Notes on opening a Fireworks Retail Business


#1

From a PyroU poster, Dan Muzey:
Okay, got a keyboard here and a few minutes. Lot easier than typing on the phone:

  1. Laws and regulations – research state and local laws. Start by searching for state laws. Then search for county laws. Then city. You need to comply with them all. The laws will determine where you can put a stand and how much the permits will be.

  2. Now you know where you can put a stand and where you can’t. Find a location. Get ready to be told no. Drive around, look for places. Pull up county maps to see who owns places. Location is tough. A building is best and hardest to find. You may need to consider sprinklers as well. Tents are cheaper and you have to deal with security and weather. I started in a 40x20 tent. This is the minimum size I would even consider. Preferably a 30x50. When storms come in you can pull things in and collapse the sides. Plan on $600 to $2000 for rent. I’ve also done semi trailers retrofitted with a couple doors. If codes allow it. You can purchase a used one for a couple grand. Retrofitting it can cost another grand. Might cost a couple hundred to get it moved as well. At the end you are stuck with an 8 foot by 50 foot shop. Less space than a tent but more secure. Finally you can build or convert a cargo container to a “walk up” stand. Extra labor to sell out of this one. Also people can’t touch the product which hurts sales. In some states this is the only thing that you can sell from. Probably looking at 2K to make one of these and you have to get it moved. Plan on paying minimum of $500 for a chunk of land, no water, no electricity. More likely you will pay more. It was $550 for my land including electric to start. There was also a 5% minimum clause. If I sold over 10K the land owner got more money. So now you have a location and something to sell out of. Figured out all the permits, met with county officials to get conditional use permits (these take about three months).

  3. Insurance :frowning: If you get your own insurance its going to cost around $2000. this includes premise liability and maybe some building insurance…maybe. You can also get insurance from a wholesaler. This is cheaper but significantly less comprehensive. No what you are getting.

  4. Now you need tables, cash registers, credit card machines (Square works well). I use copper POS for my cash register/point of sale system. The program is free and I load it on my laptop. USB thermal printers and bar code scanners complete everything. You can easily sink between $500 and a grand on this stuff.

  5. Something to sell. Lots of wholesalers around. Transporting fireworks legally can be a pain. Nuff said on transportation. I recommend Sizz Boom Fireworks (Kansas), Fireworks Forever (Wisconsin), Spirit of 76 and Hales (Missouri)…start there. Having someone within driving distance helps. Some will do consignment, some will do credit, others want cash upfront. Don’t be surprised if you get charged extra when you pay with a credit card. Carryover inventory is a tough one. Not enough carryover and you lose sales since you have nothing to sell. To much and you are swimming in inventory. I target having about 50% carryover. I’ve been as low as 25% and my shelves were bare.

  6. Advertising – expensive!!! I spend roughly 7% of expected sales on advertising. Direct mail is the most effective and very pricey. Roughly 40 cents per drop. I’ve been using everydoordirectmail from Taradell. I also am in the local parade, put up some cheap homemade billboards, put an add in the paper, and use a lot of social media.

Your location is going to determine your sales. Better locations better sales, more start up costs. Don’t risk more than you can afford to lose. I’d rather leave sales on the table year one and come back strong year two than over do it year one and not be able to open year two.
A budget for a really cheap stand might look something like this:
Maybe 10K in sales…small town, a mile or so outside of town on a main road.
Locations: $600
Tent: $1000
Misc tables and such: $1000
Advertising: $700
Product: 100 cases at approximately $70 a case or $7000 bucks.
Now if you are good you can improve on this. Scrounge and turn $1000 for tables into $100. Maybe you find a building with tables and electric for $800 (I was able to do this). Maybe you can find someone close buy that will help you get started and let you buy partial cases.
Another option is to work with a retail outfit that is close…but not to close… that will help you get started. They take a cut of your profits and your risk goes down. I’ve helped several people with this.