Many entrepreneurs contacted me to tell me that they were considering opening a pawnshop and were looking for my help. Talking to them, I find that they are more interested in buying, selling and exchanging used goods. They are shocked to discover that this is not the primary business activity of a legally licensed pawnshop. I always suggest that they consider opening a thrift store instead of trying to meet the requirements to become a licensed pawnshop. It is important that you recognize that. The main business activity of any pawnshop is to provide short-term loans to consumers, who in turn pledge personal property as collateral for the pawnshop. Simply put; If you don`t want to be a pawnshop, you shouldn`t choose to become a pawnshop. If a hold order has been placed on the goods, a pawnshop must release the goods for use in the investigation, but the pawnshop retains ownership rights until a court decides otherwise. Most potential pawnshops are too worried about filling their showroom with second-hand products before opening their business. While I`m not suggesting that you open a pawnshop with an empty showroom, what I`m saying is that there are many more important aspects of opening a pawnshop that should concern you first.
The first is that, after your initial start-up costs, will you have enough capital to start building a solid mortgage base and work with negative cash flow and minimal profits for several months? If the answer to this question is no, you shouldn`t even consider opening a pawnshop until the answer is yes. While a well-written business plan provides you with a plan to manage your pawnshop, the flexibility of that plan will also help ensure your success. In our currently unknown economy, many factors will change rapidly and can have a huge impact on your business, such as the precious metals market, the latest unemployment figures, your local economic situation and the fair market value of the most common products. These and other things are out of your control. If there is a pledge agreement, a pawnshop is clearly liable for stolen or lost property regardless of the general principles of the surety, if the former owner wishes to recover the property and it is within the time limit for the borrower to repay his loan. The pawnshop may replace your item with equivalent goods. If you are not satisfied with what is offered, you can file a complaint with the FDACS. So here are five legal tips to keep in mind when getting a pawnshop. Taking the time to set up expert systems for a pawnshop transaction is not only necessary, but also ensures your success. There are several excellent software systems designed exclusively for the pawnshop industry, and you should consider mandatory computerization, regardless of the size of your operation. It would be wise to choose your favorite software and mention it in your business plan. The regulations you are subject to based on your choice of location have a huge impact on how you run your business.
Maximum financing costs, minimum holding periods, sale of unredeemed liens and many other important key figures of the company are regulated by these articles of association and must be respected. These restrictions always vary from state to state and sometimes from city to city. These restrictions can also make it very difficult to operate a pawnshop business profitably in certain circumstances. Business security is paramount to the operation of your pawnshop and should be included in your business plan. This is no place to cut corners, and proper security measures give your credit customers the assurance that their promised items will be stored safely. If possible, it is advisable to avoid cages, screens, bars and bulletproof windows. Of course, this must be determined based on your exact location. Conducting proper research before entering a new industry is always a smart activity. To be sure the pawnshop industry is right for you, consider digging into industry information before investing in your future business. This due diligence can be easily done in several ways.