How to Start a Gun Shop
Are you a gun enthusiast and thinking of starting your own business? Opening a gun shop could be a great opportunity for you to do what you’re passionate about and make a living while being your own boss.
A gun shop sells firearms such as handguns, shotguns, rifles, etc., ammunition, and related gun accessories. Some also offer gun repair services or have a shooting range on site. They may even offer firearms training classes.
According to IBIS World, the gun and ammunition store industry is expected to reach $15 billion as of 2021 and grow 7.2% this year. The industry has grown 5.5% annually for the last 5 years. According to Statista, there are 9,502,628 firearms manufactured in the U.S. annually. In the United States, gun ownership statistics show 42% of households own at least one firearm.
The increasing use of guns recreationally is fueling the growth of the industry. Total recreational spending is expected to increase, which includes recreational gun use. The renewed push for stricter gun laws presents a threat to the industry. New laws could restrict the ability of citizens to buy guns or particular types of guns.
Your target market will be people interested in recreational gun use or home protection.
Checklist for Starting a Gun Shop
If you’re thinking about starting your own gun shop, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
Step 1: Write a Business Plan
After coming up with the idea, the next step in starting your firearms store should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Form a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a gun shop, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 3: Name the Business
Finding the perfect gun shop name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 4: Select your Location
Your location will have to be in an area where gun shops are allowed. Check with your city and state to find out what laws apply. A space with good visibility is also important.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
A gun shop is heavily regulated and will need to get a Federal Firearms License (FFL) from the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) along with a state/local Firearms Dealer license. Dealer licenses are commonly issued by the state and city and/or county through the police department, sheriff, and City Council. Just because you get licensed doesn’t mean you have free range to sell whatever weapons you want. Governmental regulations will restrict the types of guns and ammunition that can be sold.
The process varies by state, but in addition to licensing, a gun shop will need to conduct background checks on customers who are wanting to purchase firearms.
In addition to gun-specific requirements, a gun shop will need to research general business registrations. These will vary depending on where the shop is located, but some of the more common ones include a business license, sales tax permit and an Employer Identification Number.
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a gun shop is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A gun shop will need to set aside a budget to cover marketing costs on a continuous basis.
Common marketing techniques for a gun shop include developing relationships with gun clubs and local law enforcement, in addition to social media marketing and online advertising, as well as brochures and flyers.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a gun shop. A few of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and damage within your premises.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
The cost to insure a gun shop will vary but on the higher end of the range due to the nature of the business. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
You will need employees to help you run your gun shop. Make sure that you select people with appropriate experience and licensing. It also important that not all potential employees can work in a gun shop. You will need to do a background check for all employees and check for criminal history, mental health history, immigration status, etc.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your gun shop is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a gun shop?
Here are some of the typical costs you will face when you open a gun shop.
– Licensing $200
– Space rental for your shop $1,500 – $3,000 per month
– Inventory $20,000 +
– Insurance $400 – $1,000
How much can a gun shop owner make?
Profit margins on guns are low, so offering other related products or services is a necessity. The average gun shop owner makes $38000 per year.
What skills are needed to run a gun shop?
There are several specific skills that you will need to open a gun shop.
License. You will need a Federal Firearms License.
Knowledge of firearms. You need to have extensive knowledge of firearms to be able to explain them to customers. You also need a thorough knowledge of gun laws.
Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
People skills. You’ll need to be able to build rapport with your customers so that you retain them as customers and keep them coming back.
Are there grants to start a gun shop?
It’s extremely rare to find a grant to start a gun shop. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a gun shop?
The NAICS code for a gun shop is 451110.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?