Becoming a FFL Dealer in Fairfax County

[XSNOWMANx]

I apologize if others have asked this and I didn't see it. I've been considering applying for my FFL here in Fairfax County VA for a while now and have been researching and the answers I find leave me with more questions than answers. It wouldn't be a career move for me, but more of a way to have my hobby earn me some money instead of costing it and it would be nice to have a private FFL to help others like myself acquire items they desire.

It would seem the process is get the FFL license from ATF, an experience on its own, then approach the county and see if my home is zoned for a home based business, or if I can get them to zone it such, or look for another location. Then after ATF and Fairfax County approvals, I would need to get insurance, market and open up. I know I'm oversimplifying for text space reasons but is there anything here I'm missing? Im seeing some people get home businesses easily and others fought for years...

What I would like is any knowledgable advice on the matter, and for those here that have done it, how was it and would you do it again?

[allingeneral]

as I understand it, you will want to check with the county regarding zoning before you file anything with the ATF. ATF will want to know the location that you intend to use (so they can come see you anytime they want), so filing with the ATF, then finding out that you need a different location due to zoning won't work out very well.

I'm not an FFL, and I really don't have any idea about the process involved, but I do believe the above paragraph to be true.

[allingeneral]

If I were going to get an FFL, I think I would contact a few FFLs in the area and try to set up a time for some face-to-face discussion... Tell them what you;re looking to do and offer to take them out to lunch.

[Diomed]

as I understand it, you will want to check with the county regarding zoning before you file anything with the ATF. ATF will want to know the location that you intend to use (so they can come see you anytime they want), so filing with the ATF, then finding out that you need a different location due to zoning won't work out very well.

Yes, the zoning should be settled before you even bother sending in the application, otherwise you're wasting your time. They do check zoning, as well as Homeowner's Associations, landlords, plus any other random covenants you may have on the property.

You do get a grace period to acquire any local or county business licenses once the FFL is issued.

The federal stuff will be covered in your interview; if all you're doing is dealing it'll be pretty simple, if you're getting a more unusual license, like manufacturing or importing, you'll need to do a lot of research on your own, as the IOIs are usually not as up on that as the plain old dealer requirements. In addition to the FFL you'll have to register with the state police in order to do background checks (this happens after the feds issue a license).

Then you have to deal with remitting sales taxes and all that other fun BS.

[sdlrodeo]

Something I'm considering as well.

I do want to show a profit. However, I plan on getting the FFL mostly to help out with transfers for people I know or who are refered to me.

Besides the fact that people are willing to pay the high asking amounts, I don't understand why it costs more than $10 to do a transfer.

Anybody care to elaborate?

Steve

[jdonovan]

Besides the fact that people are willing to pay the high asking amounts, I don't understand why it costs more than $10 to do a transfer.

Anybody care to elaborate?

If I'm in business I need to make profit, or at least attempt to on each and every transaction. Negative income at the end of the day won't allow me to keep my doors open.

Think about all the employee time involved in handling a transfer....
Recieving the gun from the delivery driver.
Open and inspect for damage.
Enter item into my bound book, and make sure shipping documents, match actual arm.
Make inventory tag for item
notify customer, potentially multiple times.
When customer arrives do paperwork. A not insignificant number will not have all the right documents and will need a return trip. This most often occurs on firearms that they have to prove citizenship to buy.
Enter customer data into transfer system and wait for approval. Perhaps another return trip for the customer if they are delayed.
Ring up the sale.

This is conservatively take a minimum of 30 employee minutes, and is really closer to 60 if anything doesn't go through the first time.

When I look at employees salary, plus overhead of keeping the lights on, paying rent, insurance, benefits etc... $30 is a break-even proposition for most shops.

If you are a 'kitchen-table' FFL you have MUCH lower operating costs than the retail store front and can charge less.

Also you'll deal with more than a few upset customers that want YOU to deal with the seller because the gun was somehow not what they expected, or in the condition they wanted etc...
"I'm buying it from you, you make it right"

You have to explain to them, no you bought it from some dude 2000 miles away you've never met before, I'm just the paperwork guy, you got a beef, take it up with the guy you mailed the cash to, not me. Oh and if the gun doesn't work right, they are coming back to you to bitch, because they got it from you.

[sdlrodeo]

Please understand I'm just thinking out-loud here, I'm not doubting your particular cost analysis.

I understand what you are saying. However, in a way, you make it sound like that is all additional labor. In peak times I could understand, but the employees are there anyway and I have walked into plenty of gun shops where the employees are just standing around. Plus if there is 'wait time' the employee doesn't just have to stand there, they can be productive in other ways. You are paying them to be there whether they are actually working or not. Again, I'm not saying that if you don't have a booming business you won't be busy, but if you have a booming business i would assume you are making a profit anyway. Sooooo, why not charge a low low fee for transfers so that people will be driven to come to your store and more than likely buy accessories or ammo? After all, the pawn shop in TX that I used with $10 transfers had a regular customer flow. It was not a 'kitchen-table FFL' as you say.

[Diomed]

Seems to me that if the employees are standing around doing nothing that shop has some trouble in its future, unless it trims the fat.

The problem with going cheap on transfers is that while there isn't a whole lot of work involved in a smooth one, a troublesome one can suck up a lot of time and effort. You can very quickly go from breaking even or making a small profit to bleeding red with just a handful of bad transfers. And given the customer base, this is alarmingly common - the customer is not always right, often he's dead wrong, and making your life hell because of it. Guns are one of those things that attract the crackpots of the world. If you're any good at customer service you grit your teeth, grin and bear it, and try not cry yourself to sleep every night thinking about how much money you're losing.

It is hard to make money in the gun business. It takes a huge capital investment to have a stocked store - we're talking millions up front to be stocked like people always say they want gun shops to be stocked. Most shops can't afford that so they're small and have poor selection. You do seem to realize that there's no money in selling new guns, it's almost all in the accessories, so you're a bit ahead of the curve on all that.

On the other hand, if you just want to be a kitchen table dealer, you can charge very low transfer fees to a select clientele and be fine. That's the only way to do it and not lose money hand over fist.

[jdonovan]

However, in a way, you make it sound like that is all additional labor. In peak times I could understand, but the employees are there anyway and I have walked into plenty of gun shops where the employees are just standing around.

It _IS_ additional labor. If I'm not doing transfers then I don't need those employees taking time for those transfer tasks. If they take time to do those tasks, then they can't do other things. In any business if you have too much staff standing around then you've got the wrong number of employees vs customers. There is a balance between customers waiting, and staff not generating revenue, and if its tilted too far to either side its a problem.

Plus if there is 'wait time' the employee doesn't just have to stand there, they can be productive in other ways.

If the guy helping me goes off to help someone else and my paper work gets approved and I have to wait 20 min for him to finish with customer #2, before I can close the sale, I'll be upset about the wait.

Sooooo, why not charge a low low fee for transfers so that people will be driven to come to your store and more than likely buy accessories or ammo?

With the available of the .net much of the traditional accessory business is drying up and moving online. The online merchant can offer a greater selection, and much better pricing, and folks forget if you don't spend some cash with your local guy he might not be there there next year. They think there is lots of money in guns, because they are expensive.

I don't see a lot of accessories out the door with sales anymore. It used to be you saw cleaning supplies, ammo, targets etc walking out with a sale, but I just don't see that as much as I used to.

[sdlrodeo]

I'm really digging this conversation. Good info and thoughts.

I do understand there is overhead in running a brick and mortar store. I also understand there is not a whole lot of money in new guns because of competition.

HOWEVER. COMMA. I don't understand the discrepancies between some online prices and brick and mortar stores.

For Instance (a little off topic) I was going to buy a pair of pedals for my mountain bike the other day. At the store, they were $90. Online in MANY places, not just Amazon, I could get them for around $45-50. That is 50% more at the store. That is HUGE!

I can understand paying 5-10%, heck even 20% more so that the store stays in business and is there when you need something ASAP, but twice the price? C'mon, That sure is a big price to pay to 'help the store stay in business'. Again, if people are willing to pay that, I'm not going to blame the store. But here is my line of thinking. If there is some wiggle room, why not lower the profit margin so that you make A instead of making NO sale?

I suppose that is the problem, wiggle room.


Steve

[jdonovan]

For Instance (a little off topic) I was going to buy a pair of pedals for my mountain bike the other day. At the store, they were $90. Online in MANY places, not just Amazon, I could get them for around $45-50. That is 50% more at the store. That is HUGE!

Volume. lets get back to firearms/accessories.

Depending on the online merchant, say, Midway, Gander Mtn, Cabellas, etc... order more of some supplies, accesories, firearms in ONE ORDER than your local shop will sell in a decade! The discounts they can get mean they can often sell at retail for less than your dealer can buy at wholesale.

You are living in the one of the areas of the country with the highest incomes, per-capita wealth, and real-estate prices in America. It should come as no shock that off the shelf prices from local merchants are among the highest in the country as well. Everything about doing business here from rent, to wages, to all other costs are very high.

I can understand paying 5-10%, heck even 20% more so that the store stays in business and is there when you need something ASAP, but twice the price? C'mon, That sure is a big price to pay to 'help the store stay in business'. Again, if people are willing to pay that, I'm not going to blame the store. But here is my line of thinking. If there is some wiggle room, why not lower the profit margin so that you make A instead of making NO sale?

You are assuming the local dealer can actually make a profit at that lower price. For many brand products your dealer has to buy from an established distribution chain, and because of volume, may not get enough volume to hit a good discount rate.

[Diomed]

The traditional brick-and-mortar gun shop's days are numbered. Unless drastic measures curtail the advantage of buying on the internets, most gun shops simply won't be able to compete. What will be left are the big fish, who move enough diverse product to have a strong cash flow even in the face of online competition (or, in the alternate, shops that are internet-only, or almost so, like Bud's), a few fudd stores to cater to the folks who can't/won't use the interweb, and pawn shops. There will be a lot of kitchen table dealers as well to handle transfers, unless large parts of the Gun Control Act happen to vanish.

It's kind of the revenge of the small timers, for having been stabbed in the back by the stocking dealers during the Clinton years.

[lonestarag]

I've thought about getting an FFL, to do transfers only, as well. Good info here.

Anyone reading completed the whole process and willing to share ups and downs? What's the breakeven point for making/losing money in terms of transfers per year to cover license cost, etc?

[jdonovan]

What's the breakeven point for making/losing money in terms of transfers per year to cover license cost, etc?

As all of the guns should be shipped direct adult signature required, that would require most folks with full-time jobs to drive to the UPS/Fedex Hub to pick them up.

For me that would be a 25 mile one-way trip, 50 round trip. At current gas prices/truck mileage that would cost me almost $10 to go pick one up... plus paying myself for my time.... I don't think that even at the $30 local shops charge, I don't think it would be enough to make it worth my time.

[Dreamerx4]

Why does it cost more than $10 a transfer.....

Well, let me give you the reasons I charge $22 for a gun and $10 additional each gun transferred at the same time.

For each gun that comes in the door, I do the following.

Receive it from the delivery person, UPS Fedex or PO.

Log it into my bound book.

Contact transferee.

Person comes over fills out paperwork, I do background and hopefully it goes through immediately, they are out the door in 20 minutes. If delayed, they come back another day.

Then at the end of the week I send in all SP-65 copies. Use a stamp and an envelope. At the end of the month I use a stamp and send in my payment to the state for the backgrounds.

All of this takes time, and obviously if I have several guns, there is better profit, but still expenses and time no matter.

I also pay taxes, which are heavy for self employed, so that cuts down on my margins as well.

If I sell any guns, then I also have to log on and pay my sales tax monthly.

I work full time, so this eats into family time and I try to be available whenever it works out for the customers, believe me folks track their guns progress and expect to pick it up immediately, which means sometimes it is terribly inconvenient.

I store the forms for 20 years, have to maintain business licenses, FFL fees, state corporation fees, accountant fees and all other normal business expenses. Fireproof safes for paperwork protection, safe room for ATF happiness, and availability to the ATF when ever they may ask to come.

So, could you do it for $10??, sure, but I think it would be ridiculous.

[sdlrodeo]

I understand what you mean about family time. I don't have any so as it is. Really the last thing I need is another distraction from Family. Maybe now is not the right time.
Thanks for all the great input here. Wealth of Knowledge.

Steve