Key Steps to Open a Gun Store

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What are the key steps to open a gun store? Opening a gun store can be a rewarding and potentially lucrative business venture.   However, a gun store is generally more complicated than a typical retail business given the additional licensing and regulatory requirements.  For example, even securing a low cost payment processor is also more complicated for a gun store than a typical retail store.  In this posting, we will go over several factors to consider before you open a gun store.

Do you know the firearms industry enough to open a gun store?

Lots of people like owning a firearm think that they want to open a gun store.  But fewer are interested in learning about all the regulatory requirements, business trends and key players in the firearms business.   To be successful, you will need to know about a wide range of firearms as well as accessories (holsters, optics, ammunition, targets, etc.). It’s also helpful to have the ability to offer services, such as training and gunsmithing, to differentiate yourself from online retailers.  Unless this sounds like you, consider whether you are prepared to open a gun store.

Is this a home-based or store-based gun shop?

The first consideration when opening a gun store where it operates.  Many entrepreneurs passionate about firearms first start with a part time home-based business, often opening in the evenings and on weekends so that that they can keep a full-time job.  The advantage of operating your new business from your home is that you can avoid paying rent for a retail space.

The disadvantage is that a home-based business will limit the growth of the venture.  Sure, your friends and people that you know will not have an issue coming to your house, but new customers may feel uncomfortable shopping at a home-based business.  Home-based also businesses have limited visibility and walk in business.

Retail store locations do not have these problems, but the cost of paying rent and utilities on a dedicated store space will eat into your margins.  A store location can be more inconvenient that your home and require longer store ours to cover costs.

Are you opening a gun shop in a physical store or online?

Many retailers today open an online store – either as a stand-alone online-only business or to supplement their store operations.   We have covered the considerations of opening an online gun store in a different article  – click here.

Is your new gun store in a rural or urban location?

It is also important to consider the location of your store – regardless of whether it’s a home-based gun shop or store-based gun shop.   Each location type has its own set of pros and cons.

An urban environment is typically more populated and has better visibility. An urban gun store may have a larger customer base, but it will also have more competition from nearby FFLs.  Urban locations are often subject to more government regulations.

While a rural environment is less populated and may have smaller market potential, your customers may be more loyal.  On the plus side, a rural gun store may have fewer regulations than an urban location.

What are the licenses required to open your gun store?

To open a gun store, you will need to obtain a Federal Firearms License (FFL) from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).  This license is mandatory for anyone engaged in the business of selling firearms. The application process involves thorough background checks, compliance with local zoning laws, and adherence to ATF regulations. Once approved, your FFL enables you to legally buy and sell firearms, setting the foundation for your business operations.

You will also need to secure a state license. The FFL is required to sell firearms, while the state licenses are generally required to sell ammunition.

Here are the different types of FFLs:

Type 01 FFL – Dealer in Firearms / Gunsmithing (firearms repair)

Type 02 FFL – Pawnbroker

Type 03 FFL – Collector of Curios and Relics

Type 06 FFL – Manufacturer of Ammunition for Firearms

Type 07 FFL – Manufacturer of Firearms & Ammunition

Type 08 FFL – Importer of Firearms/Ammunition

The process of obtaining these licenses can be lengthy and complicated. Make sure you are familiar with the requirements of your store type and location before starting the process of opening a gun shop.  Be sure to have all the information complete and organized before applying.

Here are some of the other legal issues you will need to consider as a firearm’s dealer:

  • The federal government requires you to keep accurate records of your gun sales.  We will cover this in more detail below.
  • You will need to conduct background checks on customers who want to purchase firearms. The background checking process will differ depending on your state.
  • In addition to the firearm-specific license requirements, you will also need to apply for business permits. Depending on your state and local requirements, these documents might include zoning compliance permits, tax compliance and insurance policy documents.

Have you set up a business plan and operating budget?

Before you open a gun store, it is important to set up a business plan.  While a business plan is important for any business, and it is especially critical for a gun store, which has a higher risk.  A solid business plan will help you determine the goals and objectives for your store, as well as how you plan to achieve them.

Here are some suggested steps to follow in putting together a solid business plan:

  • Determine the types of customers that you plan to attract to your business.
  • Decide what products and services you will offer to make money (covered below).
  • Plan how you will market your new business (covered below).
  • Determine the feasibility and cost of getting business insurance that will cover any unforeseen theft, fire, and flood events.
  • Factor in the capital requirements to accumulate inventory (covered below).
  • Identify any problems that might occur in the future which could potentially impact your business – and outline a contingency plan. These unexpected problems may include changes in firearms legislation, changes in the demand for guns and accessories in your area, new competition, etc.
  • Based on your assumptions, prepare a financial analysis of your business that predicts income and cash flow.

What types of guns and accessories should be stocked?

When deciding what types of items to carry in inventory when you open a gun store, be sure to consider the type of customers that you want to attract. Do you want to sell to hunters and shooting sports customers, or do you want to focus on the self-defense market?

Each market has its own set of challenges and opportunities. Hunters and sport shooters are typically more loyal customers, but they can be more difficult to attract. The self-defense market is larger and more active, but also more competitive and are interested primarily in buying lower-margin firearms. 

You will also need to establish relationships with firearms distributors.  Some distributors are more open to working with new FFLs than others.  Here are a few popular distributors:

Do you have enough start-up capital?

It’s important to have a realistic understanding of the start-up costs before you open a gun store.  Before opening your firearms business, decide how many items you want to carry in stock and the types of items.  Guns and ammunition can be capital intensive, so costs can add up quickly.  Your initial order should also be items that you are confident can be sold quickly, so you minimize the capital stock in unsold inventory. 

DId you select a good POS inventory management system?

Invest in robust ATF-compliant point-of-sale (POS) system that at a minimum can manage inventory, handle your workflow for any orders and gunsmithing, process transactions, and print receipts.  Even better, choose a POS system tailored to firearms stores that is capable of tracking serial numbers and syncs with an electronics compliance software that can manage background checks and generate necessary reports to ensure compliance with regulatory requirements. For more information, see Top 10 Features for Gun Store POS Systems. 

Can you process payments when you open your gun store?

Taking credit card payments is crucial for a gun store owner, because many purchases will be big ticket items. But getting approved for payment processing as a firearms dealer can be difficult, as many banks consider firearms businesses a high-risk merchant account. The good news is that there are numerous providers in the market that specialize in high-risk retailers such as firearms businesses.  Once of this is our partner, Gearfire Payments.

How will you comply with gun industry regulations?

Compliance with federal, state, and local regulations is an absolute requirement in the retail firearms market. You need to stay up-to-date with the ever-changing laws and regulations governing firearm sales, background checks, recordkeeping, and advertising. If you do not want to do this work – do not open a firearms store.

Running a firearms store will require you to implement compliance rules and train staff on all the legal requirements of the business to minimizing the risk of regulatory violations and penalties.

Firearm transactions must be recorded in a ‘bound book’ containing details on each transaction.  Some retailers prefer a paper bound book given the discomfort of storing such important information online.

Other firearm retailers chose an electronic ‘bound book’ from a provider like FastBound.  Using regulatory software provides more assurance that all required information has been recorded – and makes the information more searchable.  It can also automate the 4473 process.

Are you commiited enough to open a gun store?

Operating a firearms store can be very time-consuming. The hours can be long and involve working on the weekends or traveling to gun shows.  While owning a successful gun store can be lucrative and you will get satisfaction from owning your own business, keep in mind that it can also be challenging, time consuming and unpredictable.

What is your marketing plan?

Make sure to allocate time and capital for a marketing plan – as it is critical for any business.  Your marketing plan should include a detailed analysis of the competition, as well as a strategy to beat them.

Brand – It’s important develop solid branding strategy. This is more than the name and logo of your store (although this is helpful).  Your brand helps customers identify and remember your store.  The brand should be consistent with your marketing and operating strategy.

Budget – Your marketing plan should have a budget.  You should also be sure to track and measure your marketing expenses against the budget.

Marketing Channels – In today’s world, you need to be very knowledgeable of digital marketing strategies.   Digital marketing is critical to attract customers and establishing your brand awareness. Be sure to effectively use digital marketing channels such as search engine optimization (SEO), social media, email marketing, and content creation to reach firearm owners and generate traffic at your store.

Regulations – Given that firearms is a regulated industry, be sure that your marketing strategies adhere to platform guidelines and firearms advertising policies.

Good luck with your decision to open a gun store

Opening a gun store can be a rewarding opportunity – both financially and emotionally.  But it is important to carefully consider all of the factors involved before making the decision to open your gun shop.  Hopefully this article will help you in your process if opening your own gun shop.