How to Operate a Pawn Shop
Opening and operating a pawn shop can transform your dream of being your own boss into a reality. Pawn shops generally thrive in the poorest of economic conditions, providing customers with the opportunity to make needed cash in the form of a loan with their items used as collateral. Running this type of business can be profitable and provide a needed service for the community. It can be a complicated venture, however, so you need to learn the ropes before plunging in.
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Instructions
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Establish a location for your business. You might be taking over an established pawn shop site or starting from scratch. Either way, make sure you will be operating the establishment from an area zoned for such businesses.
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Research local and state laws regarding owning and operating a pawn shop. You will likely need to visit your county's courthouse for information. Find out what permits and forms are required. Discuss your business venture with the local sheriff, if possible. Law officers often work in tandem with pawn shop owners as stolen goods are sometimes pawned by criminals.
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Procure your operating license from the non-depository office of your local Department of Financial Institutions. There will be a fee, often ranging $1,500 to $2,000. You also must supply required documentation which typically includes an accountant's report of your finances, your current credit report, a clean criminal report and letters of reference.
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Apply for a state sales tax license. If you are going to be dealing with guns, you also will have to have a federal license for selling firearms. Contact the Bureau of Alcohol, Tobacco and Firearms in Atlanta for information on how to obtain this license (see Resources below).
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Familiarize yourself with the value of various items you will likely be dealing with in your shop. Being able to judge the worth of jewelry, antiques and other valuable merchandise will allow you to offer a fair price and help you turn a profit should you need to resell the item.
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Create pawn tickets to serve as a contract between you and your clients. You will need to include contact information for the individual who is making the pawn, as well as the amount of the pawn, the date and the amount due to retrieve merchandise. Also include a statement to be signed by the client that states the goods being pawned are not stolen.
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Keep detailed paperwork on all your transactions. To operate efficiently and legally, you need to record all pertinent information regarding clients and items. Be sure to maintain information on serial and model numbers for merchandise bearing these identifiers.
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Accept items for pawn that are in good condition only. Remember that you might eventually be selling these items, so you want to make sure there will be a market for them. You will probably not want to accept outdated items such as Beta-formatted VCRs or cassette-only audio equipment.
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Operate a testing area for electronic items that come into your inventory. Always test the equipment a client brings in to make sure it is in working order. You also will need to show interested buyers that the equipment you are selling actually works. Set up an area within your shop designated for this procedure. You will need to have the necessary electrical outlets close by.
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Establish and maintain security for your business. This can take different forms, from installing "panic buttons" to alert police, keeping a licensed firearm for your personal protection behind the counter, hiring a security guard, installing deadbolts and barring windows, or any other measures as deemed necessary. Consider the crime statistics in your area and ask local police for their suggestions regarding the type and amount of security you need.
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Tips & Warnings
Stock your store with profitable finds from yard sales, online sellers and auctions to increase your "for sale" inventory.
Never accept stolen goods. Call the local police if you suspect a client is trying to sell illegally obtained items.
