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.
Skills, Experience, and Education Useful in Running 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.
Costs to Start a Gun Shop
Here are 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
Steps to Starting a Gun Shop
Step 1: Write your 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.
Step 2: 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 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include a 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.
Related: Comparison of Business Entities
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.
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 business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the 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 social media marketing and online advertising, as well as brochures and flyers. Developing a website can be a significant expense, but it can also give your gun shop greater visibility online.
Step 9: Get Insurance
A gun shop needs several types of insurance for full coverage:
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.
Your insurance costs will be on the higher end of the range due to the nature of the business.
Insurance policies will vary. 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: Hiring 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.
How Much Can You Potentially Make Owning a Gun shop?
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.
Things to Consider Before Starting a Gun Shop
Running a gun shop or any business will have its challenges. You need to be prepared and make sure that you know what you’re getting into.
Marketing and acquiring customers will be your biggest challenge and an ongoing expense. You will face competition, so your marketing will need to make you stand out, and your prices will need to be competitive.
You need extensive knowledge of gun laws, and you must make sure that you are always in compliance.
There is liability in owning a gun shop, so being properly insured is critical.
You will be risking money opening a gun shop. It will take time and hard work to see a profit.
Talk to other business owners for tips on starting a business and do your homework to determine costs. Research other gun shops to see what they offer and what prices they charge.