When it comes to opening a pawn shop, there’s a lot to think about and many mistakes you can make. As there’s no formal degree you can get or official courses you can take to become a knowledgeable pawnbroker, there’s a lot of independent research to do and individual classes to take to feel prepared.
While there’s no fail-proof guide against common pawn shop mistakes, looking into them ahead of time will lessen the risk of you falling prey. To start you off, here are three common mistakes every new pawn shop owner makes, as well as tips on avoiding them.
Three Common Mistakes New Pawn Shop Owners Make
Over Valuing Your Inventory
When you’re starting, you may not have a good understanding of how much something is worth. Whether you buy it off someone for too much or are trying to market it at a price that’s way too high, overvaluing your inventory can negatively affect your business.
In the past, pawn brokers could get away with high prices and overvaluing their goods. These days, though, customers can quickly turn to their phones and determine how much a particular item is worth and whether or not you’re offering it at a reasonable price.
Overvaluing your inventory will lead to a poor reputation and bad business. As customers start to complain about high prices, word will get around. To avoid this, it’s best to buy and sell items at a fair market price. Even if you feel like you can get away with it for a while, it’s not worth the risk. You’re better off keeping prices fair and bringing in loyal customers than jacking up prices and hoping people with heavy wallets stumble upon your shop.
Poor Cleanliness and Presentation of Your Pawn Shop
Although no one expects a pawn shop to look and feel like a luxury store, you should keep your shop clean and tidy. No one will want to do business with you if everything has cobwebs on it or if they trip over things on the floor.
Part of owning a business is upkeep and maintenance. Be sure to take care of your shop, or you might give customers a negative impression. While you don’t need to hire a professional service to clean your store daily, taking the time to dust, sweep, and mop will go a long way in keeping your shop in good shape.
When you keep your shop in good condition, the items you pawn will be worth more, and you’ll get a better price for them. So not only will shop cleanliness improve business, but it will also provide a more professional sales atmosphere.
Not Understanding Your Niche
Every pawn broker needs to decide on a niche for their shop. Whether you choose gold, silver, precious metals, or firearms, you need to be knowledgeable in it. If someone steps into your shop in hopes of selling you something, they want to be reassured you know what you’re doing.
Since pawn brokers see a lot of items in a day, you can’t expect to be an expert on everything. Find your niche and stick to it. You’ll be much better off being an expert in one or two areas than trying to have just a basic knowledge of everything.
As a new pawn shop owner, there will be a lot to learn, and you will make mistakes. Unfortunately, you can’t always plan for every single one of them. However, researching ahead of time and preparing yourself for some common mistakes will set you off in the right direction.