Managing Your Parts Inventory For Maximum Profits

If you know anything at all about merchandising, you know you need to control’and I emphasize control’ the volume of parts you stock. Of course, there are certain things you must keep in inventory, like screws, springs, pins, as well as a variety of metals for making custom parts. But I am not talking about those things here; what I am talking about are more expensive parts, like sights, mounts, grips, recoil pads, and the like.

The gun-parts distributors who read this will hate me, but it’s in keeping with my continuing crusade to make a profit’and keep that profit’t hat I’m forced to commit these words to paper. First and foremost, you must realize that trying to keep a complete stock of parts for even the most popular or often-repaired firearm is not only expensive, but unnecessary. Nevertheless, if you repair a popular gun that needs anew extractor, you probably don’t want to order just one.

If you know you use six of these a year, buy four rather than six, and keep them in inventory. For one thing, extractors are cheap, and you probably can’t order just one anyway, since there likely will be a minimum charge from the factory. So to keep your costs down, either buy enough extractors to meet the minimum or add something else that you know you’ll sell within a year. Service on most parts’whether directly from the factory or a parts house’is usually a threeto fourweek process.

Most gun owners know this, so there is usually no hurry on the part of your customer. When you order more expensive parts only when you need them for a job you’re working on, you have an immediate turnover which is profit’right now. You’re not tying up your money in the expectation that a particular repair will come in’which, of course, might never happen.

In other words, when you attempt to carry an inventory of more expensive parts you’re essentially gambling with your money, playing the odds that someone will come in who needs them. You make money only on parts that sell’ even if you get great satisfaction in looking at those drawers full of iron. What really tells you if your parts supply is making you money or not is accurate record-keeping.

Take an inventory, price it out, and create a daily-weekly-monthly sheet that shows what you’ve sold from that business and the type of work you do will obviously factor into this, so there is no set formula that can be followed; and if you specialize in a particular type or brand of gun, that will also play apart in determining the size and type of inventory you keep.

A "good inventory""once you determine what that means for your operation’will help not only in maximizing your profit, but will help to reduce the turnaround time on a given repair, which also helps to maximize profit. An accepted rule of thumb for any retail operation is that the inventory should turn over at least twice a year. Remember, those drawers full of parts don’t make you any money until they go out the door. Let’s suppose you have $5,000 worth of parts in stock and only sell $2,000 per year.

This is not smart, and certainly not profitable. One of the greatest dangers for the small shop is a large inventory of sights, particularinventory. Sure this is a little work, but you will learn the truth about the value of your inventory and whether it’s making you money or costing you money. You’ll know for sure if it pays to carry apart in inventory or not. The size of your

AMGFW08 AG DBI – Spread Ad – New (p/u from 10/07 issue)

AMGFW08 AG DBI – Spread Ad – New (p/u from 10/07 issue)

ly pistol sights. These are not only expensive, but can sit on your shelves for years. If you feel you need to stock sights, pick the brand you like best and buy one set each for the most popular guns. When you sell one, order another, but keep records of your inventory. The same is true of scope mounts. These can really kill you. Check your records for the last year and determine the models and types that you’ve actually sold. These are the only ones you need to keep in stock.

In many areas, the large chain stores like Wal-Mart and K-Mart carry things like sling swivels, choke tubes, recoil pads, scopes and scope mounts. In most cases, you can’t sell these items for the same price that they do. Therefore, you’ll want to avoid keeping an What? Fifteen Dollars for a Screw?

While we’re on the subject of the gunsmith’s parts inventory, we should spend a few moments thinking about those parts that can’t be easily obtained with a simple phone call to the order desk at a gun factory or parts house. Sure, you’re going to keep an inventory of small parts’ screws, springs, pins, and so forth. But what about that oddball screw for an unusual or older firearm that isn’t just a phone call away? Is $15 a fair price for the screw you have to make from scratch? The answer is: No, $15 is too cheap.

Think about it. If you order that screw, you’ve got along-distance phone call to make, a shipping charge to pay, even before the screw gets to your bench. Even if you get the screw from a nearby hardware store, you can’t drive very far these days for $15. This brings me to another area where the gunsmith has an advantage that he can exploit’ that he must exploit’over his competitors in the gun-parts business.

And that, of course, is that unavailable part for a discontinued firearm’of which there are thousands inventory of parts that anyone can buy cheaper from Wal-Mart. The one thing that these chain stores can’t do is offer installation. But don’t be too hard on your customer is he buys a scope at a discount chain store and brings it to you for installation. After all, he’s no different from you’he wants the best price he can get.

And keep in mind that when that gun starts to malfunction, he won’t be taking it to Wal-Mart to get it fixed; he’ll be bringing it back to you. There’s little that the gunsmith can do about the fact that his business in accessories and parts is shrinking because of the merchandising that’s going on. Gun stores and gunsmiths have no control over who can stock and sell these items. Since the introduction of publications like Shotgun and thousands. Cana gun owner walk into Wal-Mart and have a custom screw turned?

Of course not. I’ll use the example of making a screw here, but the same logic applies to any otherwise unavailable part. So is a $15 screw expensive or cheap? Let’s look at the facts. First off, you have to have a lathe, the proper steel, the proper dies, a micrometer, a steel ruler, some cold blue, not to mention a fair amount of know how.

The lathe can run anywhere up to $10,000, but let’s assume you have a good used one that might have sold for $2,500 to $3,000. (A good bench lathe can be had for that.) The steel, if bought from Brownells, is the least expensive item on our list, but you probably ran out of the size closest to the head diameter, so you need to use a larger piece than necessary. The dies can run anywhere from $4 to $15, and the handle a little more. Micrometers, even the good 1-inch digital run $60 to $75.

So taking just these items into consideration, we’re already around $3,000 in equipment to make a screw that we have no dimensions News and the creation of zillions of gun-parts and accessories websites, the world has become aware of the fact that most parts can be purchased directly without an FFL. But the gunsmith still has one leg up, and that’s installation, repair, and custom work.

That’s where the gunsmith market will be for some time to come, and that must be factored into the inventory you keep on hand, since more and more gun owners are going to be buying these parts this way and then asking a gunsmith to install them. Unfortunately, there’s no price protection offered to the gunsmith by any of the parts houses. This means that where once we would have ordered apart and added the shipping and a small markup for a little profit, now we’ve lost the advantage. Now everyfor.

And we haven’t even factored in the cost of your education in using this equipment. Before we begin, we make a sketch, determine the approximate length, threads, diameter, and type of head. Let’s say it is a fillister head, head thickness unknown, with a length overall of 3/4 inch and with 1/8 inch cut to 5/40. We turn apiece of metal down, cut longer threads than necessary, then cut them off so only 1/8 inch of thread is left, then turn the head down to the correct diameter.

In this case, we’ll say we were lucky and found a number drill that when squared off on the smooth end, fit the hole. We have to leave the new screw-head diameter long enough so that we can cut the new screw off, reverse it in the chuck, and by fitting the new blank head in the piece that it will go into, we can make around mark to show the length. By being careful, we can then cut the head down to the proper thickness. Now we can use a screwslotting file and hopefully get the slot centered in the head.

Then we have to spend the time it takes to

one knows what these parts cost, and no one wants to pay us more than the parts house gets for a given part. This brings me to my final piece of advice: Don’t try to be a parts house yourself’not unless you want to go into the parts business instead of the gunsmithing business. In other words, my advice to gunsmiths is: Don’t sell parts separately, without installation. First off, you have the problem of competing on price that I’ve just outlined.

Second, if the part is coming from your inventory and it’s a hardto-find part, you are hurting yourself if you sell that part without the additional profit you’d make on the installation. You’re in the business of repair, and you install all parts that you sell. And finally, never order expensive or unusual parts unless you have blue it, of course, and to admire it. Now, let’s see how much money we lost. Yes, lost.

If you charged $15 for this screw, used all the equipment that I listed, and it took you somewhere between 30 and 45 minutes, you did indeed lose money. First off, that lathe, dies, and micrometer are not going to last forever. They have to make money for you. If you charge as much as your local machine shop does (he probably doesn’t have the taps and dies that you do), which is about $50 an hour and you charged $25 for the screw plus your minimum of $25, you would have a $50 ticket.

So even $25 would be relatively cheap for a custom-made screw. If you had built a custom firing pin for your customer and charged him $50, he wouldn’t give it a thought. Because in his mind, building a custom firing pin is different than making a little old screw. But, in fact, the custom screw could be a more time-consuming project than a firing pin.

Despite the fact that people think of screws as being cheap, if one isn’t available and the the gun in your shop and the full amount of the part has been paid in cash up front. So where does this leave us? If we do a repair job that calls for apart available from a parts house, and the customer has the catalog or looks at the website, you’re not going to be able to charge more for that part (like we should be able to do). You’ll have an unhappy customer on your hands who thinks you’re trying to rob him.

But I have away of handling this. The customer can buy all of the parts he wants from whomever he wants, and I will happily put them in for him. But I will also guarantee you that the customer will pay me a profit on those parts that’s hidden in the final bill. We’ll get into the specifics of that in a future article. I gun and its parts are discontinued, a custom screw is apiece of custom machine work, and must be priced accordingly.

Try to explain to your customer that you’re bringing a gun back to life that can’t be used without that screw. The gun may have only cost $50 when it was new, and for the first time in 50 years it needs $50 worth of work. I wish I could keep my old car going for the same years-to-dollars ratio.

In the final analysis, while it’s very satisfying to make a customer happy by repairing his prized gun, you can’t work for nothing, you can’t replace your lathe for nothing, and you can’t spend satisfaction at the grocery store. You deserve to be paid a fair wage for a fair job. Remember, if you work cheap, then the world will laugh at you for your stupidity. Charge a fair price and everyone will realize you’re the firstclass craftsman that you truly are.

And if all else fails, do what I’ve done for the last 50 years: Tell your customer that if he can’t afford to pay a fair price for your work, then don’t bring you his guns.