Crowd Funding A Business Venture Rather Than Assuming Any Personal Risk

Crowdfunding the wrong way:

Riverside-Tactical-Sales-GoFundMe

This is all about working off “best case scenario” predictions and avoiding any personal financial risk.  This type of money grab is rife in the firearms community lately since sites like Kickstarter started to become popular.  People hear stories about how someone made a prototype for a little widget up, and got $900k on crowdfunding websites.  Customers start basically throwing money at the “inventor” because they wanted the product so bad.  It was only a matter of time before this turned into people who want handouts for something they are “going to do” (which, spoiler alert is usually regular shit but they think they are special).  Enter companies like Riverside Tactical Sales & Training… a company which was bold enough to email me about their new GoFundMe campaign.  I always have an open mind when it comes to emails about this type of thing, because sometimes what is on the other end of the link is pretty cool… not this time.

From the campaign:

After researching and applying for several options to fund a brick and mortar retail storefront and custom shop, we have found that the amount of resistance to this highly misunderstood and inappropriately tabooed industry is simply incredible. We have been denied by lenders, merchant card processors and even building owners strictly due to the Constitutionally protected nature of our business.

Waaaaaahhhhh welcome to the club.  To summarize, Riverside Tactical Sales & Training wants $80,000 to open a bricks & mortar store.  They have invested a WHOLE $40,000 of personal money and two years worth of part-time work into their business guys, so give them a break.  They are REALLY trying hard and need your support *eye roll*.  The main guy (beggar) Daniel Hauer even still works as a public servant for the state of California, and they have 4 kids. *tactical violin sounds for the working man*.

Why does one need a Cerakoting shop (which they already have) in their community?  I can overnight mail my guns to any FFL who does Cerakote for a few bucks.   They want to start a “training company”… so start one.  You don’t don’t need a bricks & mortar to do that… you can book a range and have instructors and students show up.  Cory & Erika did that, even with Cory’s 11B habits from the sandbox and Erika not initially knowing how to shoot.  What makes Riverside Tactical qualified to teach people anything or provide “security consulting”?  Are the planning on hiring more people to train / consult?  Who knows… take their word for it though and give them money. haha

Tons of other people, myself included have grown companies organically.  That’s how it should work.  Take calculated risks, create your own success, reap the rewards.

Crowdfunding this type of thing is absolute pure laziness looking for a handout.  Even the “reward levels” are laughable.  Oh so if I donate $10K I get my name on a banner on opening day? $5000 and I get wholesale prices for one whole year?  $1000 and I get a firearm Cerakoted and grip or frame stippling?  LOL my sides… this is too good.

Thoughts?  You into spending your hard earned money, funding other people’s risk when they aren’t even confident enough to invest their own time and money to grow it?

I’ll continue to invest in myself.

24 COMMENTS

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JohnnyIShootStuff October 21, 2014 at 03:39 am

I get crowdfunding for arts project, but, this is just throwing money away. $80k is far less than what is needed to procure, refit, stock, and open a physical location. They will burn through $80k in no time at still not have a store.

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Leonard October 21, 2014 at 06:40 am

They were probably denied loans due to a poor business model or insufficient ROI from the lenders. No one is going to turn away a lucrative business deal, regardless of their political stance; money will always buy people. The fact NO ONE is willing to invest in his dumper-strapped business should be a painful realization he needs to change his plan/approach, and not beg on the damn interwebs for capital hand outs.

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JohnnyIShootStuff October 21, 2014 at 08:46 am

I liked the heart tugging that he used by telling us about his four kids.

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Keith October 21, 2014 at 08:00 am

Tip number 1: Don’t bitch about trying to start a gun business in California … just move out of California like everyone else

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Keith October 21, 2014 at 08:03 am

Additionally looks like plenty of other people have successfully started a brick and mortar gun store in Menifee, California

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Keith October 21, 2014 at 08:04 am
ENDO-Mike October 21, 2014 at 02:50 pm

haha yea imagine that! Good catch Keith.

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KestrelBike October 21, 2014 at 08:10 am

There’s an amazing, full service B&M gun store in Orange County, CA smack dab between Los Angeles and San Diego ( http://www.riflegear.com ) Awesome staff, quite fair prices (they can’t beat desperate deals on gunbroker, but they beat the shit out of thieves like cheaperthandirt) and decent, basic gunsmithing services. And yeah, I moved out of CA because I wanted to enjoy firearms and because it’s a terrible state with amazing weather being it’s only saving grace (that and the only state with legal motorcycle lane-splitting).

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MudMarine October 21, 2014 at 01:31 pm

Corey`s 11b tendancies? Please….

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ENDO-Mike October 21, 2014 at 02:51 pm

It was a joke lol

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Daniel Hauer October 21, 2014 at 07:06 pm

Hm. Well, it seems as though I was wrong assuming that a “Firearms Industry” blog writer would be supportive of a large part of the “Firearms Industry”, small business. While this may be just my opinion, I think your commentary may have jumped to immediate inaccurate conclusions which are both misleading and uninformed. But that is ok, I welcome all comments, questions and advice (whether good or bad) and take them all into careful consideration before deciding how to react. After reading your other blog entries I expected a little better quality from you. Those entries seemed like you did a little more research than “click the link and run a keyboard”. I trust that you will use all the contact info I have given you to get in touch with me to discuss the ‘what’ and ‘why’ of our business.
I would like to respond to your, although grammatically well written, somewhat misleading blog entry one issue at a time.
-We are not looking for a ‘handout’ for something we are ‘going to do’. We are exploring every option possible to expand our already operational business into something that will create jobs and better serve our community. Offering a reward for investment is in effect ‘partial reimbursement’ for supporting our business. If you ask people to give you $20 and in return you give them a t-shirt worth $20, you’re business will go absolutely nowhere. Hence the invalid argument concerning reward levels. There are several companies that will sell an item at a ‘pre-order special’ in order to raise enough funds to actually afford the product in the first place, sometimes making a customer wait for an 80% lower for over a year… we chose a more transparent promotion. Our $10k reward level was meant to be humorous. Much like responding to my initial email with “LOL oh I’ll put a post up about this, you can count on it.” then claiming you have an open mind concerning emails… By the way, we pay for advertising and never expect anything for free.
-$80k is the remainder of what we will need to open a storefront. This number is constantly being crunched to reduce it further, however this is a conservative estimate. This is also in addition to the $30k in stock we already have, security and storage, licenses and permits, and accounts held with several distributors that are all on board to assist us with 30-90 day payment terms. So ‘JohnnylShootStuff’, $80k is going to work just fine. By the way, it is possible to have 2 full-time jobs. This business has been and continues to be hard work. If anyone here is a licensed firearms dealer with a shop they know exactly what I’m talking about. As far as my kids are concerned, I wanted to tell people a little about myself, not looking for sympathy. My kids are everything to me and I am very proud to have them. At no time would I ever consider my kids a burden. If I am going to invest even $5 in a business I want to know about the guy running it.
-Now let’s take a look at the Cerakote… If you would like to send your $2k+ rifle to Bubbas mail order gun coaters and pay ‘a few bucks’ for a Cerakote Application you are braver than I am. You are going to end up with exactly what you paid for, a ‘few buck coating’. I really doubt those ‘mail order coaters’ will guarantee satisfaction like we do. Also, in order to become a ‘Certified Cerakote Applicator’ your shop must be in a commercial building, not in your garage. While you don’t need a brick and mortar to start a training company, this will be an additional service we offer, not the primary one. We have a large network of instructors, active duty and retired military, so this is not a problem for us. Also, in order to assemble custom rifles for sale as a business, one must obtain a Type 07 Firearms Manufacturers License, which requires an appropriately zoned location. These are real issues that a firearms business faces. The industry is much more restricted than apparel. So in response to ‘Leonard’, while a t-shirt company may have access to all the financial backing and funding they can find, your ROI, Net Sales, Gross Revenue, Time in Business, etc. have no meaning at all when policies clearly state ‘we do not engage in business with firearms related companies’. This is just as applicable to merchant processing and commercial leasing as well.
-Last I would like to address comments from “Keith”. Sir, I appreciate the research that went in to your comments. You were doing some fact finding before coming to a decision to comment and I thank you. The map you posted is slightly inaccurate. The Shootist, Faith Armory and Steelwater are the only two ‘actual’ shops and they are not located within the city of Menifee. The rest are all ‘Kitchen Table FFLs’ which is what we are trying to get away from. It also did not list ‘West Coast Ammo’ which is also located in Temecula. Of all those shops, not one offers Custom work. They all have their benefits and we have a working relationship with most. When people ask me about ammo I refer them to West Coast. Questions about archery? Go visit Faith. But when people want custom work on their guns from a family business they can trust, they’re already in the right place. Also Keith, ‘just moving out’ is not an appropriate response to conflict resolution. When people don’t like how the federal government is run they don’t immediately skip to ‘renounce your citizenship and move’. The only way to fix a problem is to face it head on and do something about it. When people run from their problems it just makes the problems worse. As for us we will stay right here, side by side with our community and our customers and we will continue the good fight.
So with all that said if you’re still wondering what sets us apart from the rest, I invite you, Mike, or any of your readers to go visit our online store. Ask people that have done business with us what their opinions of us are. See how we treat our customers. Put our customer service to the test if you would like. I don’t want anyone to think they are getting any kind of preferential treatment, so please don’t tell me you are coming from ENDO. After you are armed with that information, then please, form an opinion for yourself. Mike, you have some really great shirt designs. I wish you the best for the future of your company and hope that one day we can have a better working relationship.

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JohnnyIShootStuff October 22, 2014 at 03:37 am

tl;dr

I guess you’ve never read this blog or the comments from the pack of hyenas that visit here.

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Brian October 22, 2014 at 12:30 pm

tl;dr

we have some friends that are former 11B’s and 311’s.

we know how to operate the basic tools to assemble the AR and have jumped on the cerakote bandwagon.

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ENDO-Mike October 27, 2014 at 03:04 pm

I really have nothing else to say to you Daniel except for I think you’d be surprised how far hard work and an actual business plan goes. You might think you have a business plan, but all it looks like to everyone on GoFundMe is that your plan consists of wanting the money to open a “successful” bricks and mortar store + starting a training company. How is it automatically going to be successful for one?

“I can overnight mail my guns to any FFL who does Cerakote for a few bucks.” – I worded that shitty, but what I meant is I can overnight mail the gun for “a few bucks”. I’m aware what Cerakote costs. I think the low cost and convenience of the mail system is a huge threat to that part of your business. Especially considering so many companies that do Cerakote are extremely active on instagram and facebook and have hundreds if not thousands of customers (social currency) to drive future business.

As others mentioned, $80k is such a small amount of money for what you’re talking. I’d really like to see you prove me wrong and reach your goal. I’ve been flabbergasted by the internet before and I’m sure it’s bound to happen sooner or later again.

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Will Smith October 21, 2014 at 09:04 pm

Saw the length of Daniel Hauer’s comment. Read Mr. Hauer’s comment. Easy on the quote key buddy. I could explain all the reasons why Mr. Hauer’s response was bad however that would be unpaid work. In short, I smell Battle Rifle Company Redux.

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Daniel Hauer October 21, 2014 at 09:21 pm

Will, my apologies if my comment was winded. I wanted to address everyone’s concerns “directly”. I can assure you we are not another “Battle Rifle Company”. We use quality parts from other reputable companies, and stand behind anything we build “100%”. Ok, got all my quotes out… :) I really do appreciate hearing concerns that people have. They can only make us better.

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Brian October 22, 2014 at 12:19 pm

TLDR; we are another battle rifle company.

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Will Smith October 21, 2014 at 09:57 pm

http://www.ispot.tv/ad/75Pf/sprint-steves-facebook-ft-james-earl-jones-and-malcom-mcdowell

Mr. Hauer, the link above is essentially what is happening. While the commercial is humorous the point being that a back and forth of comments as a discussion, argument or debate destroys any real chance of meaningful gain.

Keep working on your PR craft.

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Gwolf October 22, 2014 at 07:03 am

I’m going to refrain from being a total dick and only be a partial dick. On account of I operate so fucking hard in business and I like to see people realize their dreams. But to do that I gotta speak truth.

With private investors or bank funding, as opposed to crowd funding, you will have to open the books up for review, present your plan and tell them how they will make their money back with interest, or give them an ownership interest in the business. Is there an issue with that?

Is that why you want to do crowd funding instead? It’s like a loan with no strings attached. Free money essentially.

Look, if I invest $10,000 in a business, I don’t want my name on a banner and I’m not doing it to be a second amendment philanthropist. I already get my name on a frigging banner when I “invest” money supporting my kid’s high school football team.

If I give a business my money I’m doing it because I want to make that money back with a profit in a reasonable amount of time. I have my own kids to feed. A business is not an exercise in charity or to make a political point, it’s business.

I’ll be honest, the fact that you thought that someone would be satisfied with their name on a banner for $10K or that they should want to give you that money as a philanthropical exercise indicates to me that the people operating this business are either flying by the seat of their pants when it comes to understanding business and money or that they are desperate for an infusion of operating cash. Neither of which give investors that good “Yeah, take my money bro!” feeling. I would personally shitcan that funding page.

If you need $80k, and the banks have said no, then I would recommend you first examine your business plan and make sure it’s tight. Bring in an outside advisor to review it with you. You do have an outside mentor to bounce things off of right? Someone who has demonstrated business success, doesn’t matter the industry, as long as they have success taking an idea from paper to profitable retail location.

After you have done that you can go back to the banks, or seek private investors, real ones, with cash in hand to make this happen. If they all say no, and it’s not for philosophical reasons in that they are opposed to firearms, then take that as a sign that the market is telling you that you still have work to do to refine your business plan. If you can’t tell me with great specificity how I make my money back, and how I make a profit, then I’m not giving you my money to use.

Investors like to see books operating in the black or very nearly so, a well thought out plan for growth and an owner or daily operations manager that they have confidence in. If they get the feeling that “this guy knows guns, but he doesn’t know shit about business…” then it will be a tougher sell to convince them to part with their money and to provide it to you. If that is part of the problem then it might be worth your while to consider bringing in a partner or daily manager who does have experience taking an idea from inception to storefront.

You can say they are all wrong, and they are haters and no one understands your industry and whatever else, but the proof is in the pudding. If no one is willing to put their money into your idea, then you still have work to do on that idea, or the team of people executing it, or you need a new idea.

Finally, maybe the scope of what you want to do right now is beyond what you can finance to make it happen. So, perhaps there is one segment of your business that would generate considerable revenue versus the others.

Maybe think about focusing your efforts and current funding on that to get this off the ground. You say you don’t need a retail location to execute your training component. Why aren’t you putting that into operation now and using the revenue it genetates to fund your eventual retail location? (Don’t forget adequate liability insurance.)

Rome wasn’t built in a day. You can always expand your lines of business as you progress. If you aren’t progressing then you’re selling shit no one wants, or at a price no one wants to pay, or your fundamental premise and execution is wrong for your region and market. All of which comes back to basic business practices.

Put your thinking caps on, get with your advisor and figure out where you’re at.

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overkill556x45 October 22, 2014 at 07:47 am

Amen!

I wish I could invest in my gunsmith’s business but it’s privately held because he’s a business ninja. He started off as a cerakote dealer (certified) and grew incrementally over the years. that’s the only way to build a solid business. Crowd funding a venture like this is just an attempted shortcut. Shortcuts lead to bankruptcy.

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Daniel Hauer October 22, 2014 at 07:58 pm

I really do appreciate all the words of advice, no matter the tone. Will, that was a funny commercial, but in this day and age you have to use every avenue available to communicate with people. Whether its comments or face to face. Took me a while to get used to it as well. Gwolf, a lot of very good points and I thank you for the good nature you deliver it in. With all said, I am not a Gun Guy who likes business, but yet a Businessman that likes Guns. Developing and running a business is a full-time job. Haven’t had a chance to actually go to the range and throw lead for myself more than once in the past 2 years. And overkill556x45, I understand how it looks to crowdfund this business, but this is not the only thing wee are actively pursuing. I think I’ve done my best to address most of your concerns on this blog. Thank you all for sharing your opinions. Looking forward to proving ourselves soon and changing your initial opinion of us.

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FarmerJoe October 22, 2014 at 10:30 pm

I’ve only used Kickstarter once, and they shut me down within an hour. I was highly disappointed.

Your request (#213442) has been updated.

If you have further questions or comments, you can add a comment by replying to this email.

Project Specialist, Apr 23 11:24 (EDT):
Hi Joe,
Thanks for writing in. Unfortunately, deportation falls outside of our scope.

Best,
Luke

Joe Xxxxxxx, Apr 19 18:02 (EDT):
So I can’t start a Kickstarter Project to fund the deportation of Peirs Morgan, the CNN commentator?

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Will Smith October 23, 2014 at 06:37 pm

Mr. Hauer let me be metaphorical.
Your approach to connecting to potential investors via the internet is currently likened to General Lee determining that Gettysburg is where he needed to make a stand.
In short it’s a horrible idea.
You might as well be leading Pickett’s charge.
Have fun running toward the hail of lead shot.
Always choose to fight your battles where you will win.
In internet terms: don’t feed the trolls.

Pro Tip: Trolls live in the comments section.

The better strategy would be to address people’s statements in comments by redirecting them to a webpage that better elaborates on how you handle their concerns.
Like your GoFundMe page where you can update that page to redress the concerns of the trolls.
One of the best ways to do that is to list your @#$$&@@%@## business plan.
At that point we can dissect the bloody thing and then litter the comments sections with our viewpoints.

Next, how you react to comments affects everything and this cannot be overstated.
Having someone spend large wads of cash funding your project and all they get a banner is not just laughable but just plain suicidal.
What makes this worse is your response to criticism.
You knee jerked an answer that it was a joke. Really? A joke.
People dropping hard earned cash into your lap is a joke? (Channeling my inner Allen Iverson)
Either you have a warped sense of humor or you just can’t take the heat and admit when you messed up.
Making or stating that your reward system is a joke only makes your GoFundMe page more like a terrible Craigslist ad.
You know the ones we all laugh at on Facebook.

It doesn’t matter if you thought it was a joke.
You are seeking an investment.
If these people invest in you then you need to reward them with a return on their investment.
A custom built rifle or twelve.
Ten Grand should at least get free lap dances at the strip club.
Heck ENDO Mike might low ball and just as for endless supply of Cheetos.
So have some respect for your investors and your business.

Remember how Battle Rifle responded to negative comments?
Blogger: hey your gas tubes are exposed? Why?
Battle Rifle: DERP? Cause it looks aggressive and tactical?
I think more people have facepalmed to that reaction than could ever be counted.
Your reaction to negative criticism is in the same league.
That is the only aspect of why I think you are another BR.
Because you can’t handle the heat and you don’t know when to or how to fix it.

Now that you have a modicum of presence on the internet, whether good or bad, use it.
Keep updating your GoFundMe page to redress the concerns of potential inventors or create a new webpage and show some custom builds and Cerakoting.
Or how about a well written and articulate money making business plan.
Prove us wrong. Just saying you’re not a Battle Rifle company doesn’t make it any less true.

Also let me point out that as horrible as BR is in building a rifle they at least started a business without crowdfunding.
So at least they know how to start a business.
If you can’t fathom the idea that your business plan has more holes than swiss cheese or is about as useful as sewage on a birthday cake then you need to reexamine reality.

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alex October 27, 2014 at 02:11 pm

Daniel – comments will never a business make, hard work will.

If you think crowd funding will help you do it faster or better, do it. Entrepreneurs are made from leaders, not followers.

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