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View Full Version : How much does it cost to open up a small store?


Q
08-14-2009, 7:32 PM
Instead of trading in for a new car; I was thinking about maybe getting a FFL and opening up a small gun store.

How much am I looking at to start? Maybe I'll just do transfers instead of having stuff in stock because I wouldn't have money for inventory at first. Maybe some lowers and ammo?:D Things are pretty slow, so I'm not sure I want to get into it right now, just thinking out loud.

How much is the FFL license? Yearly renewal price?
Any other fees?

Anything I should know? Or study up on? What are a few reason shops don't survive? Lease to expensive vs sales..

Mike's Custom
08-14-2009, 8:09 PM
Well, for one thing, it is hard to find a store front that you can rent cheaply. most want a long term lease on the building of 7 to 12 years. Then you have to make it crash proof. Now, buy glass counters and long gun racks so whatever you pay for those. If you are smart you wil have gun safes to lock all your firearms into when closed considering most mall type stores have common space above the drop ceilings. Good alarm system with sight and sound and great monitering. Then you might be able to start with $100K in goods, remembering that you get about 2 guns or less per $1000 and ammo is not cheap and can tie up several thousand in just a few cases. you need shelving and non firearms stock and scopes will eat up a good chunk even with cheap scopes. It is all the peripherals that will take a decent bite out of that $100K. Now, you will make about 15% to 18% MAYBE on firearms and less if you include shipping in the prices. If you want to price things so CAl Gunners don't complain about prices then try 10% or less. If you want to do transfers then you will spend 30 mins or moer per transfer for what ever fee you charge but people will complain if you are over $20-25 or so. Same with PPTs at 45 mins for handguns PLUS time for the A&D book all for $10? Now add in the fact that you could be legislated out of business at any time and would have to eat the remaining lease on the building. Considering you can make a higher priffit on scopes and rings and accessories IF you can sell them because everyone knows you can buy them cheaper from Cabellas. Bass Pro or someother large online store and you would ahve to ask yourself, "why do I want to work for less then minimum wage but have the BATFE and CA DOJ visits to look forward to at any time with no notice"?

Yeah, I think you could do it for $100K in inventory (not that much. I use to have $250K doing gun shows around central CA and needed anywhere from 10 to 15 tables) plus the cost of the store front, fixtures and security.

Q
08-14-2009, 9:29 PM
Does the store have to be ground level or can it be in a mini mall? Like on a second story? What is required of the structure?

I saw lots of those racks and glass displays offered cheap from a close out electronic store at the mall. Those should be easy to find.

What does the structure require? Locked gating for the front and back, 24hr Alarm system, what else?

Don't care for gun shows. I don't even go to them now.

I know this nice old guy that has had a store for a while. I haven't seen him in a couple years, he might retire, so maybe I'll talk to him about taking over the store or ask him some questions about being a FFL.

Rudolf the Red
08-14-2009, 9:29 PM
It cost me about $500 to get started out of my home. The DOJ and ATF people have been nothing but nice. If you are renting, forget it. FFL is $200 for 3 years. Local business license was $60 and I just renewed for $10. Certificate of Eligibility was around $90 I think plus a livescan fingerprint session. The resale permit is free from the BOE. Yes, you have to collect tax. After all that, you pay the state again to be on their List. The whole thing took 3 months and expect to have Federal and State LE visit your licensed premises. Of course, I live where the Sheriff car doors have cow heads on them. It may be different in your area. The difficult element is usually the local license. Everything else is easy.

Q
08-14-2009, 9:56 PM
The fees are not as much as I thought they would be. I was thinking a couple thousand for all the licenses. I guess the lease is what will cost the most. There are a lot of new mini malls so I thought it would be nice to open a small store. I read before it was harder to get a home FFL nowadays. I don't want to do that though but it's good to know..:)

FortCourageArmory
08-14-2009, 10:08 PM
I have a small store and my start-up costs were about $250K to get the doors open and another $90K in inventory costs within the first year. In SoCal you will need a store front before ATF will green-light your venture. Costs for rent vary but I'm paying $3/sq. ft. for my space.

THT
08-15-2009, 6:05 AM
It cost me about $500 to get started out of my home. The DOJ and ATF people have been nothing but nice. If you are renting, forget it. FFL is $200 for 3 years. Local business license was $60 and I just renewed for $10. Certificate of Eligibility was around $90 I think plus a livescan fingerprint session. The resale permit is free from the BOE. Yes, you have to collect tax. After all that, you pay the state again to be on their List. The whole thing took 3 months and expect to have Federal and State LE visit your licensed premises. Of course, I live where the Sheriff car doors have cow heads on them. It may be different in your area. The difficult element is usually the local license. Everything else is easy.

You're a home-based FFL? I thought the ATF stopped granting those?

tenpercentfirearms
08-15-2009, 8:17 AM
Instead of trading in for a new car; I was thinking about maybe getting a FFL and opening up a small gun store.

How much am I looking at to start? Maybe I'll just do transfers instead of having stuff in stock because I wouldn't have money for inventory at first. Maybe some lowers and ammo?:D Things are pretty slow, so I'm not sure I want to get into it right now, just thinking out loud.

How much is the FFL license? Yearly renewal price?
Any other fees?

Anything I should know? Or study up on? What are a few reason shops don't survive? Lease to expensive vs sales..

Forget costs. How much is your time worth? If you want to be so busy most other things in your life go to the way side, open up a retail business. If you like playing video games, going shooting, and spending time with loved onces, don't do it. If you want to be busy and be owned by your business. Go for it.

billslugg
08-15-2009, 8:31 AM
You're a home-based FFL? I thought the ATF stopped granting those?
It depends on where you are. If you live in a city, and they allow stores to operate out of a home, then you are OK. This is unusual though. Most cities would require a business license for counter sales to be in a Commercial or Manufacturing zoned area. The key to the ATF is the business purpose, the profit motive. They told me that I could get a renewal even if I had little or no firearms related profits, because I had a fully functioning profit motive driven business. They said: "Hey, you have a storefront, you have been here for years, you make money on sharpening, we support your effort to make a few bucks on firearms." They would not be happy with a home based FFL positioned as a profit making venture that made no money on guns.

The key to them is a business. They can sniff out a "home based collector" a mile away.

In my city, in a Residential zoned area, you can operate a business as long as there are no customer visits, no deliveries and pickups, and the sign on your business is no larger than 2"x6". If you live in an unincorporated portion of a county, then the ATF would allow you to set up anywhere.

I set up a manufacturing operation here. I rented a storefront in the city limits on a road with 9000 cars/day passing by, 1200 square feet, $400/month to month rent, zoned M-1. The ATF guys were insistent that I have a business license for manufacturing, and the city was insistent that I be located in an M-1 area.

I bought the contents of the shop from a guy for $30k. This included a bunch of old machine tools he was using for sharpening. I incorporated for about $4k, $30 annual corporation fee, $100/yr business license, $900/yr for $1M liability insurance policy. $1500/yr phone and internet, $1200/yr for utilities, $300/yr for security system, $100/yr business cards and invoice printing, $500/yr landscaping, $100/yr computer maintenance, $200/yr credit card processing, $200/yr checking account fees, $550/year tax preparation.

I spend $300/yr on advertising which is simply a Yellow Page listing. I do no other advertising and I have more work than I can handle. The sharpening portion of my business pays all the bills and funds my firearm inventory building process which is very slow. I also do pickup machine work, fix it work, FFL transfers. I rent a corner of the shop to a reloader. I buy the raw materials, he assembles the rounds in my shop, we sell the rounds up front. As owner of the raw materials, holder of the 07 FFL, and owner of the business I am thus the manufacturer. He is simply a contractor. I will never have an employee, only contractors.

Mike's Custom
08-15-2009, 10:45 AM
BATFE does not stop anyone that I know of from having a FFL out of their home. This is done by cities or counties and is not a BATFE restriction. What the BATFE does do is not issue FFLs to people living in those restricted areas because they will never get state or local licenses. Most people blame the BATFE for not getting a FFL when it is the restrictin of their city or county. The BATFE is a SHALL ISSUE on FFLs as long as the person applying is not a restricted person and only deny a FFL app. to those that would never get the rest of their state or local licenses. If you want to know if you live in a restriced area give the BATFE a call and they will tell you if it is allowed.

If you want a FFL out of your residence then call the BATFE and do not take someone elses word for it. I was told that for several years until I applied and found out for myself that what "others" had told me was bunk. I still hear it today.

SDProtection
08-17-2009, 1:30 PM
Mike's correct. I just went through the entire process in San Diego County. The BATF will be more than glad to help you through the process and even approve you, however, you must be able to show them all your local and state business licenses. In San Diego county, you won't get a business license if you are working out of your home. The sheriff requires a location and business hours as they are the ones doing the CA DOJ inspections. As for BATF they even called my landlord to make sure he was ok with a gun shop as the lease tenant. Once they get your application and see that you have all the licenses then you will have no problem

Q
08-17-2009, 3:44 PM
In my city, in a Residential zoned area, you can operate a business as long as there are no customer visits, no deliveries and pickups, and the sign on your business is no larger than 2"x6". If you live in an unincorporated portion of a county, then the ATF would allow you to set up anywhere.

I set up a manufacturing operation here. I rented a storefront in the city limits on a road with 9000 cars/day passing by, 1200 square feet, $400/month to month rent, zoned M-1. The ATF guys were insistent that I have a business license for manufacturing, and the city was insistent that I be located in an M-1 area.

I bought the contents of the shop from a guy for $30k. This included a bunch of old machine tools he was using for sharpening. I incorporated for about $4k, $30 annual corporation fee, $100/yr business license, $900/yr for $1M liability insurance policy. $1500/yr phone and internet, $1200/yr for utilities, $300/yr for security system, $100/yr business cards and invoice printing, $500/yr landscaping, $100/yr computer maintenance, $200/yr credit card processing, $200/yr checking account fees, $550/year tax preparation.

I spend $300/yr on advertising which is simply a Yellow Page listing. I do no other advertising and I have more work than I can handle. The sharpening portion of my business pays all the bills and funds my firearm inventory building process which is very slow. I also do pickup machine work, fix it work, FFL transfers. I rent a corner of the shop to a reloader. I buy the raw materials, he assembles the rounds in my shop, we sell the rounds up front. As owner of the raw materials, holder of the 07 FFL, and owner of the business I am thus the manufacturer. He is simply a contractor. I will never have an employee, only contractors.

This is very helpful in getting an idea of the costs, Thanks.
I was thinking about an 07 also. 07 to make rounds, I did not think of but that is interesting.
Reading the last section, I got a vision of the factory in Schindler's list where they made tank shells.:D

freonr22
08-17-2009, 3:48 PM
an 07 per ar15 barrels requires itar reg which is like $1800 or $2200/year + + + + i was told it works out to about $6k/year between insurance and lic/taxes/fees maybe someone else has more info

freonr22
08-17-2009, 3:52 PM
#10 (http://www.calguns.net/calgunforum/showpost.php?p=1757392&postcount=10) http://www.calguns.net/calgunforum/images/buttons/report.gif (http://www.calguns.net/calgunforum/report.php?p=1757392)
http://www.calguns.net/calgunforum/images/statusicon/post_old.gif 12-05-2008, 06:19 PM
http://www.calguns.net/calgunforum/image.php?u=370&dateline=1165213028 (http://www.calguns.net/calgunforum/member.php?u=370) mrkubota (http://www.calguns.net/calgunforum/member.php?u=370)
You need an 06 (ammunition mfg) type FFL to make ammo for sale. There's some additional paperwork to import components/live ammo as well.
Only 30.00 for three years. You have to submit full fingerprint cards and pass the std FBI background check.
You'll also need a CA seller's permit (resale license) Sales taxes are paid quarterly to the CA Franchise Tax Board.
May or may not need to have a commercial business address and business license, depends on your local ordinances. May be some restrictions/requirements on sale records (like in L.A.) and storage of components/live ammo as well.
BATFE agent will visit and interview you and check out the production site.

Liability insurance is expensive (about 7K/yr) and usually required by retail sellers before they'll carry your product on their shelves. Not required otherwise, but still a good idea.

If you mfg. or remanufacture ammo, an 11% Federal excise tax is applied. as well as CA sales tax if sold withing the state.
If you reload a customer's brass, then the FET is not applied, but of course CA sales tax still is for in-state sales.

Federal taxes are generally collected quarterly and managed by the TTB:
http://www.ttb.gov/forms/f530026.pdf

Shipping must be via common carrier like FEDEX or UPS. A separate hazmat certification is needed to ship powder or primers by themselves. Primed brass or loaded ammo IS NOT considered hazmat, only ORM-D. Shipping carton must be labeled accordingly and boxes must meet strength requirements.

There's a lot of paperwork.....:D
http://www.calguns.net/calgunforum/images/buttons/quote.gif (http://www.calguns.net/calgunforum/newreply.php?do=newreply&p=1757392)

Q
08-17-2009, 3:55 PM
BATFE does not stop anyone that I know of from having a FFL out of their home. This is done by cities or counties and is not a BATFE restriction. What the BATFE does do is not issue FFLs to people living in those restricted areas because they will never get state or local licenses. Most people blame the BATFE for not getting a FFL when it is the restrictin of their city or county. The BATFE is a SHALL ISSUE on FFLs as long as the person applying is not a restricted person and only deny a FFL app. to those that would never get the rest of their state or local licenses. If you want to know if you live in a restriced area give the BATFE a call and they will tell you if it is allowed.

If you want a FFL out of your residence then call the BATFE and do not take someone elses word for it. I was told that for several years until I applied and found out for myself that what "others" had told me was bunk. I still hear it today.
Good info. I'll have to call for more info after figuring in all the costs and which city etc.

Mike's correct. I just went through the entire process in San Diego County. The BATF will be more than glad to help you through the process and even approve you, however, you must be able to show them all your local and state business licenses. In San Diego county, you won't get a business license if you are working out of your home. The sheriff requires a location and business hours as they are the ones doing the CA DOJ inspections. As for BATF they even called my landlord to make sure he was ok with a gun shop as the lease tenant. Once they get your application and see that you have all the licenses then you will have no problem

I wonder how difficult it is to lease a place for a gun shop? I definitely don't want to be in a bad area. I'd like to be in a nice area with nice people around. My only fear of having a small store is getting robbed.

Rob454
08-17-2009, 4:37 PM
Shop around for retail space. I had a shop that was 1100$ a month
I didnt sell guns I did construction and i was in a retail area. jsut happend to be cheap to rent there.
With all the businesses closing there is tons of retail spaces empty.
you could also venture out and offer fishing stuff also. lots of hunters fish also.
Rob
heres a bldg and a guy looking for a FFL in long beach
http://www.calguns.net/calgunforum/showthread.php?t=186892

if you need a securuty system installed let me know . ill do it for cost of the materials and 1/2 the labor rate for a cal gunner.

SDProtection
08-18-2009, 5:08 PM
I wonder how difficult it is to lease a place for a gun shop? I definitely don't want to be in a bad area. I'd like to be in a nice area with nice people around. My only fear of having a small store is getting robbed.

the biggest challenge is figuring out what zoning laws you have to contend with and if where you want the shop will be allowed in that zoned area. Usually gun dealers are looked at as being required to be in industrial/commercial zones. That usually means the "less elegant" areas of town.

with that said, ATF will require you demonstrate the ability to secure your product. Safes, alarms, locks, window bars are all going to be apart of your life.

Q
08-25-2009, 4:54 PM
Shop around for retail space. I had a shop that was 1100$ a month
I didnt sell guns I did construction and i was in a retail area. jsut happend to be cheap to rent there.
With all the businesses closing there is tons of retail spaces empty.
you could also venture out and offer fishing stuff also. lots of hunters fish also.
Rob
heres a bldg and a guy looking for a FFL in long beach
http://www.calguns.net/calgunforum/showthread.php?t=186892

if you need a securuty system installed let me know . ill do it for cost of the materials and 1/2 the labor rate for a cal gunner.
Fishing stuff would be cool. Long Beach is a bit far. It would be nice to have a store by the beach. Thanks for the offer, if I do, I'll give you a call.


the biggest challenge is figuring out what zoning laws you have to contend with and if where you want the shop will be allowed in that zoned area. Usually gun dealers are looked at as being required to be in industrial/commercial zones. That usually means the "less elegant" areas of town.

with that said, ATF will require you demonstrate the ability to secure your product. Safes, alarms, locks, window bars are all going to be apart of your life.
I know, I wouldn't want to shop at a store with bars all over the windows.:D I like the gates that slide to the side. I curious of the cost of those. If anyone knows let me know.

Mike's Custom
08-25-2009, 9:38 PM
Fishing stuff would be cool. Long Beach is a bit far. It would be nice to have a store by the beach. Thanks for the offer, if I do, I'll give you a call.



I know, I wouldn't want to shop at a store with bars all over the windows.:D I like the gates that slide to the side. I curious of the cost of those. If anyone knows let me know.


A store here in Bakersfield just had a drive thru installed by some crooks. He had the expandable gates but the truck drove right thru them like they weren't there. You will need to install some BIG steel cement filled pipes in front of the windows to keep cars out. We are now in the days when crooks use vehicles to break into stores and we have all seen the videos on YouTube and security systems are nice but like the police, they only come into use after the police arrive. If it takes 3-5 minutes for a LE to get to the scene then you stock is gone.

FortCourageArmory
08-25-2009, 11:26 PM
I just remembered this classic line about the gun business.....

How do you make a small fortune in the gun business? Start with a LARGE one!!

new cal shooter
08-26-2009, 9:49 AM
Only advice I can give is move your stuff, sitting on it usually does not make you money, I've been to gun shops who have a 15% mark up and they move a few guns a week, then I've been to shops that area no bigger than 1000 square feet and advertise a 8% over cost on guns and you could not go in without 2 or more people filling out the yellow forms. Ammo was gun shop prices so you could get it cheaper but why go to two stores? Who can go into a shop and pass up a super deal? Not me, I was in there every 2 weeks :)