Is Pawn Business Right For You?
Many people view pawn business as operating in the gray area between being legal and illegal. While this is mostly untrue, it is important for successful pawnbrokers to maintain a good reputation in the community. Due to the nature of the business, it is helpful if an owner of a pawn business is someone who is able to get along with a wide variety of people.
What happens during a typical day at a pawn business?
An owner of a pawn business usually spends a lot of time maintaining records, filing reports, and doing inventory. At other times, the owner is responsible for making appraisals, buying, and selling items.
What are some skills and experiences that will help you build a successful pawn business?
An owner of a pawn business needs to be highly organized to keep perfect records and to adhere to all the laws and regulations related to pawn businesses. In addition, an owner should be able to assess the value of a wide range of items and deal with people in potentially high-stress situations. As online sales continue to chip away at brick and mortar stores, the ability for a pawn business owner to sell online will increase your pawn business profits.
Must have eyes for details
Know value of items and market price
Good negotiation skills
Full description of Operations
- Business operation
The pawn business is structured into 3 main departments
- Credit department : The department is responsible for asset appraisal/valuation and therfore should be handles by someone that can evaluate assets and determine their worth. When a customer walks in to transact loan business, the loan personnel collects the item the customer wants to exchange for loan (collateral), evaluates it and tells the customer the amount the item is worth. An agreement is reached, interest rate is fixed and time of repayment is also fixed after which the pawn shop can sell the item/collateral.
- Exchange department: The department is in charge of exchange or swapping of items. Customer walks in with an item and negotiates an exchange for another item on the shelf; most times the customer adds extra cash. The department should be handle by someone skilled in the art and science of negotiation with good product knowledge to be able to get great deals for the business.
- Retail department: The retail department is essentially the retail store where the direct sales activities take place. Customer walks in to buy items displayed on shelf (gotten from swap activities and loan activities) at a reasonable rate that covers the cost and profit.
Make profit on loans, swaps and outright sales
It is relatively cheap and easy to set up
- Possible Limitations and solutions
Risk of stolen goods: This is the main problem experienced by pawn shops but there are two ways to deal with the challenge:
a. Proper documentation: For every item taken from customers, proper documentation must be done; copy of identification, details and evidence of address, picture evidence with item etc.
b. Proof of ownership: For very expensive items, there must be proof of ownership; receipt, invoice, letter of transfer etc.
What is the growth potential for a pawn business?
In an environment were cash and access to cash is becoming increasingly difficult and many are turning to the use assest as a fall back to getting cash to fund operations, any business that is able to make cash available in exchang for assets will have no problem growing, other business success issues considered.
Is Pawn Business Right For You?
All the Success!
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