Title: How To Succeed In The Firearms Business In Confusing Times
Author: Andrew Molchan
Date: Tue December 6th, 2005
(August 20th Fort Lauderdale) Most people today are confused and apprehensive. As mentioned several times in this column, we’re going from one historical age to another, and thinking people worldwide are confused. America is also declining relative to the rest of the world, and this produces even more anxiety.
We’re all gong to have to learn to live with the confusion because it will become worse over the next 30 to 40 years before it becomes better.
The politicians, especially the Democrats, say vote for them and they will magically bring yesterday back. Trying to make yesterday work is the problem, not the solution. The Democratic Party is wrong to the point of being dangerous to America’s survival.
I hear people say, “Gas prices are too high. They have to come down.” Gas at $1.50 a gallon is gone forever. It’s one of the new realities we have to adjust to. Gas prices will go up and down, but they’ll never go down to what they used to be, and when they go up, it will be up to new highs. Most of the people reading this page will live to see $5 a gallon gasoline, and young people will see $10 a gallon gasoline.
You should start living in a decreasing radius of home, work, school, shopping, etc. Buy vehicles with smaller engines, and think of your vehicles as appliances, like your refrigerator, and not as an extension of your ego.
Today in 2005 we have a society that works at borrowing as much money as possible, and then spending as much money as possible. By 2035 we’ll have a society that takes pride in how little they need, and how they only spend on necessities. Why don’t you be early?
American firearms retailers have many inherent advantages in this new age. In the years to come, protection will be a growing necessity. As to gasoline, in 95% of the cases there’s no reason why a gun retailer’s home should be more than a few miles from his store. If it’s not, move your store or move your home.
Too many people in our gun industry use every change in the breeze as an excuse to not do anything. For over 36 years I’ve listened to a significant part of the gun industry consistently say, “We have to wait to see what’s happening.”
God made the world, and everything in world. Survival in God’s world can be summarized as, successful adaptation to the challenges of change. In nature what adapts grows and expands, what doesn’t becomes extent. You cannot eliminate the challenges of the world, but you have the power to change your life and successfully adapt.
INVENORY: During the last ten years many gun stores have run down their inventory. They order, “As needed” from their distributors. It’s time to re-think your inventory strategy. Yesterday I went to a gun show in Fort Lauderdale. This is the “off season” in Florida, and for gun sales in general. Parking was $5, show admission was $7, and I could hardly get through the isles. It was a constant tight squeeze and waiting for room to move forward, and people were buying.
In Florida all the 4473 paper work, and NICS checks, are done for every sale at a gun show, and prices at the show were not cheap. The crowd was big and it paid to get in. There’s a lesson, if you have a good selection of firearms inventory the customers will come.
Times change, there are four ideas about current firearms retailing.
1. Our industry deals in hard goods, things made of steel, wood, leather, etc. Our products change slowly. As you know, the 1911 .45 is still popular some 94 years after being adopted by the Army, and almost 100 years after being invented. We firearms retailers have a ton of product obsolescence protection. If you sell computers, and a new wiz-bang model is introduced, your inventory is obsolete overnight. Real world American inflation is 7% a year, so if you stock up on good inventory you’ll make 7% just on inflation.
2. The used firearms business is big, and growing. The “chains” can’t handle used guns, but independents can. Chains can’t take consignments (probably the best business out there), but you can.
3. You should be an expert about firearms. An expert you can solve customer problems, and business does flow to stories with answers. Selling knowledge is the highest profit margin product.
4. Product choice is important with consumers. They’re not going to return to a story if there’s nothing to see. This is one reason why used guns and consignment are good.
5. Lose the union mindset if you have one. Lose the entitlement-mindset, like “I deserve this.” Or, “the distributors are supposed to take care of me” and so forth. Don’t set around waiting for the perfect world to arrive because you’ll die of old age before it gets here. Take the world as it is and make it work for you.
6. Most of all, don’t be a “good Democrat” waiting for yesterday to return. Or even worse, the political con game that “the rich” are going to pay for everything.
Manufacturers, for the 36 years I’ve been in the industry, run hot and cold on firearms dealers. Gun dealers are in fashion with the manufacturers for a few years, than out of fashion, than in, and so on. Here are the facts no manufacturer should forget. There are 30 million active hunters and shooters, and 50 million gun owners. However, there are only 58,000 FFL holders. The one and only place the 30 million active shooters come together is at the gun store. The FFL holder is the “pass,” the “bottleneck” where a small amount of promotion can have a big effect.
So many people say, “But a lot of those FFLs are small!”
Small compared to what? The yearly gross for McDonalds Hamburgers is bigger than our total gun industry gross for new firearms and ammunition. The biggest manufacturers in our industry are all “small business” by Wall Street standards.
What’s big, Wal-Mart and Outdoor World? I’m an expert on the total gun selling system, and I figure Wal-Mart and Outdoor World combined collect 4% of the yearly money spent on firearms and shooting. The combined pawnshops of America sell more guns than Wal-Mart. What the big chains do have are people on the staff with $150,000 yearly salaries, and their only job is to wring out every ounce of profit from their suppliers. Show me a company that does a big percentage of their business with Wal-Mart and I’ll show you a company with very little net profit.
For a manufacturer, a big gross and small profit margin strategy based on only a few retailers is a bankruptcy waiting to happen.
What I’m trying to say is do not “wait” for something to happen. There will always be one kind of challenge or another with something. You have to push ahead, sell smart and sell fast. Do NOT live a tentative life! Do NOT run a tentative business. America is full of people who won’t commit themselves to anything. Say to yourself, “I’m in the gun industry forever, and I’m going to make it work for me. It won’t be easy or fun, but I can do it.”
Some people say the firearms industry is hard. Hard compared to what? What industry is (1) fun, (2) no work, (3) never changes, (4) is easy to get into, (5) has no frustrations or worries, (6) has no challenges from a changing world and (7) is highly profitable? You tell me and we’ll both know. In all honesty, I think our firearms industry is at the better end of things.
Christmas and SHOT Show will be here soon. Remember manufacturers, January is AFI’s Super SHOT Show Issue. Get them at the pass!
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