When it comes to starting a pawn shop, many people think it’s much more difficult than it needs to be. As long as you plan ahead of time and prepare adequately, it can be a smooth and relatively straightforward process. Software like PawnMaster also comes in handy to help you organize various daily processes.
What Do I Need to Start a New Pawn Shop?
Starting a new pawn shop means assuming some risks. Most states have strict laws surrounding who can become a pawnbroker and what a pawnbroker is required to do. This is why it’s crucial that you familiarize yourself with your state’s laws and regulations so that your business is legally permitted to operate.
Aside from knowing local and state laws, here are a few other things you should do, have, or know before you start a new pawn shop.
Testing Equipment and Supplies
Some pawn items will need to be appraised before you can put them on the market. Items such as jewelry and precious metals will need to be carefully assessed, so ensure you have all the necessary testing equipment and supplies. It’s equally important to stay up to date on the value of any gemstones or metals that come through your shop so as to avoid losing money.
It’s crucial to understand that the loaning and purchasing of fake gold, diamonds and watches can cost brokers thousands each year. This is why it’s vital that every item is checked and verified; even general merchandise items should be tested with the customer.
Instead of having a manual process with your daily operations, software like PawnMaster can be a great help. You’ll be able to save a lot of time and run a more efficient checkout process that will benefit your customers. Other time-saving features include repeat loan processing, search functionality, and more.
With PawnMaster, you’ll also be able to simplify your checkout process with a barcode scanner that can capture customer information easily, thereby reducing errors. In addition, with barcode scanning, you’ll be able to have accurate inventory numbers at a glance, so you’ll be on top of all the merchandise that’s entering and leaving your pawn shop.
PawnMaster also has other features that help you with bookkeeping, reporting, marketing, compliance, and employee attendance. Additionally, there’s PawnMaster Classic which is an on-premise software that has over 200 stock reports. Overall, it’s an invaluable software that will make a significant difference in your business.
Good Law Enforcement Relationship
Pawnbrokers often work with law enforcement officials, so it’s important to have a good relationship with the local law enforcement officers. If you have any doubts about the legitimacy of an item, always be sure to contact officials before moving forward with the sale. It’s better to stay safe than unknowingly handle stolen items or items that were used to commit a crime.
Know Your Demographic
Before you decide where to open your pawn shop, conduct some market research. Certain demographics are more likely to turn to pawn shops than others, so placing your new shop where these people will come across is vital to your new business’s success.
Find Your Niche
Finding your niche will help set you apart from other pawnbrokers and help you develop a trusted community within which you deal. You may choose to go with jewelry, musical instruments, tools, cars or motorcycles, or any other niche that attracts your interest.
Whichever you choose, it’s vital that you carefully analyze the level of competition you’ll be dealing with and the interest of those around you. For example, if there isn’t a large community of those looking for musical instruments, then you should choose a different niche to concentrate on.
Know the Legal Requirements
As mentioned above, it’s vital that you know and understand all legal requirements before you start your pawn shop. Every state will have different laws and regulations that pawnbrokers must follow, so be sure to look up your state’s specific laws to avoid trouble.
When you decide to start your new pawn shop, there is a lot to think about and keep in mind. Taking the time to plan for your business will help you start on a good note, and getting software like PawnMaster can help you organize your business processes efficiently.