in a money area, and the newbs get boned hard here......not by my shop but by a few others, especially the local one with the indoor range that prices shit way above retail and gives people 30% value at sell time. That place is for rich NY cityiots of which there are plenty of them here....especially now.
Overall though, the shop I do business with that Dench gave me a reference to. The guys are solid and it was like walking out of my local town MA shop that I loved, right into the same type of atmosphere except I can buy all sorts of shit now that I couldn't before, and they have no issues and no flack doing transfers...cheap as shit now. But if they do have it in stock, Ill buy it there...as their prices are not worth the hassle of online.
Selling down here on FLguntrader has been way better than up north. I get quick no nonsense responses and have sold a bunch of stuff already for good prices Id never get up there. Just a big gun buying audience down here.
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Rob Boudrie
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Plus $2000 (I think) for ITAR unless you are purely for research and not any selling. I don't think that not doing any international sales precludes an 07 from the ITAR requirement, however, it does not appear to be rigorously enforced if the 07 is not exporting.
Think of the unique nature of the business. Your customers will have access to either wholesale price information, or very close to it. Retail markups are frequently double or more in other industries, and you won't get near a dealer price list unless you are really in the business. For example, a bicycle shop does not have to worry about it's customers having access to dealer price info, or customers coming in and expecting to pay the supplier directly and pay you $50 or less to use your business license so they can bypass the retail markup.
Unless you order 100 guns (of one model at a time), or rounds by the million (per product, not aggregate) you will not be able to get the kind of pricing that large established independents get.
A simple exercise - Gather two pieces of information:
1) Cost per hour to keep the shop open - rent/mortgage; utilities; insurance; donations to political campaigns to get zoning approval; employee; etc.
2) Your weighted margin on products
From this, you can easily calculate "dollars per hour" required to break even.
Rockrivr1
NES Member
Also if you’re serious you need to look into a credit card system. Cash only is fine but if you start selling on a bigger scale you’ll need one. Not even close to cheap setting it up and using it.
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Rob Boudrie
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As a small business, the owner will almost certainly be personally liable. Suppliers and landlords are unlikely to accept "my assets are shielded by an LLC so I do not have to pay if the business fails".
In practice, residential leases are rarely enforced and collected in the renter leaves early. I don't think this is the case with a commercial lease. Consider the full amount for the committed term spent the day you sign - if the business fails you may still hae to pay rent for the duration.
Discounting for cash is a great thing but a CC processing system is needed otherwise you're leaving money on the table when theres an occasion where someone wants to buy some extra junk with their gun. In 2025 not doing CC processing at some level at retail is suicidal. The greasy spoon down the street from my house thats probably one of the cheapest in town, they will even take credit/debit.
Rob Boudrie
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Setting it up is near-zero cost with the lower end suppliers like Stripe and Square. If you want high volume rates where you actually see vigs that differ by card type (rather than just being dinged the max as if everyone had a premium card), industry, card presentnss, etc. it becomes more complex and expensive to set up. And yes, bigger vendors do pay a bigger percentage for a customer using Visa Signature or Infinite than Vist Traditional for example.
Low end yoou pay a CC charge on everything. Move up the food chain a bit and you will pay a vastly lower amount for a card persent w/PIN debit transaction that for a charge transaction - which is why many vendors ask for the PIN even though they can process a debit card as a charge transaction without the PIN.
Rob Boudrie
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Like I said, not rigorously enforced.Nobody pays for ITAR. I thought this horse went to the glue factory a long time ago, but apparently it's still a "thing".![[rofl]](/xen/styles/default/xenforo/smilies.vb/013.gif "ROFL [rofl]")
CrackPot
NES Member
Correct. No one pays ITAR. Its a self reporting, self regulating set of regulations that unless you do something REALLY wrong, they will never knock on your door.Nobody pays for ITAR. I thought this horse went to the glue factory a long time ago, but apparently it's still a "thing".
I'm about 16 months into having a B&M shop in NH. Your start up cost is the cost of the FFL, the SOT (if you want it), rent, the NH License to Sell Pistols and Revolvers, and insurance. You don't need anything else. You don't even need to have a single firearm in inventory to be a FFL.
But you will want a bunch of other stuff. In less than a year, I ended up adding on an ecommerce site, payment processing, various software licenses, FastBound, Dropbox for backup of my Bound Book and 4473s, etc.
My "startup" cost was about $10,000-$15,000 when all said and done. I paid for it by liquidating my firearm collection. The costs went to inventory, safes, security cameras, printers...you name it. And it goes very fast.
Being profitable all depends on your business model and your expenses. If you find a hole in the wall to rent out for $250 / month and just do a few transfers and online sales, you'll be profitable fast. If you decide to get street visible retail space for $1500 / month + utilities, you're going to need to be much deeper on inventory, have open hours almost every day of the week, and be good at sales. You'll also have to find a tactful way around transfers, transfer fees, and finding a way to either avoid or convert the customers that are only interested in saving $10 because they saw it online.
I spend just about every free hour I have working on my business. For better or worse, I get complements about answering emails at 3:00 AM or calling people at weird hours of the night once my son is asleep. Luckily, I've been able to generate almost all positive feedback and have close to 40 five star Google Reviews. But it takes a toll on your life. If you have any other responsibilities, like family, they will let you know how absent you've been. So finding balance is key. And the crazy part is, I could be doing so much more on the marketing end. But at some point, you must sleep.
I include the above paragraph only to convey that there is a difference between getting a FFL and running a business. Believe it or not, getting a FFL is very easy. It's practically shall issue. The ATF looks for:
1. Can you pass a background check?
2. Zoning
3. Landlord approval
4. That you have all the correct licenses required by the town or the state
That's about it. Of course, it also comes with the ATF inspecting you which can be calm or turbulent depending on who is running the agency and what their directives are.
To get a FFL, you need the bare minimum. To get a FFL to pay for itself, find a place that is low rent. My first spot was a half-demolished bathroom in the back of a warehouse for $200 a month, but it was good enough to get a 07/SOT which helped me finance a new location.
And until you have a business plan and vision, don't quit your day job or treat it like anything more than a side business.
But you will want a bunch of other stuff. In less than a year, I ended up adding on an ecommerce site, payment processing, various software licenses, FastBound, Dropbox for backup of my Bound Book and 4473s, etc.
My "startup" cost was about $10,000-$15,000 when all said and done. I paid for it by liquidating my firearm collection. The costs went to inventory, safes, security cameras, printers...you name it. And it goes very fast.
Being profitable all depends on your business model and your expenses. If you find a hole in the wall to rent out for $250 / month and just do a few transfers and online sales, you'll be profitable fast. If you decide to get street visible retail space for $1500 / month + utilities, you're going to need to be much deeper on inventory, have open hours almost every day of the week, and be good at sales. You'll also have to find a tactful way around transfers, transfer fees, and finding a way to either avoid or convert the customers that are only interested in saving $10 because they saw it online.
I spend just about every free hour I have working on my business. For better or worse, I get complements about answering emails at 3:00 AM or calling people at weird hours of the night once my son is asleep. Luckily, I've been able to generate almost all positive feedback and have close to 40 five star Google Reviews. But it takes a toll on your life. If you have any other responsibilities, like family, they will let you know how absent you've been. So finding balance is key. And the crazy part is, I could be doing so much more on the marketing end. But at some point, you must sleep.
I include the above paragraph only to convey that there is a difference between getting a FFL and running a business. Believe it or not, getting a FFL is very easy. It's practically shall issue. The ATF looks for:
1. Can you pass a background check?
2. Zoning
3. Landlord approval
4. That you have all the correct licenses required by the town or the state
That's about it. Of course, it also comes with the ATF inspecting you which can be calm or turbulent depending on who is running the agency and what their directives are.
To get a FFL, you need the bare minimum. To get a FFL to pay for itself, find a place that is low rent. My first spot was a half-demolished bathroom in the back of a warehouse for $200 a month, but it was good enough to get a 07/SOT which helped me finance a new location.
And until you have a business plan and vision, don't quit your day job or treat it like anything more than a side business.
CrackPot
NES Member
This answer is not inaccurate for a non-gun business, but is way off base relative to gun businesses.
Stripe, Square, etc do not permit the sale of firearms, ammo, firearm accessories, etc. Remove them from your thinking.
The world of CC processing falls into two buckets, traditional and modern. Traditional you pay a some amount above interchange for each transaction and possibly a per transaction charge. In traditional the type of card you swipe matters and you never know what it will cost you to swipe a card. Traditional is what large volume places use.
Modern are like square and stripe. They charge the same amount everytime you swipe, lets say 3%. A debit card might cost 0.5% on traditional but costs 3% on modern. Amex Black might cost 4.5% on traditional but costs 3% on modern.
Anyone using low volume, especially low volume high dollar should use modern. BUT most modern processors won't touch guns.
The best way for a gun shop to find a friendly processor is to pick from this list https://support.gunbroker.com/hc/en...Immediate-Checkout-Supported-Payment-Gateways
If they support a gunbroker gateway, then they are good about guns. I use BNG which is actually Clearent on the backend (both listed). Lots of others are known good.
Rob Boudrie
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I use eproessing.net with Clearent on the backend for one of my projects; stripe for some others. Authorize.net is another alternative, and I have built interfaces to that as well.
Clearent has an obnixious cancellation fee policy.
You get a LOT more control with the traditional processors - Do you want to use CVV2? Do you want full address verification, no address verification, or zip code verification only? Do you want to place a hold on a charge (hotel / gasoline pump style) prior to submitting the actual charge? What time of day do you want the daily batch processing done? Do you want to be able to cancel charges that have been submitted but the settlement time has not been reached (and avoid any credit card fee since it was not a "refund" transaction)? Do you want to benefit from a lower fee when someone uses a non-premium card instead of paying a fee sufficient to cover the most expensive type of card? Most or all of these are unavailable on the "modern" systems. The APIs to traditional systems provide much more control than the "make it simple" modern systems.
As to modern being good for "low volume/high dollar" - what would your $$ cutoff be?
I had to do a Stripe scramble because they cut off a shooting competition. When I dug, the issue was not the fact that it was a shooting competition but that prizes were promised to the winners. In Stripe's view was that violated the no gambling clause.
This is huge, especially for large dollar purchases, which is why I prefer traditional for larger scale applications, like websites that can do tens of thousands of $$ per day in transactions.
CrackPot
NES Member
It is going to be VERY dependent on mix, card types, customer types, etc. Gun businesses we don't have to worry about charge backs. We have their ID and signature and charge backs fail pretty spectacularly. So that helps the math. We are also low volume high ASP. That also effects the math. I think anything under $50K/month is no brainer to modern. $50K-$100K/month is either. $100K+/month is traditional.
I do see alot of debit cards with the gun shop so that is a win for traditional. BUT I also see a lot of very high end cards from my big ticket customers and that is a lose for traditional. I can make a case for always modern with a gun shop given the mix and profile of customers, but I think my approximates above are defensible.
My business name implies nothing about guns. I tried square at first. They figured it out and cancelled me in about 6 months. Intuit allows guns for in person swipes only. Any other transaction they will cancel.
Traditional yes, you can set the settle time and therefore give yourself a window to unwind without incurring fees. The modern I have used also have allowed same day voiding.
But the fee structure for traditional requires enough business to overcome the fixed costs.
For most people simple is easiest. If you have the analytics, the volume, the cognitive skill to do the evaluation, then...
Anyone starting a gun shop worrying about startup costs should go modern.
Rob Boudrie
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It is also one less headache for the business owner dealing with a multitude of other issues.
dcmdon
NES Member
Great point. The FFL holder is not laying out money up front like if they purchased. But they do incur as a liability the full value of the lease.
dcmdon
NES Member
I believe that ITAR isn't even formally required anymore. I'm about 75% sure this rule change happened.
Even still, I don't know a single 07 who has ever paid ITAR. I read about one once, about 25 years ago. State department approached him and told him he had to pay. There were no fines, no threats. He was given the choice of paying or switching to an 01.
ITAR UPDATE – Proposed Rule Change May Help FFLs
Federal Firearms Licensees (FFLs) are required to jump through various hoops to be able to sell guns as a business.From zoning laws, to insurance to National Firearms Act (NFA) payments, and to detailed record keeping, license holders need to be in compliance or risk losing their ability to...
www.thefirearmblog.com
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CrackPot
NES Member
One of the big advantage of a 07/02 is making of post samples. Even if this rule went into effect, they would trigger ITAR in the strictest sense.I believe that ITAR isn't even formally required anymore. I'm about 75% sure this rule change happened.
ITAR UPDATE – Proposed Rule Change May Help FFLs
Federal Firearms Licensees (FFLs) are required to jump through various hoops to be able to sell guns as a business.From zoning laws, to insurance to National Firearms Act (NFA) payments, and to detailed record keeping, license holders need to be in compliance or risk losing their ability to...
I can attest to this. Forget them.
