September 4, 2018
New Range Basics — The Business Plan
When developing the business model for your new shooting range or firearms retail store, among your first steps should include getting your vision on paper in the form of a business plan. Creating a business plan is important primarily for two purposes. First and foremost, it is important for your own edification, but also to ensure you have a sound, well-thought-out roadmap to follow and that leads to a successful, viable business. Second, if you are like the vast majority of range and firearms retail store owners, your roadmap includes some form of third-party funding, be that a bank loan or an investment partner. Those third parties will want to see that business plan for themselves to confirm the use of funds and a reasonable expectation for projected returns on capital.
Numbers the Proforma Way
The best place to start in crafting a business plan is to create a document (using Excel or a similar software) you can continually add to and revise. As you build out this document, you will gain a better understanding of your overall project budget, expected revenue and operating expenses. This information will help you create your projected financial statements, sometimes referred to as a “proforma.”
One section of your proforma should be an overall project budget containing the big items such as real estate purchase price, building/renovation costs, initial inventory and start-up expenses. Once you have a grasp on what it will cost you to get your range or retail store open, you will want to create documents for each of your profit centers — range, retail, training, memberships, events, food and beverage, etc. — and each of these should include a detailed analysis of sales and revenue by category and the direct costs associated with those sales.
Once you have a comprehensive proforma developed, you can use it to create a more detailed set of projected financial statements, namely an income statement with net income projections for the first few years, as well as a balance sheet, and cash flow statement. These projected financial statements should have very conservative numbers backed by industry statistics and data from existing, similar businesses. If third parties are used for some of your funding, they will likely want your numbers vetted by industry experts to confirm the conservative approach used therein.
Numbers + Narrative = The Formal Plan
Effective business plans for presentation to investors open with narratives that include an executive summary that lays out current industry trends, your vision for the business you’re developing and the basic financial requirements to get up and running. This should be presented in summary form on the first page of your plan. Thereafter, business plans typically include the following:
- Where — This expands on the demographic analysis of your current market specific to the shooting industry, and it should include details from a national, state and local perspective. The best source for much of this data is an NSSF Customized Market Report (CMR), which provides a demographic picture focused on a radius of up to 35 miles around your location. This “Where” section should also describe the competition and opportunities you have identified in your area.
- What — This is where you’ll describe the overall project, including niche opportunities you are targeting, information about your location and a summary of the business lines. Next is a detailed analysis of each of those lines (range, retail, memberships, training, etc.), complete with the key components of success for each and the summary numbers from your proforma to back it up.
- How — This is your business strategy, what it is that will set your vision apart from others in you market. Descriptions can include unique retail and training offerings, state-of-the-art equipment you intend to include, and the “destination experience” you are creating. Your overall marketing strategy should also be described and can include pre-opening membership sales, website and social media goals, soft/grand opening events and details regarding ongoing marketing efforts.
- When — This is your project timeline, including the projected real estate closings, construction schedules, range of dates for opening (based on days after construction is complete), and projected loan/investor payback.
- Who — Describe who is involved in the project as key members of the team, what their roles will include and how their experience adds value to the project.
- Why — This is your opportunity to communicate your vision and the mission of your organization. Following these statements, a summary of the financial requirements, lending partner requests and investment offerings should complete the opportunity presented in the plan.
Adding a Visual
Once you’ve created the narrative, you should help your audience see the big picture with the use of images and document summaries that allow the reader to easily evaluate where capital is being spent and what the profit centers will look like that will be generating the revenue. A basic rendering of you floor plan is also recommended. These are the final touches that pull together the financials from your proforma and their related detailed descriptions into images that both capture your vision and communicate to your investors what executing on your vision means “by the numbers.”
About the Author
Jeff Swanson is Cofounder and an Owner of the “Next Generation” range Wilshire Gun in Oklahoma City, Oklahoma, and the Managing Member of NexGen Range Consulting. An attorney, entrepreneur and business development consultant with more than 22 years of experience, Swanson and his team created NexGen Range Consulting to help new and existing range owners across the country create their own “next generation” facilities. Swanson also serves on NSSF’s Range Action Specialists team and can be reached via email at Jeff@NexGenRangeConsuliting.com or by contacting NSSF Member Services at 203-426-1320.