Pawn Shop Business Plan [Sample Template]

Are you about starting a pawn shop? If YES, here is a complete sample pawn shop business plan template & feasibility report you can use for FREE.

Okay, so we have considered all the requirements for starting a pawn shop. We also took it further by analyzing and drafting a sample pawn shop marketing plan template backed up by actionable guerrilla marketing ideas for pawn shop businesses. So let’s proceed to the business planning section.

Why Start a Pawn Shop?

A pawn shop is simply a business that gives out secured loans to individuals that give their personal items as collateral. The item pawned usually had an agreed duration within which the individual pays back or the item becomes the property of the pawnbroker who can in turn sell it to raise back his funds.

The pawnbroker using his bargaining power instigates the criteria and options for the loans and agreement. Also the pawnbroker is charged with understanding the risk in the case that the items that are brought into the shops might be stolen items.

A pawnbroker should also be able to understand and have the ability to differentiate fake goods from original ones. You’re proper understanding of item and the retail industry will count as an advantage to you. If you are interested in this business, just read on as we take you through a well detailed business plan to help you set up a standard pawn shop.

Please it is highly important that you take note of the several technical areas in the business plan so that you can get a full grasp on how to write a plan. A sample Pawn shop business plan has been neatly put together for your use below;

A Sample Pawn Shop Business Plan Template

1. Industry Overview

The pawn industry can be said to have enjoyed a limitless period of conservative growth. This conservative growth can be attested to the fact that consumers in this industry are always releasing disposable gold during the peak gold price periods.

It has been noted by over 80% pawnbrokers that pawn loans are the most common transactions that they carried out in their shops. This we believe is because pawnbrokers are usually consumer friendly and there has also been increased public awareness and a positive image of the business being portrayed to the general public.

The pawn shops industry’s market share and revenue is expected to rise at 6.3% from $14.5 billion in 2015 to $19.88 billion in 2016.

The national average pawn loan was $80 in 2008 and increased to $100 by 2009. In 2015, the national average pawn loan remains at $150 according to the report of the survey carried out by the National Pawnbrokers Association. The pawn industry is said to employ 28,946 Americans with about 11,000 pawn shops in the united states.

It has been noted through extensive research that Jewellery sales is the most significant share item sold by a pawnbroker while the remaining sales are got from musical instruments, consumer electronics tools and sporting goods. 50% of revenue is derived from merchandise sales and 50% from pawn loans given out to their customers.

The pawn business industry is however saturated with shops springing up here and there as everyone thinks they are capable of running this business. Too many shops are chasing few customers in the same area.

2. Executive Summary

Fidelity Pawn Shop is an outstanding pawnshop serving the various financial needs of people who need fast funds to settle their problems. We hope to offer the loan services by collecting a personal material as collateral for a period of time agreed upon by us and the client.

Fidelity is capitalized by Fidel Lawrence and his immediate family. Fidel Lawrence is a licensed pawnbroker who has been in the industry for over ten years, working for Pawn plus and Metro pawn.

Our aim To Fidelity pawn shop is to offer comprehensive loan services to the people of Montgomery, Alabama and we hope to focus on providing personal and specialized services to meet each the needs of our prospective customers. Our Objective at Fidelity pawn shop is to become very profitable serving the various loan needs of the people of Montgomery, Alabama.

We also want to construct a solid, corporate identity in our specified target market area and become one of the pawn shops in the area by our third year of operation, or before. We also hope to realize a positive return on investment within the first 12 months of starting Fidelity pawn shop.

We are very much prepared to show the people of Montgomery that we are a new shop that will provide a high level of expertise in the pawn industry.  We will provide superior personal service to our clients.  We at Fidelity pawn shop understand that 70% of our business will come from repeat clients and their referrals, and we hope to make sure of that.

Our main responsibility as specialists in the pawn industry is to determine the value and price of any item brought tour shop and to be able to negotiate a price that will be good for nor just us but our client. Our personal goal is to break the financial barriers that withhold individuals from achieving their various aims.  We hope to provide comfortable loans that will give joy to the city of Montgomery, Alabama.

3. Our Products and Services

We are not in any way going to settle to be the second best. This is one of the reasons why we will work tirelessly to see that we emerge one of the top brands in the pawn shop business.

We at Fidelity Pawn shop hop to offer a vast range of loan services within the scope of the pawn industry in the United States of America and of course on the global stage. Our intention of starting our pawn shop in Montgomery– Alabama is to leverage on the opportunities available in the city.

Fidelity Pawn shop will act as a short term collateralized lender that will accept jewellery, electronics, certain musical instruments, and other objects of resalable value with the intent to provide a loan to our customer. We at Fidelity Pawn shop believe that our loans will be for a period two week and will carry a loan to collateral value ratio of 25%.

We believe that during this two week period, if the customer does not come back in to pay the loan, we will then have to sell the merchandise to the general public.

We at Fidelity Pawn shop anticipates a default rate of about 40% on the loans, which simply means that we will be generating a substantial portion of our income from the sale of customer inventories that have lapsed beyond the loan period. We hope to comply with all state and federal laws guiding the operation of pawn shops.

4. Our Mission and Vision Statement

• Our vision at Fidelity Pawn shop is to become the recognized leader in our targeted market for small collateralized loan services.
• Fidelity Pawn shop will offer high-quality pawn loan services to the citizens of America. Our mission is to provide our customers with simple and affordable pawn loans to sort out their issues.  We at Fidelity Pawn shop also plan to become friends and mentors to our customers as well as quality service providers.

We believe that Fidelity Pawn shop will become an excellent place to work, a professional environment that is challenging, rewarding, creative, and respectful of ideas and individuals.

Our Business Structure

One of the things that we plan to do as we launch out is to create systems and structures that will outlive the owner of the business. This is why we are starting out with the structure of the business. The success and height that a business will attain is dependent on the workforce they have.

They workforce will go a long way to decide how fast the business grows and the profits to be made. If you have attendants who are very saucy, people wouldn’t want to come to your shop. It takes time to build brand awareness, and you don’t have to destroy it with bad choices when it comes to your workforce.

We at Fidelity Pawn shop understand how important our founding workforce is to the success of our business. Fidelity Pawn shop was established to raise to the utmost height and not to die even before we start.

We have decided on the workforce we hope to start our business with and we have decided on the criteria and the various duties they will be doing. We hope to employ very zealous and trustworthy workforce that will offer extensive services to our clients, and also help us maximize profits.

Fidelity Pawn shop will be managed by the owner Fidel Lawrence who has more than 10 years of experience in the pawn and retail management industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations. We also hope to start with the following business structure;

• Chief Executive Officer (Owner)
• Store Manager
• Merchandize Manager
• Sales and Marketing Manager
• Information Technologist
• Accountants / Cashiers
• Cleaners

5. Job Roles and Responsibilities

Chief Executive Officer – CEO

• In charge of providing direction for the business
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• In charge of fixing prices and signing business deals
• In charge of recruitment
• In charge of payment of salaries
• In charge of signing checks and documents on behalf of the company
• Evaluates the success of the organization

Store Manager

• In charge of managing the daily activities in the ship
• Ensures that the store facility is in tip top shape and conducive enough to welcome customers
• Interfaces with third – party providers (vendors)
• Controls the sales floor inventory
• Ensures that goods and products are properly arranged
• Supervises the entire sales staff and workforce
• Any other duty as assigned by the CEO

Merchandize Manager

• Takes care of clients relations, market visits, and the ongoing education and development of the organizations’ buying teams
• Helps to ensure consistent quality of goods and products on our rack
• In charge of the purchase of goods and products for the organizations
• In charge of planning sales, monitoring inventory, selecting the merchandise, and writing and pricing orders to vendors
• Ensures that the organization operates within stipulated budget.

Sales and Marketing Manager

• Takes care of external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
• Models demographic information and analyse the volumes of transactional data generated by customer purchases
• Understand, prioritizes, and reaches out to new partners, and business opportunities et al
• Understand development opportunities; follows up on development leads and contacts; participates in the structuring and financing of projects; assures the completion of development projects.
• In charge for supervising implementation, advocate for the customer’s needs, and communicate with clients
• Create, executes and evaluates new plans for expanding increase sales
• Keep all customer contact and information
• Represents the company in strategic meetings
• Aid to increase sales and growth for the business

Information Technologist

• Takes care of the organization website
• Handles ecommerce aspect of the business
• In charge of installing and maintenance of computer software and hardware for the organization
• Manage logistics and supply chain software, Web servers, e-commerce software and POS (point of sale) systems
• Takes care of the organization’s CCTV
• Handles any other technological and IT related duties.

Accountant / Cashier

• Receives payments on behalf of the organization
• Issues receipt to customers
• Prepares financial report at the end of every working week
• Handles all financial transaction on behalf of the company
• Interfaces with our bankers
• In charge of payment of tax, levies and utility bills
• Any other duty as assigned by the CEO / store manager

Cleaners

• In charge of cleaning the store facility at all times
• Ensures that toiletries and supplies don’t run out of stock
• Cleans both the interior and exterior of the store facility
• Any other duty as assigned by the store manager,

Security guard

• In charge of protecting the shop and its environs
• Controls traffic and organize parking
• Give security tips when necessary
• Patrols around the building on a 24 hours basis
• Presents security reports weekly

6. SWOT Analysis

It is very important to note that Fidelity Pawn shop was established with just one shop to be used to test run the business for a period of 3  to 5 years to know if we will add more funds, or expand the business and build more pawn shops in other key cities of United States.

We at Fidelity Pawnshop are very much aware that some small businesses offer most of the services we are to be offering in the same city, which is reason why we are taking every aspect of our planning serious to establishing a business that will be very successful.

We also know that to get a well detailed SWOT analysis, we need to let a professional do it for us we is why we consulted Freeman Consults to conduct our SWOT Analysis.

Freeman consults are second to none and are highly known to be an expert in HR and Business Analyst with excellent experience in the retail industry. We employed them to help us build a Business model that will aid us at Fidelity Pawn shop achieves our business goals and objectives. This is the summary of the SWOT analysis that was conducted by Freeman Consult for us;

• Strength

Our SWOT Analysis explained that our shop location, the business model we will be using at Fidelity Pawn shop, our vast payment options, service offerings, experienced workforce, and our excellent customer service culture will without doubt count as a strong strength for Fidelity Pawn shop.

• Weakness

Our main weakness at Fidelity Pawn shop will be the duration it might take to attract customers as a new pawn shop in Montgomery, Alabama. We also see our lack of financial power as a weakness and a barrier to our desired goal.

• Opportunities

Starting Fidelity Pawn shop in a great city like Montgomery and along an ever busy road gives us unlimited opportunities to offer our products and services to a lot of people. With our detailed analysis and excellent market feasibility, we at Fidelity Pawn shop already believe and understand what our potential clients will be looking for when they visit our pawn shop.

• Threat

Our SWOT Analysis was quick to note that the major threat we will be facing at Fidelity Pawn shop will be the emergence of a new pawn shop in our business location, and the ever changing government policies. It also stated that despite all these being threats and hindrance to our business, we at Fidelity Pawn shop still have the advantage and chance to overcome anything thrown to us in Montgomery, Alabama.

7. MARKET ANALYSIS

• Market Trend

Pawn shops have been known throughout history to play a very important role in originating loans and doing business within the second-hand marketplace.

It is not a fact to be argued that pawn shops can be seen in almost any major city around the world and Pawnbrokers have been able to take care of a variety of situations from lending money to buying consumer goods and personal property items for resale.

Also, since the recession hit in 2008, a lot of people that have been used to a lifestyle they can no longer pay for or afford. In addition, these individuals who believe that the recession was only temporary and will pass with time; which is the reason why high dollar loans have become in high demand in certain demographics.

It is important to note that these individuals are not your typical pawn shop clients. We are seeing more loans over 5k to send the kids to summer camp, or pay the club membership dues. We are also seeing a lot more athletes off season coming in for loans to bridge the gap between off season and season.

We believe we will be seeing loans from 5k to 150k and an occasional 250k loan in Montgomery, Alabama. We all know that it is a very hard thing to change the image of pawnbrokers and pawnshops as a whole because there are a large number of businesses that have broken the law and knowingly purchase stolen goods.

They happen on low income towns and in few richer cities, and it tends to paint a bad image about pawn shops. Survival in the pawn business industry is based on having a good knowledge of the way the industry works.

Your ability to understand very well the kind of customers you want to attract and create a unique and interesting experience to draw them in. If you are in a high-class neighbourhood, you should know that a low-class pawn shop will not be a good fit for that neighbourhood.

8. Our Target Market

It cannot be denied that the pawn shop industry has a vast range of customers. Fidelity Pawn shop being a standard pawn shop will capitalize on the  large variety of small loan  service and other industry related services we wish to offer, hence  we have made sure all are employees are well trained and equipped to serve a diverse range of clientele base.

Our target market at Fidelity Pawn shop will move across businesses of different sizes and individuals. We hope to equip our business with a business concept that will help us work with individuals living in Montgomery and other key parts of Alabama.

We have built Fidelity Pawn shop to service the residence of Montgomery, Alabama and every other location our retail stores will be located all over Alabama. We have also conducted our market research and we have ideas of what our target market would be expecting from us.

Our competitive advantage

It is not a hidden fact that there are almost 18,000 businesses that operate in a pawn brokering capacity. Every year, these retailers/lenders in the United States generate more than $6 billion of revenue while providing jobs to more than 100,000 people also in the United States.

Aggregate payrolls in each of the last five years have exceeded $1.2 billion. The pawn brokerage industry is very huge and mature industry, and the expected future growth rate of sales receipts is expected to stay in lockstep with the general economy.

As discussed above, the business may actually see a slight increase in its lending portfolios and inventory holdings as deleterious economic conditions often lead to more people using pawn brokering businesses to quickly sell merchandise. Again, the concern here is that sales of merchandise that has come under ownership due to default will slow.

Our Competitive Advantage at Fidelity Pawn shop is the experience of our workforce especially Fidel Lawrence. Fidel Lawrence has a weekly column in the city’s daily newspaper and also is a well known city leader in the city of Montgomery.

Our Business model and our promotions will serve as a competitive advantage to us to be able to take lead of the industry.

9. SALES AND MARKETING STRATEGY

• Sources of Income 

Fidelity Pawn shop was established to offer a wide range of small loam services to the residence of Montgomery, Alabama. We believe that our source of income will be the funds will be getting from the various small loan services. Just as we wrote in our executive summary, Fidelity Pawn shop will be very much engaged in pawn brokering.

simply means that our clients can bring in an item of saleable value, such as a ring. If this ring is worth $500, the customer can receive a short term (usually two week) loan of $100 to $150. At the end of the two week period, the customer can repurchase the item back from the pawn shop for about $200 (assuming a $150 loan).

During this time, Fidelity Pawn shop will not sell the customer’s item to the general public. If the two week period lapses and the customer does not come back in to acquire their merchandise then we will sell this product to the general public.

If the supposed ring is worth $500, we will sell the ring for $400, to get back our fund while generating a significant profit.

10. Sales Forecast

We are not going to limit ourselves in anyway by thinking and dreaming small. This is why we have broadened our horizon in the past months and realized that we must think big.

We at Fidelity Pawn shop are well positioned to take on the available market in Montgomery, Alabama and we have been able to critically examine the pawn industry and loan services market and have analysed our chances in the industry and we have been able to come up with the following sales forecast.

Our sales projection is strictly based on information gathered on the field and some assumptions that are peculiar to start up in Montgomery, Alabama.

This our projection is done based on what is obtainable in the industry and with the assumption that there won’t be any problem and natural disasters within the period stated above, and there won’t be any major competitor offering same additional services as we do within same location. Please note that the below projection might be lower and at the same time it might be higher.

• First Fiscal Year-: $150,000
• Second Fiscal Year-: $480,000
• Third Fiscal Year-: $950,000

• Marketing Strategy and Sales strategy

The backbone that dictates success for any business is the marketing strategies that are put in place. This is one of the sole reasons we have come up with robust strategies son how to attract our clients. We at Fidelity Pawn shop understand that if our customers have a bad experience while doing business with us, they will look for our competitors and give them the business that could have otherwise been ours.

We understand that bad customer service is a major reason that makes business loses customers. We hope to create a good customer culture to keep our customers satisfied and good.

We also know that having good customer relationship management practices is important to keeping our clients. This we believe can be achieved by getting good software for your Fidelity Pawn shop and also to keep up with our client. With this, we will have the necessary information about our business and our clients at the tip of our fingers with which we can use to keep in touch with them on important occasions like birthdays, anniversaries and public holidays.

We at Fidelity Pawn shop understand that we need to market, advertise and promote our business so as to attract new clients and keep old ones. We plan to have a budget to help us carry out our marketing activities. We hope to do the following to promote our business;

• Advertising on the shop website or through magazine ads
• Giving updates on social media about our pawn shop
• Informing local media to put word out about our pawn shop
• Printing business cards and fliers
• Sending out press releases
• Giving special incentives to our first set of clients so that they can spread word around about our pawn shop
• Creating a brochure to show clients
• Listing our pawn shop on local directories/yellow pages
• Advertising on radio and television stations

11. Publicity and Advertising Strategy

We at Fidelity Pawnshop understand the competition and we are ready to compete with existing pawn shops in Montgomery. We will take time to choose the people that are going to be on our management team so that they will be able to take our business to the next level.

We have taken our time to study our competitors in the pawn shop industry and compare our business ideas with theirs. These are the following platforms we hope to use to promote Fidelity Pawn shop;

• Advertise our shop in websites and magazines
• Listing our business on local directories / yellow pages
• Advertisement on satellite TV and radio stations
• Direct email marketing
• Take advantage of social media
• Brand our company vehicles and shirts

12. Our Pricing Strategy

• Payment Options

We want to make payment as flexible as ever for our clients. That is why we at Fidelity Pawn shop understand the various needs of various individuals. Being a shop that will offer small loan services, we understand the need to make our payment options accessible and easy for each of our client.

We have put plans in place to make all our services and payment options affordable at any given time, even from the comfort of our client’s room. We have chosen banking platforms that will help us achieve our plans with little or no itches.

Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for our service charge. Here are the payment options that we will make available to our clients;

• Payment by via bank transfer
• Payment via online bank transfer
• Payment via check
• Payment via bank draft
• Payment with cash

13. Startup Expenditure (Budget)

We at Fidelity Pawn shop understand that starting a successful pawn shop business will incur some expenses, but we are very ready to match all expenses and hurdle. We have done a comprehensive market survey and feasibility studies before going ahead to develop a budget and find a source of funding to finance our pawn shop business.

We have checked out all possibilities and a have come up with a detailed cost analysis of starting Fidelity Pawn shop. We plan to spend our start up capital in the following ways;

• The Total Fee for incorporating a business – $750.
• The budget for permits, Insurance and license – $10,000
• The Amount needed to rent a suitable office with enough space (Re – Construction of the facility inclusive) – $30,000.
• The Cost for equipping of the office (shelves, lockable display cases, cash register, security system, furniture, filing cabinets, safety gadgets, computers, printers, telephones, fax machines, and electronics) – $20,000
• The Cost to Launch an official Website – $700
• Additional Expenditure (Signage, Business cards, Adverts and Promotions) – $50,000
• Miscellaneous expenses – $5,000

From our detailed analysis above, we will need $116,450 to start Fidelity Pawn shop. We have considered all aspects of raising this fund and we have chosen our distinctive method to raise the fund.

Generating Funding / Start-up Capital for Fidelity Pawn shop

It is no news that to start and then effectively run a business, you need   funds.  We have put all plans in place to generate good funds. Fidelity Pawn shop is a family business that will be owned and managed by Mr Fidel Lawrence and his immediate family members.

They will be the sole financiers of the firm, but may likely welcome partners later which is why they decided to restrict the sourcing of the start – up capital for the business to just three major sources. These are the areas we intend generating our start – up capital;

• Generate part of the start – up capital from personal savings
• Source for soft loans from family members and friends
• Apply for loan from my Bank

Note: Mr Fidel Lawrence have been able to generate about $50,000 (Personal savings $40,000 and soft loan from family members $10,000) and we are at the final stages of obtaining a loan facility of $100,000 from our bank. All the papers and document has been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

14. Sustainability and Expansion Strategy

We at Fidelity Pawnshop understand that the success of any business rest in making sure that the workers strive to together to work in line with the vision and mission of the shop. Our Chief Executive Officer is expected to give direction to the staff to make sure that they work in line with the goals and objectives of Fidelity Pawn shop.

Staff meetings should be held because they are important to keep our workforce informed about what goes on in the shop. We believe that the meetings will be held regularly so as to get feedback which is important to the success of the business.

The Performance appraisals of the shop will be done regularly to find out if our staff are following the standard operating procedure of the shop , the results obtained will then be used to correct any errors found.

We at Fidelity Pawnshop hope to train our staff to enable them perform their duties effectively, give praise to encourage and motivate staff, reward hard work to promote healthy competition and operate an open door policy to encourage our staff to be open about their feelings with you.

There is room for networking in the pawn shop business because we have to source for goods for our business from different sources. We also hope to form an alliance with other pawn shops in the business. This way, we can be able to learn from one another and trade valuable information with each other in the business.

We at Fidelity Pawn shop also hope to make the classiest part of our front room to be the retail jewellery area and carve out a private room where we can negotiate loans with high end customers. Our office should also be equipped with other basic needs such as telephones, furniture, tools and equipment.

Checklist/Milestone

• Business Name Availability Check: Completed
• Business Incorporation: Completed
• Opening of Corporate Bank Accounts various banks in the United States: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of All form of Insurance for the Business: Completed
• Conducting Feasibility Studies: Completed
• Leasing, renovating and equipping our facility: Completed
• Generating part of the start – up capital from the founder: Completed
• Applications for Loan from our Bankers: In Progress
• writing of business plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents: In Progress
• Design of The Company’s Logo: Completed
• Graphic Designs and Printing of Packaging Marketing / Promotional Materials: Completed
• Recruitment of employees: In Progress
• Purchase of the Needed software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business (Business PR): In Progress
• Health and Safety and Fire Safety Arrangement: In Progress
• Establishing business relationship with banks, financial lending institutions, vendors and key players in the industry: In Progress