I’m wanting to start a small pawn shop in a small Alabama town. There was a pawn shop in town for 13 years, but the owner had to retire due to health issues. I want to fill the gap the previous owner has left. My question is, how do I survive while trying to get it started?
I know I need a county business license, state pawn license, and Federal Firearms License (FFL) from the ATF. I need a building, pawn software, inventory, etc. I think I have all that figured out. But the FFL takes 2 to 6 months to get processed from what I hear, and to be able to submit the FFL to be processed, I have to list where the store is going to be and talk to the local sheriff, etc. So basically, I need to go ahead and get a building, start paying rent on it, and wait months on the FFL to get approved before I can start doing business? That, to put it mildly, aint no good.
Also, I’m still working on the numbers, but it’s hard to figure out how I’m going to make ends meet when I can’t accurately predict sales numbers until after I open the business. I have about 15k saved up in cash, plenty of credit (very good credit score and no debt except a home), 0 mortgage payment, typical utilities, etc. The rent on the store I want to put the pawn shop in is 0/month. I’m looking at about 10-15k of initial expenses just in furnishing the store, having a decent inventory of merchandise and guns, and buying the pawn software and paying all my 1st month’s bills. Then it will be around 00/month for business expenses as a minimum, and around 00/month for bills I have to pay at home, as a minimum. I’m no economics major, but I’m having trouble figuring out how I’m going to be able to make 00/month any time soon at a pawn shop. That’d mean I would need to pawn out nearly ,000 in loans every month. Help me out guys, how can I make this dream come true?
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Hate to add a sour note to your dreams…. but according to a friend of mine who did go into the pawn business several years ago….. you are going to have to have about $150,000.00 and maybe more to get started in the pawn shop business.
Another thing… the pawn shop business is not built on resale sales. It is built on loans and interest. You are basically doing business similar to a lending organization but using sell-able items as collateral. You have to have a sizable amount of money to work with paying out cash for the loans people want to make. There is a good bit of legality that goes with the business.
To more precisely answer your questions, you might travel to the closest city to look for the mom and pop pawn shops and ask if the owners would mind talking to you about all of the procedures to getting started in the pawn shop business.