Our customers asked ….

When customers ask there are normally more with the same thoughts and questions. In this blog I will address why The Powder Keg stopped selling and trading in old firearms when others have started to do this as a new initiative.

When we bought The Powder Keg from the estate of the late Dr Lucas Potgieter there were approximately 500 second hand firearms in the safe. I best describe the situation as fog; a distraction to running a disciplined business with proper controls and clarity of vision.

Every business operates under different circumstances; good strategy in one business is often bad strategy in another. Also, good strategy is normally a differentiated approach; a copy strategy is normally not good strategy.

When fixing a business, do it quick. The number of second hand firearms on our premises was a cancer that could not be cured in a reasonable time frame given the licence procedures in SA. Our business needed surgery.  We boxed 2 crates of our old pistols and after 6 months of trying to have these destroyed we gave them to another dealer with a different strategy.

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Similarly we got rid of our second hand rifles with little or no value and asked customers to collect their storage firearms. The storage of firearms is a good business if that is your main focus and if you have a warehouse for storage. We needed to focus elsewhere.

The average value of the 500 firearms approximated R1,000 each. At best we could realize an average margin of R250 per firearm.  Consider the effort to sell, complete license applications, control stock and the cost of insurance while compromising stock control and the opportunity cost of not doing what matters. Waste, we had to cut fast and deep.

A lesson I learnt from Carlyle Private Equity in the financial crisis of 2007- 2009, cut deep and then cut again, better to make corrections later than not being around to have that chance. My biggest frustration in the firearms industry is that you cannot make legacy issues a 1 day problem; you simply cannot get rid of an accumulation of unwanted firearms quickly.

In every decision you have benefit and compromise. Employees who were part of The Powder Keg for many years could not understand why we refused to compromise on keeping second hand firearms.  To get rid of the second firearms we needed decisive action, no grey areas,  even though in some instances (viewed in isolation) this was a lost profit. We had to be clear and decisive on our goals and time to implement.

In China there is a no drink and drive policy (ZERO). No grey area. A limit allows for subjective evaluation i.e. “I should be fine with one more”. The same rule for new drivers in many European countries; kids in these countries will not risk losing their license; there is nothing not to understand about a ZERO allowance rule.

Similarly, when the production director of a manufacturing plant in our business needed to reduce the cost of overtime worked he banned overtime and stomached the impact of those instances where there was a cost to production shortages. At The Powder Keg we implemented lessons learnt from our past.

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To be a good leader you must be courageous. At The Powder Keg we have clear strategy and we focused on that golden thread. Selling second hand firearms might be a future strategy at The Powder Keg but not until we are perfect and successful in other more important matters.

Doc Lucas was in the business for 40 years, he sold second hand guns and he stored everyone’s firearms, why would we now consider this bad strategy? New eyes are important in all businesses. If you throw a frog into hot water he will jump out. If you place a frog in cold water and slowly heat the water the frog will cook to death because the slow temperature increase is not recognized as an event to act upon.

A police inspection that took 5 hours is now possible in 30 minutes.  As we continue to implement lean principles at The Powder Keg we should get a police inspection down to 15 minutes – our next goal.

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