Part 10: Getting a Home-Based FFL: Lessons From First Sales

I know, I know. I’ve been a bit remiss at completing the Home-Based FFL series complete. Fortunately, there are many passionate TFB readers who are able to light, maintain, and grow a bonfire on my derriere to keep it moving. My thanks for the motivation!

At the last instalment, the FFL & SOT had arrived and I was in the throes of getting signed up with distributors and setting up direct company accounts.With maxing out my company credit card to bring in inventory, I was bent on turning the inventory as fast as possible. Credit cards do have required payments and I did not want to have to cover the payments from personal monies. After all, I was in the business of selling firearms!

For Transfers, People Are Coming to your HOME. 

In something that I should have been more comfortable with prior to getting the FFL, for a customer to do a transfer, they must come to the licensed premisis, meaning they must come to the address on the FFL. Since the address is your home, this means customers are coming to your home. This means perfectly good strangers are going to enter your home to buy a gun. As part of this, they will likely have a gun on them and then will know your address. Further, as you are bringing in strangers, prepare for all types of personalities and demeanours including the creepy and potentially dangerous.

You must be comfortable with this if you are going to sell retail or by appointment. If you are not, only sell online (more on that later) or do not get the FFL. Even then, an FFL is public record that anyone can look up and see the address where you have guns.

What Inventory Should I Buy?

When I got started, I picked up an eclectic mix of firearms including personal favourites. I ordered many Glocks & M&P’s, but also went for Beretta 92’s, random AR-15s, and whatever I could get my hands on (remember, this was at the tail end of “the panic”).

Unfortunately, this was the wrong choice. As a small FFL looking to move inventory, one must pick up inventory that will sell to the public, not just what you would buy. The Glocks moved reasonably quickly, the M&P’s about as well, but the eclectic guns sat in the safe collecting dust. Frankly put, they were money pits that I ended up having to sell on GunBroker for nearly cost after sitting on them six months.

As you are working to grow your inventory, I will reiterate that you should pick up units that sell to a wide range of people. 9mm handguns, basic AR-15s, and 10/22s are all great bets. Do NOT pick up the expensive or unique guns for the sake of selling for profit. Those are only profitable if you have a following and traffic (more on that later).

If you are able to build a relationship as I did with a distributor sales person, picking up allocated firearms will ensure you can sell them at a decent margin. Allocated guns are in high enough demand that distributors play favourites on who gets what.

The Gun Sales Market Is SATURATED

Even in my small city of Fort Wayne, Indiana, there was stiff competition from firearms retail stores. In the city, I remember at least six of them including a store that was the retail arm of a distributor. These were constantly able to undersell me by sheer volume in both units sold and units purchased. To meet their prices, I would often have to sell a $500 firearm at only $50 mark-up. No much profit margin in that with lots of risk.

Remember, these retail stores also have a big advantage over the home-based guy. They are open to the public and have the guns on display. As a home-based FFL, you typically have to set appointments and advertise online. You will work harder to bring customers in than they will, but it’s a great opportunity to build relationships with customers for repeat business.

Selling Online

My original intent was to sell only online via GunBroker and ship to other FFLs. It is a stable business, but extremely low margin for the amount of work. Just to sell a firearm, you have to:

  1. Take photos
  2. List online
  3. Answer questions
  4. Sell It
  5. Collect Payment
  6. Get the FFL for transfer
  7. Ship the Firearm

Each step is a lot of time. Combined with fierce pricing competition from fellow online retailers, it was a tough gig. The only way I made decent money at it was to sell large quantities of items to offset the large time requirements.

This ignores all the times customers did not pay or the FFL gave me heartache…

 Doing Transfers

I mentioned briefly that I had difficulty with other FFLs on shipping in guns for customers who bought from me online. FFLs are typically territorial and many view the outside purchase of a new gun (one that they can get and sell) as a betrayal from the customer or bad faith between FFLs. I dealt with all sorts of annoyances sending guns to other companies including transfer forms (not required legally), fees charged to me (not just the customer), rejection of shipments as it arrived on days they were not in (nor told me they were not there), etc. Good grief.

This perplexed me. I found doing transfers for customers one of the best sources of long-term revenue. One, I was able to charge a transfer fee for having no risk of inventory and two, I was able to build a relationship with a customer which led to many repeat sales.

handshake

As a home-based FFL, you will likely have far more flexibility for hours on pick-up. Considering most gun shops are open during “normal” working hours, having the ability for someone to pick up a firearm at 9:30 at night when it was convenient for them drew in an incredible amount of good people.

Long Term Business Will Come from Relationships, Not Pricing

I found that once I had a customer, I generally kept them. Home-based FFLs are a more intimate environment where you get to know your customers on a personal level. You make up for lack of inventory with personal service and attention. For example, when someone stops by to pick up a gun, ask what they are looking for and go find it. Call the customer and let them know you can get it.

6 times out of 10, they got it from me right there on that phone call.  9 times out of 10, they got it from me later.

Profit, Even Small Profit, Will NOT Come Quickly

Sure, I made money on each gun sale, but the time it took for each sale was incredible and still left me feeling like I lost on each sale. It was only when I was finally able to build relationships with many customers that I felt the FFL was starting to be worth it. They directed friends to me, did custom sales for high-margin guns, and did constant transfers.

You should steele yourself for a long grind with only small gains in profit and satisfaction. At some point, if you work at it and build those relationships, it will turn into a decent side-gig, but it takes work. If you’re not willing to work it, simply put, its not worth it. You won’t recoup the costs just to get the FFL.

To catch up on previous installments, check out the links below:





Nathan S.

One of TFB’s resident Jarheads, Nathan now works within the firearms industry. A consecutive Marine rifle and pistol expert, he enjoys local 3-gun, NFA, gunsmithing, MSR’s, & high-speed gear. Nathan has traveled to over 30 countries working with US DoD & foreign MoDs.

Nathan can be reached at Nathan.S@TheFirearmBlog.com

The above post is my opinion and does not reflect the views of any company or organization.


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  • A.WChuck

    This is exactly what the government wanted when they setup the FFL system. Low profits and high overheard in time and paperwork. All designed to discourage and limit the numbers of new FFL dealers.

    • Rick O’Shay

      No, the government just thrives on endless paperwork, especially of the CYA variant. The fact that managing all that paperwork eats into time that could be devoted to actual moneymaking is just a minor aside to them. Whether a bureaucrat has five forms or a five inch stack of forms to complete by the end of the day makes no difference to what shows up on his paycheck, so he has no investment in making sure an FFL has minimal paperwork.
      Nathan’s point that the gun sales market is absolutely saturated would argue that if the government is trying to discourage and limit the number of new FFL dealers, they must be doing a pretty crappy job of it.

      • A.WChuck

        Well, the government often does a “crappy job” of things, doesn’t it? The point of the FFL system is control and reducing the number of outlets selling firearms. Before it came about, you could walk into Sears, Wards, or the local hardware store and buy one right off the shelf. There were many more dealers of arms back then.

        • Rick O’Shay

          When was the last time you walked into a Sears or Ward’s? Don’t worry, I can wait while you think on that.

          Are you honestly gonna argue that it’s harder to find a place to buy a gun now, than 20 years ago? Or even 30? 40? Sure you can’t do mail order purchases, but that ended before most of us were born, and the ATF crackdown on kitchen FFLs came long after that.

          Let’s be completely honest. The idea of having a kitchen FFL really only appeals to most of us because we’re convinced Big Box FFLs are putting some kind of huge markup on the guns we want, and we either want to be able to buy direct from a distributor at “wholesale” prices, or we want to find Average Joe who’s our neighbor who wants to help us stick it to the man and do a FFL transfer at a minimal price and pass along that wholesale cost. Nathan’s series pretty much tears that dream to shreds, and the ATF makes a convenient scapegoat.

          I’m no fan of ATF shenanigans, but looking at annual firearm sales over the last decade pretty much shreds the argument that the ATF is trying to reduce access to firearm purchases via eliminating kitchen FFLs.

          • Yep.

          • A.WChuck

            I think you are arguing a different point. My point is that the GCA of 1968 was designed to limit sellers of firearms and reduce the number of arms sold. Because it failed in its purpose does not mean that it had an entirely different purpose. President Johnson wanted it to include the registration of guns and gun owners.
            I was in Sears two weeks ago and Wards has been out of business for years. Why were they mentioned at all? Because they both sold firearms, Wards had its own house brand at the time.

          • Rick O’Shay

            I guess my qualm with your logic, is that you’re suggesting that the FFL system is designed to reduce the number of guns and gun owners by limiting places to buy guns.
            The truth of the matter is, whether that was the express design or not, there are now more guns, and more gun owners today, and more places you can walk in and buy a gun, than there ever were at any previous point in our nation’s history. They’re just not hardware or department stores, and that’s not necessarily a bad thing. If that’s what the goal of the FFL system was, it’s failed in a huge way.
            The present-day difficulties in being a successful FFL have almost nothing to do with the bureacratic and legal quagmires of trying to navigate that system. The modern consumer’s desire to get the gun he wants as cheap as possible favors big box retailers over mom-and-pop brick-and-mortar gun shops and kitchen FFLs, every time.
            My counter to your examples about Sears and Ward’s, is that they didn’t get out of the firearms business because the FFL bureaucracy was somehow too convoluted for them, they got out of it because either A) it didn’t tie in well with their vision of where they saw their retail sales going or B) it wasn’t profitable enough to dedicate retail floor space to a gun counter when they could sell something else at a higher profit. The same thing is true for Ace, Abercrombie and Fitch, and a host of other companies. In the case Sears (and a more extreme way, Ward’s), they’ve become increasingly irrelevant to modern consumers, that they can’t even dream to compete with other big box stores that “do” guns better.

      • Paul White

        we have state contracts for work; can confirm!

  • Harry’s Holsters

    Making money on guns is all about turning over your inventory. My local shop charges $50 over cost for everything under $500 and cost plus 10% for everything over $500. They are a small shop with a great inventory for the size of their space. They turnover 50% of their gun inventory weekly while some other items sit.

  • Curious George

    It was my understanding there had been some kind of “ATF crackdown” on home-based FFLs? Read that somewhere last year – ATF wasn’t issuing licenses anymore to “home-based” FFLs, and weren’t renewing those already issued either. Is that true, or just more Internet lore ?

    • David

      ATF will issue a FFL to a home business as long as zoning allows retail sales.

      As a low volume FFL, I don’t get to buy at large discounts and have a difficult time competing online with sellers who are happy to make just $20 on a sale.

      • Does not require zoning for retail sale, just that zoning allows a business. The ATF allows FFLs for online-only selling or gunshow only selling.

  • MrBrassporkchop

    I think it would be cool to get an FFL and be a traveling background check service. Charge 50 bucks to go out where people are selling their firearm and do the transfer wherever they want.

    My state passed the law that requires private sales to go through an FFL.

    I’m windy if this would work. Make more scratch than Uber and won’t need to have an inventory.

    • David

      You can only do transfers at your licensed location or at bonafide gun shows. Traveling service is not allowed

  • Esdee

    In my area there are quite a few home based FFLs, I’ve used a few of them an barely any of them keep inventory, most just do transfers for around $20-25. Some of them seem to have people lined up outside their doors with incoming transfers. Is the amount of time it takes to do a transfer that long that it’s actually prohibitive?

  • Trevor Spencer

    I was reading through this, very interested until I stumbled across that you live in Fort Wayne! Never knew that, I’m working on my FFL (though not home based), and I’m located in Waynedale. Very cool. Lots of gun shops here in town already, though.

  • Emperius

    Guns with Cash (U.S. Gov issued cash, not fed reserve note) is how the Constitution intended it. FFL and government permissions are a violation of the 2nd and 4th.