Need UR help - What do we do?

Now you just need a Tobacco shop, I always did think that Alcohol, Tobacco and Firearms would be a better name for a convenience store than a government agency.

hmm, interesting. There is another building that comes with the gun shop that is available to rent out (about 750 sq.ft)... a tobacco shop (Hooka perhaps?) might go nicely.

We won't be able to do alcohol though... NM has some weird laws/restrictions for those licenses.

I can just see it now: "Honey, can you stop on the way home from work and pick me up some Pinot Noir and hollow-points?"

More like Muscat and Personal Defense! And it HAS happened.

I have a few thoughts & concerns-

1. can you buy existing inventory for less than face value?
2. do you have any experience running a gun biz? or any type of business?
3. what exactly are your expectations? I saw briefly what you've outlined but more to the point, what do you expect to be your rate of return regarding $ and time?
4. can you disclose how the asking price is broken down? (inventory, real estate, goodwill, retained earnings, etc)

if you need help analyzing the financials, let me know and I'll be happy to help... Make sure you analyze the corp returns as well as the personal returns before making the decision.

I've been involved with buying, selling and opening b&m businesses and the biggest piece of advice I can give is that you need a strong plan to follow.... This plan will consist of an exit plan, expansion plan, cash flow plan, etc...

A few hours spent on a simple business plan (even microsoft word has a template) will eliminate a lot of the guess work down the road. The biz plan is most helpful when you answer to many "what if" scenarios. i.e. (as Jill said) what happens if your cash flow falls short for the week to pay payroll or mortgage/rent or insurance, etc.... how will you support that biz if need be. ideally, you don't have to, but "what if" ....

lastly, and this is very key- have the owner hold some of the paper.

good luck.

Just up I-17 from MJ, on Milton Avenue in Flagstaff, is Ruff's. They are a Liquor, Guns and Ammo store with a drive-thru!

(At least it was there about 18 years ago.)

Heard from the owner today. He has another offer for us (we did not give him any offer yet, just let him know that we would consider the opportunity) that he claims is better than what we have been told so far. We will be meeting him on Friday.

More Answers to comments from the post:
1. can you buy existing inventory for less than face value?
Yes. There is not much inventory. Most everything is purchased as sold, so overhead is low. The existing inventory is pretty much just thrown in as part of the deal. The real cost is for the real estate.

2. do you have any experience running a gun biz? or any type of business? No and Yes NOTE: Both my husband and I are type A, very, very detailed oriented. Every job we have held we have approached like we were owners and often customers thought that we were.

3. what exactly are your expectations? I saw briefly what you've outlined but more to the point, what do you expect to be your rate of return regarding $ and time?My expectations at this point are not high. I would expect to have the business just supporting itself. So to answer the question we would likely be working for free, likely putting any and all profit back into the business. My husband and I would be the employees until such time we could pay ourselves and/or cover the cost of employee(s). It seems to be a bare bones operation and federal required systems are in place and in order according to records and inspections. It is a small town, mom and pop kinda place. Outside of that the options are limitless. He has very little internet, advertising or any other kind of marketing plan in place. His customers are typically word of mouth and return customers.

The locals do NOT want this place to go out of business. He IS getting out and likely will leave town within a year (not because of the business but for personal reasons). All he wants is to not have to worry about the debt he has without an income to cover it. He has offered to train (which he says can be accomplished in 2 weeks) and run the place for up to six months if needed.

4. can you disclose how the asking price is broken down? (inventory, real estate, goodwill, retained earnings, etc)The asking price is basically set up to cover what he owes for the real estate, that is all. Everything else is gravy. At least this is what it looks like thus far.

OK... so let's move onto the next phase. Let's assume that we do want to go for this and the business itself is self supporting. We know we are not going to count on any income from the business for awhile (1 year). We are looking for some creative financing ideas that could close the deal. At this point too, I am NOT convinced that we would HAVE to or need to purchase it. I am thinking "rent to own", owner financing or maybe even 2nd job? Like I said, the owners main concern is to get out of the debt. I am pretty sure he could be comfortable with anything he felt would make the payment. Looking for ideas out of the box.

My friend took a look at the thread and had the advice below. He also mentioned finding 8 gun shops listed in your town? You probably know this but he also mentioned that in the gun business you have to know how to spot the very good fakes that are out there right now. Another thing he mentioned is that in this world there are customers who REALLY know their stuff and some who really think they do but do not, it is a delicate thing when you have to gently educate a customer who is, how you say? Full of shit.

His note to me predated your clarification regarding the inventory... when you build up the inventory you might wanna chat with him.

1. Buy Building Separately as LLc lease back to the Business--layer, layer, layer

2.FFL Business may be a corp, individual names still attached ----layer, layer,layer

3. FFL should be secured and approved BEFORE purchase --IMPORTANT ( local field agents are of a great help, I understand you must have physical address BEFORE License is delivered , saw a shop change hands recently with an 8 MONTH DELAY IN LICENSE after the sale, for no good reason)

4. Define you "extensive experience" , loving firearms does not count- have you acted as a buyer, appraiser , gun insurance expert, gunsmith etc etc

5. Market analysis, B&M draw area and competition, supply chain, distribution, draw area economic forecast ,

6. DEFINE B&M MARKET SALES TYPE ------, black guns, hunting, self defense, target, collector, etc, etc

7. GREAT gunsmith nearby ??? How far??

8. Number of gunshows nearby?? How Far?? Ranges, esp teaching classes--how far? etc, etc

9. INTERNET presence, GREAT WEBSITE a must, as well as great pictures, accurate descriptions AND rapid response to inquiry

10. Buy NEW inventory at or below current wholesale if possible

11. USED inventory--BE CAREFUL then repeat X 3,

12. Look carefully at consignment % and length of time consignments stay in shop

13. Look extra carefully at any Layaway inventory

14. LOOK SUSPICIOUSLY at any NON-GUN inventory--buy at 50% or LESS of current wholesale---------books, holsters, chemicals, clothing, cases, optics basically any non-gun non-ammo items

15. HOLD HARMLESS AGREEMENT ON ALL PRIOR SALES

16. Change name slghtly on License , all paper work and store itself --Example-- CRIPPLE CREEK GUNS to CRIPPLE CREEK GUnS AND AMMO
trademark the name if possible, BUT AT LEAST CHANGE IT just not too much

17. Check firecode and insurance as to up dated ammo/component storage requirments.

18. GET a liability umbrella in spite of layer, layer. layer

19. WHEN was the most recent ATF inspection and results?

20. What's the fastest way to kill a hobby you love---turn it into a business

Thanks Bobo for the list. Awesome input Rep+

More coming next week. We had to postpone the mtg that was scheduled for today.

UPDATE:
We met again with the gun shop owner. He has had a rough few weeks. His wife passed a day after my last post. On topic: he offered a purchase price now $15,000.00 less than the last time we spoke.

We also discussed some other non-purchase types of options. Primarily, working as employee/mangers and asked for an equity share of the business. We would also get the purchase price in writing and we would commit to work/manage the shop for "x" amount of time with the option to purchase after that time frame should the business go as expected. He was open to and willing to work with us on an arrangement such as this and has asked us to email him a proposal. We would also need to be approved for our own FFL which could be "attached" to the LLC to protect us.

This would be a very low risk option for us and would alliviate the current owner from his primary goal which is to not have the FFL responsibility while not being at the shop... that would fall upon us.

Though all of this sounds very promising, we are still unsure if we are going to act upon this. If I HAD to make a determination today, I would not pursue this any farther. Perhaps there in, lies the answer. We have some contemplation immediately ahead.

why?

Overall, many of the concerns previously mentioned. Mostly that the hours that would be required to be at the shop would likely take up the free time that we have set aside for my family and we do not want to let go of that.

Time that we have potentially available for the gun shop would be Thursday-Sun and a very good portion on Monday. It is likely that the shop cannot be open on Sundays (or would not be allowed to sell firearms on that day). This would be great for that family time (weekends are when we currently have our family and personal time) BUT it is also one of the few days that we did have available to commit to the shop. So, if we close the shop on Sundays, that would mean we would have to open the shop either Tuesday or Wednesday (or both?) at some weird hours AFTER our regular work schedules. Not sure we want that.

Neither of us were planning on quitting the jobs that we do have (both of them are retirement jobs that provide exactly what we need right now). The gun shop would NOT be providing any income until we changed some things at the shop itself and the other benefits do not out weigh the benefits of the current jobs.

The only reason we have not let go of this thus far is because we DO want to finish the research and have the whole picture.

After going over all the information we have we have decided to NOT pursue the purchase of this gun shop at this time.

The final decision came down to the 2 related facts:
1. We do not really want a self-employed type of business - it goes against our primary plan.
2. We don't want to change our lifestyle to accommodate the time and effort needed owning an "S" business.

Interesting thing has occurred: Since letting the owner know that we are not interested, I have received 2 emails from him requesting that we call him because he thinks he has found a solution that will meet both of our needs.

I think I will call him just out of curiosity.

Funny how a lack of interest makes a seller more willing huh?

Sometimes, creative solutions can be win-wins all around.

I live for these times (as anyone who's played CF101 w/me knows!)

-Russ H.