By Gene Kelly
President, American Gunsmithing Institute
Gunsmithing can be a wonderful hobby, but it can also become very profitable if you keep in mind a few of the secrets to successfully operating it as a business. Here are a few of the secrets of prosperous gunsmiths.
Know what you want to get from the business.
The key to success in any business venture is knowing exactly what you want to get out of it. While that sounds really simple, it isn’t. Most people have only a vague idea of what they want to accomplish when they start on their own, and gunsmiths are no different. They know they want to be their own boss, they want to have the fun and thrill of fixing firearms and they want to make money. But, beyond that, they probably haven’t written down actual goals, like the amount of money they want to generate by the business, both gross and net, much less converting that to the number of sales, repairs, services, etc. they need to do each month to cover the expenses and put a nice profit in their pocket.
This isn’t difficult to do, shouldn’t be scary and it is covered thoroughly in the complete American Gunsmithing Institute (AGI) Business Success Tool Box Course. If you are interested in gunsmithing as a hobby or as a way to supplement your retirement income, this process becomes slightly less necessary. Your goal may be just to enjoy repairing guns and to bask in the admiration of those who are less skilled—nothing wrong with that. However, if you want to generate a significant income from your gunsmithing business, THIS is the precise spot where you need to start.
So set some simple and basic goals to start. Don’t overcomplicate things. Think about how much you would like to put in the bank each month (profit).
Know your operating costs, and decide on and maintain adequate profit margins to meet your goals.
Most gunsmiths fail simply because they don’t charge what they need to cover overhead and still make a significant profit. They seem to be afraid to charge what their knowledge and skills are really worth. They often price a job low, because that is what the starving gunsmith down the road is charging and he has been charging that for 20 years, or, “This gun is only worth X, so I can only charge Y.” Wrong!!! The market will bear more than you think. People WANT to SPEND MONEY on their gun. This is one of the key areas I work on with our students and now some of them are making six figures a year.
Once you know what your personal objectives are, then you need to have some idea of what your total business costs will be. Again, don’t overcomplicate it in the beginning.
I am going to oversimplify this (the course goes into greater detail), but basically you need to know your overhead and general costs such as rent, utilities, advertising, etc. for the month. Let’s just say you’ve done the calculations and determined your overhead is $1,000 to keep it simple.
Next, divide that by the number of hours you will be doing paid work. So a typical work month (40 hours per week, 4 1/3 weeks) averages 176 hours per month. This is assuming you are going to be 100-percent productive, and we all know that no one ever is. So you need to adjust that number by a performance factor. Take for example, if you were only able to bill 50 percent of your time, that would be 88 hours a month if you are working full time. So take your total overhead ($1,000 in this example) and divide it by 88. Bingo! You now have your per billing hour overhead cost (in this example $11.36 an hour).
Now, take what you want to make in net profit each month (let’s say $5,000) and divide that by 88 (using the same 50-percent billable hours figure) and you will end up with your second number, $56.81. Add them together and you get the minimum hourly rate you need to charge to meet your profit goal (in this case $68.17 an hour). Does that seem like a little or a lot to you? If it seems like a lot, then you really need to take my Business Success Course. But, it may surprise you that you can actually charge less than that per hour and make more net profit if you become more efficient, which I’ll address in a minute.
Market your gunsmithing services.
I hate to pop your bubble, but the truth is when you open your doors as a gunsmith (or any other business) the whole world will not suddenly come running to your door to have their guns repaired. How can they if they don’t know you are offering gunsmithing services? It never fails to amaze me that some gunsmiths think they don’t have to do any advertising at all to be successful.
However, a big advantage for gunsmiths is that you can spend a lot less on advertising than most other businesses because of the huge demand and the lack of qualified gunsmiths. But you have to do it smart and let them know you are there, open for business and qualified to repair or customize their firearms. Again, I extensively cover marketing in the Business Success Course. But, as a head start, here are four simple and extremely low-cost ways to get a ton of business:
•Business Cards, hand them out everywhere and post them letting people know you are an AGI-Certified Gunsmith.
•Post and mail a simple brochure (AGI can help you by providing you with a standardized brochure) to gun shops, pawn shops, ranges, gun clubs and take them to hand out at gun shows. Everybody needs a good gunsmith—people share news about them faster than hot stock tips.
•Create a proper yellow-pages ad (don’t buy an ad without listening to the AGI CD on how to create effective yellow page ads and certainly don’t listen to the ad sales rep) .
•Have a simple but effective website presence, with the five key components covered. (AGI has a turn-key system that can help with that, too.)
Just these four simple things can generate a lot of work. There are even more powerful tricks I reveal in our success courses. You also need to know how to “Sell” your work and services. Whoa! You may be thinking, “I hate selling,” but “selling” is not a dirty word! It just means knowing how to best help your customers make a good decision. If you are honest and want to actually help your customers, then you need to know how to do real selling.
Know how to rapidly do repairs and customizing work.
I won’t spend a lot of time on this point, as it is what the entire AGI course is all about. In brief, you must be able to understand the firearm design, quickly analyze the problem and then make the proper repair. That’s what you learn if you take AGI’s Professional Design, Function and Repair Gunsmithing Course. If you haven’t watched the Professional Course Introductory video lesson, then go to www.AmericanGunsmithingInstitute.org for complete details.
Understand the lifetime value of a satisfied customer.
To acquire a new customer takes time and some expense. A satisfied existing customer will bring you business for many years and at very little cost in marketing. Again, let’s do some simple math. Let’s say a customer’s gunsmithing job is $100. He is happy with the work you did, but you only did that one job and never see him again.
That customer was worth only $100. But most gun owners own a lot of guns, so what if you kept in contact with that same customer and he did $100 worth of business with you twice a year for 20 years. The lifetime value of that customer would now be $4,000! Now, what if you could increase the transaction size (dollar amount) of each job and do work for them more often? That same customer could now easily have a lifetime value of more than $10,000. How many of those customers would you need to meet your financial goals?
But, you have to have a simple way to keep them coming back again and again spending more and more money. I reveal how to do exactly that in the Business Success Tool Box Package, which is available with the AGI Master Gunsmithing Course.
Extract maximum benefits from the business, “tax free!”
Quite frankly, I am like most everyone else and really hate to pay taxes. But, I do. However, I first take every legal deduction I can so I pay less. You probably could too, by legally deducting many of the expenses you are already spending your hard-earned money on, such as your truck or car, phones, computers, guns, ammo, range fees and memberships, travel, meals, rent, tools and many other items—as long as they become legitimate business expenses. As a part-time or fulltime gunsmith, many of these items do become write-offs and business deductions. You will need to check with your personal tax advisor and everyone’s situation is different so this is NOT legal advice. But in an audio interview with a CPA and tax specialist we reveal “Tax Secrets That They Don’t Want YOU to Know About.” Again, it is in our Business Package and education is the key.
Leverage your time and resources.
OK, so how can you make more money per hour? Well, I have a number of proven answers to this question and I am only going to share a couple of them with you here. First of all you can charge a “flat rate” per job and get faster at the work itself. (AGI developed an exclusive Gunsmith’s Flat Rate Manual showing you what to charge per type of job included with the Master Gunsmithing Course.) Second, you can batch your work, doing similar jobs at the same time—bluing, trigger jobs, bedding, etc. You organize your time and tools and therefore get more done faster. Another biggie is knowing which jobs not to take. Trust me, knowing how to make this decision properly will keep you out of the poor house!
Other ways of increasing your income and leveraging your time include having other gunsmiths work for you on a percentage basis. You can also specialize in customizing certain types of guns—getting higher dollars for those projects—and you can implement simple processes that maximize your efficiency. Combine a dozen other methods, and this can result in huge income growth with more freedom.
Hopefully this information helps you realize there is more to being a successful gunsmith than just knowing how to turn a screwdriver. It isn’t really all that complicated if you know what to do. I have so much more to share with you, but there isn’t room for it all in this article, however it is available to you through the AGI Business Success Programs and the Business Coaching I do.
There is a real need for qualified gunsmiths, and I wish you the very best if you choose to get involved in this exciting profession.