Many holidays are traditionally accompanied by explosions of firecrackers and the launch of fireworks. Especially on the eve of the New Year, the use of a variety of pyrotechnics is popular among the population of the Russian Federation. In December, many entrepreneurs begin to open their retail outlets engaged in the sale of pyrotechnic products. The cost of these goods in connection with a sharply increasing demand is sometimes excessively high, and it is easy to guess that businessmen make good money on a holiday.
However, the introduction of such a business is fraught with its own difficulties and limitations, so a novice entrepreneur should fully study this issue before opening his own business. It should be noted that the retail business of pyrotechnic products is seasonal, about 70 percent of all pyrotechnic products are sold in December, at other times the demand for them decreases sharply, it is supported only by individual lovers, as well as those who want to arrange a pyrotechnic show on a wedding or birthday, or other celebration.
It should be noted that even when organizing private events and holidays, a very small percentage of the population goes directly to the sellers of pyrotechnics, it is often bought by the organizers of the holiday, which are an advertising agency or an agency for conducting and organizing events. It turns out that this type of business is profitable only one month a year, the rest of the time you need to find additional sources of income, however, it is not always advisable to close your own pyrotechnic store, the sale in it can be combined with the sale of goods of other groups, significantly diversifying the assortment.
Some entrepreneurs engaged in retail sales of pyrotechnic products themselves act as organizers of fire shows, fireworks and fireworks, receiving large orders for private and public events. Many others are engaged in retail sales of completely different types of products, and in December they open an additional outlet where you can only buy pyrotechnics. As you can see, the number of such sellers begins to grow sharply from around mid-December, the rest of the time, even a large city has no more than 10 stores with pyrotechnics, which have a good reputation and regular customers. But even such stores are forced to sell a very wide assortment of pyrotechnics, have permission not only to implement, but also to launch and use pyrotechnic products, and such stores are often sold not only with usual pyrotechnics, but also special ones with an increased level of danger, which requires relevant licenses.
Given the very small demand throughout the year for pyrotechnics among the population, it is often impractical to open a point of sale operating year-round, due to sufficient supply from competitors in the market. If an entrepreneur wants to make money only on New Year's hype, he can, having invested relatively small funds, quickly make a profit and disappear from this market until next December.
Before you start your work, you need to register as a business entity. In most cases, it is enough to register as an individual entrepreneur, but if there is a need to register a legal entity, it is better to choose the form of a limited liability company, because in this case, as in the case of individual entrepreneurship, a simplified taxation system is available that allows you to pay in favor the state only 6% of taxes on income or 15% of operating profit. It is important to specify the OKVED code correctly, and in this case, the activity falls under the definition (OKPD 2) 47.78 Other retail trade services in specialized stores, but it may be more correct (OKPD 2) 47.89 Retail trade services in non-stationary trading facilities and other goods markets, after all, not all entrepreneurs rent a whole store for one month of trading in pyrotechnics. However, the registration issue is not the most difficult if trade in pyrotechnics of a class higher than the third is supposed.
So, I must say that all pyrotechnic products are divided into 5 classes. The determining factor is the area of potential danger. The free distribution of pyrotechnic products of the first three classes is allowed, although the possibilities of introducing compulsory licensing for pyrotechnics of the third hazard class are currently being considered. This legislative act has not yet been adopted, but changes may occur as early as next year. The separation of pyrotechnics takes place according to the following conditions:
1st class - radius of damage up to half a meter;
2nd class - radius of damage up to 5 meters;
3rd class - radius of damage up to 20 meters;
4th class - radius of more than 20 meters;
5th grade - pyrotechnics of this class, as well as hazardous areas during its application, are determined by special conditions, including such pyrotechnics may have a shock wave and fragments.
In order to be able to implement non-licensed pyrotechnics, you must have a certificate of conformity, which is provided by the manufacturer of these products. Thus, the seller is free to trade in pyrotechnic products, because for sale he receives a product that has already been tested and does not pose a serious danger. But if the pyrotechnic store wants to sell pyrotechnic products of the 4th and 5th hazard classes, it needs to get a license, which is issued by the Russian Ammunition Agency or a licensing body that has passed accreditation in this area. The distribution of pyrotechnic products is regulated by Decree of the Government of the Russian Federation No. 279 of April 16, 2008 “Approval of the Regulations on the licensing of explosive materials”, as well as the Regulations on the storage, use and distribution of pyrotechnics. It is also issued in accordance with Decree of the Government of the Russian Federation No. 467 dated 08/18/2019 "On licensing activities in the field of pyrotechnic products and ammunition." It is also necessary to comply with the technical regulations of the Customs Union “On the safety of pyrotechnic products”, and the general safety requirements are GOST R 51270–99 Change No. 1 GOST R 51270–99 and Order of the Federal Agency for Technical Regulation and Metrology of August 18, 2019 No. 93- Art). Rospotrebnadzor also puts forward serious requirements for the packaging of such products, on which all information about the product and its use in Russian should be provided. A store engaged in the sale and storage of pyrotechnics must pass the inspection of not only the Fire Inspectorate, but also the Ministry of Emergencies. If it is planned to organize fireworks, fireworks or pyrotechnic shows, you need to get permission to conduct such events in the Ministry of the Interior. Thus, the seller of crackers and sparklers sells his goods only with a certificate of conformity on hand, but a serious store where you can find a variety of, including professional, products, is forced to contact more than one authority and get more than one permit.
If the entrepreneur plans to sell pyrotechnic products not in a stationary object, then special requirements for his work are not presented. That is why in December all the crowded places and with a large cross are filled with traders of pyrotechnics and New Year's goods. From a legal point of view, they do not violate the law, and the main item of their expenses is the lease of space and equipment of their non-capital construction. But it is they who most often come across products made in violation of the conditions of production, and therefore such products are not allowed for sale. The entrepreneur himself, who allowed the implementation of products that do not meet the standards, may be held liable. In large stores, suppliers are usually carefully checked, it is much more difficult to find defective goods or illegal products here. Given the spontaneous demand, which exists for only one month, it can be said that an entrepreneur rarely earns a negative reputation that affects his work and customer flow, most often he has to deal with inspection bodies, and therefore saving on goods (and counterfeiting is always cheaper) is not worth it. However, on the other hand, if you have to work in the market and all the surrounding competitors have bought cheaper, albeit low-quality and dangerous goods, you can expect a small number of buyers, because consumers are eager to save on the issue of pyrotechnics.
But even a stationary store, designed to work all year round, should be in a passable place, because only in this case you can provide yourself with a sufficient flow of consumers. The social facility in which pyrotechnics are sold has slightly more stringent conditions than any other retail store. As you might guess, special attention is paid to fire safety, therefore, the store should be equipped with a fire alarm, its walls should be made of non-combustible material, primary fire extinguishing equipment should be at the facility, an emergency exit and an evacuation plan should be provided in case of fire, a pyrotechnic products storage warehouse must be fully protected from the environment. In this case, it is better to immediately contact the local fire department for all the recommendations and requirements for the arrangement of the premises, because in each region local authorities can set their own laws and adopt local legal acts, which may differ from the national ones. However, cooperation with the fire inspectorate will provide the most accurate information and subsequently not have problems with the law. Not to mention the safety of the store and its customers will be respected.
If an entrepreneur is going to sell pyrotechnics at an unsteady facility, then it is much more profitable for him to independently act as a seller, otherwise paying wage labor can completely deprive a businessman of income or reduce it to a minimum. But it should be noted that one single tent with pyrotechnics will not bring much income, in connection with which you need to seriously think about opening such non-stationary objects in different parts of the city. Only in this case, the total revenue from all outlets can justify such an undertaking. But then you need to think about finding implementators for each outlet, and such a person should have sufficient knowledge about the features of a particular pyrotechnics and be able to advise the client on the rules for its use.
Much more serious requirements are imposed on employees of stationary stores, because it must be competent consultants who can even demonstrate the principle of operation of a particular product. In order not to conduct demonstration tests in the backyard of your store, it is enough to get video materials about the work of the supplied pyrotechnics from the supplier of the products. Therefore, the person who has applied has the opportunity to see with his own eyes the principle of work and the features of using this or that product. Is there a store that sells only pyrotechnics, which is not subject to licensing, its employees are not required to have a special education. The situation is different if pyrotechnic products of the 4th and 5th hazard class are offered for sale, because in this case the store employees must have a pyrotechnic education.
Most of the pyrotechnic products are made in China, although there are several proven and reliable Russian manufacturers. Chinese products are cheap, but rarely meet the necessary requirements, Russian and some foreign manufacturers are more concerned about the quality of their goods, so you can run into a fake only when working with dubious intermediaries. Today in any city you can easily find a supplier of pyrotechnic products, which offers its customers reasonably favorable prices even for small wholesale. The intermediary must also have all the necessary certificates that the manufacturer passes to him; Directly cooperate with manufacturers can only large stores that purchase large quantities of goods. However, even for a stationary retail facility, it may be disadvantageous to purchase a large batch of pyrotechnics once, because some products cannot be stored for longer than a certain period. There is also a restriction on the number of pyrotechnics in the room; more than four kilograms of pyrotechnic products per 1 square meter should not be placed in the warehouse. In this regard, it is often necessary to work through an intermediary who offers slightly higher prices, but can supply a relatively small amount of products.
The mark-up for pyrotechnic products averages 50-70%, but for smaller and cheaper products there may be 100%. However, the pricing policy for a stationary store operating year-round is different from a pyrotechnic tray that spontaneously emerged in December. A large store can set a price higher than that of competitors if it has a good reputation and recognition among consumers due to the fact that it always offers a quality and proven product. The seasonal outlet has to rely completely on the offers of its competitors, because they often work too close to each other. As a result, the winner is the entrepreneur who offers the lowest price for his products, but he can reduce it only if he bought a cheap one (which means almost always a fake product). Therefore, an honest entrepreneur has to attract his customers with a wider assortment range and friendly service.
If we consider only seasonal business, then it is distinguished by a rather high profitability and quick payback. The usual profitability of such an undertaking is approximately 30-40%, but in terms of a natural amount from one outlet you can earn a little money. A stationary store is even less profitable, but it has a stable and relatively high income all year round. However, it is worth noting that a full-fledged pyrotechnic store in most cases can be successful only if it is engaged in the sale of pyrotechnic products of all classes and independently arranges the launch of pyrotechnics.
Thus, such an undertaking is distinguished by higher costs (because it is necessary to purchase the appropriate equipment for launching), more demands are placed on such a business, and the entrepreneur is forced to contact the checking authorities more often. But the scope of such entrepreneurship is much wider. This business is suitable for those entrepreneurs who want to engage in an interesting business and completely devote themselves to the chosen direction, otherwise, in order to get short-term profit, it is enough to rent a place in the market for December, buy goods and earn something from people’s weaknesses on the threshold of the New Year.
Matthias Laudanum
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08/18/2019