How to Start a Pawnshop Business
Starting a pawnshop business allows a customer with little cash the chance to sell various items such as musical instruments, jewelry, compact discs and even guns for a sum of money in exchange for a loan on the item. Pawnshop businesses need to learn various skills such as understanding the real value of items, interact well with customers, and understand the art of making a sale to own and operate a successful pawnshop business. A typical pawnshop business transaction begins when a person wants to sell something for purposes of obtaining a cash loan on the item.
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Instructions
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Obtain a license. Contact the department of financial institutions, or business, in your state to obtain the necessary license to operate a pawnshop business. Be prepared to pay the required licensing costs, which could run as high as a $2,000 per business location.
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Secure a location. Consider renting space in a building initially rather than buying a structure because you will be able to move more easily at a later time if you find business is slow in this area. Pick an area which is about 700 square feet for your pawnshop business, and store larger pawnshop items in a storage facility to save space.
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Obtain financing. Use credit-card cash advances, a loan from a family member, or money you have saved to open a business to lease your location, pay operating costs and buy items from your clients. Save extra cash in a separate business bank account for times when business is slow.
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Find your inventory. Go to garage sales on a weekly basis to buy items for your store, in addition to obtaining items to pawn from customers who come into your store. Consider buying items on Ebay.com to resell at your location at a profit. Put fliers with your business address in various locations in your area to drive traffic to your physical location.
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References
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