Every year the demand for pawnshop services is growing. This is due to many factors: a decline in the solvency of the population, a decrease in the level of wages, banks tightening credit policies, rising prices for all groups of goods, and much more. Thus, the profitability of this type of business is growing rapidly. Therefore, many entrepreneurs are thinking about how to open a pawnshop. A step-by-step instruction will be considered later, but for now it is worth noting that you need to be extremely careful when starting this type of business, since it has many nuances and pitfalls.
general information
Collateral lending, like any other type of business, has certain features that should be considered at the planning stage of the project launch. This is a very competitive field for activities, in which it is quite difficult to survive. This is especially true for beginning entrepreneurs who do not have much experience in the field of collateral lending. The following are the main aspects that answer the question of how to open a pawnshop. The step-by-step instructions discussed in this article will create a profitable company that can withstand any competition.
Step 1: market research
This is one of the most important stages in the development of any project. Over the past few years, the number of pawnshops has increased significantly, due to the abolition of licensing. In addition, the demand for cash loans services has also increased many times, since obtaining them is much easier than opening a loan at a bank. On average, about 150-200 new pawnshops appear in our country every year. Therefore, before starting your own company, you need to study the market and identify potential competitors working in your city.
Step 2: choosing the direction and mode of operation of the company
The story about how to open a pawnshop is best to start with the choice of specialization, since it is very extensive. Credit companies can issue cash loans secured by vehicles, real estate, jewelry, household appliances, mobile gadgets, antiques, branded goods and many other assets with high liquidity. As a rule, one organization carries out its activities with a certain type of property. It is rather difficult to answer with which one to work. Here you should be guided by the market, and also choose the closest specialization for yourself. As for the mode of operation, most companies today work around the clock.
Step 3: financial planning
It is impossible to answer the question of whether it is profitable to open a pawnshop or not, without financial planning. Before you draw up documents, rent office space, purchase equipment and hire workers, it is very important to calculate the amount necessary for this. Without specific numbers, you cannot determine the profitability of a business.
In this case, the following expense items should be considered:
- Amount required for the implementation of the project.
- Monthly operating expenses.
The first paragraph implies the amount needed to register and start a business, and the second is the monthly expenses of the pawnshop necessary to maintain its work. When all the calculations are in your hands, you can determine the optimal interest rate on loans, as well as the amount of monthly lending, which is necessary not only for the payback of a pawnshop, but also for generating profit. It is worth noting that, in addition to the main amount, you should have a “safety cushion”, because during the first months of operation, the business will be unprofitable.
Step 4: determine the name
Talking about how to open a pawnshop in our country, it is necessary to touch on the topic of choosing a name. It should sound simple, attract the attention of potential customers and be easy to remember.
Here are a few criteria for choosing a good name:
- Short length, maximum two words, one of which is a pawnshop.
- The name for your company should be exclusive, not like competitors.
- It is obliged to inspire confidence in people and to have to themselves.
- The name should be associated with reliability and safety.
It is worth noting that any self-respecting company should have its own website. Therefore, when choosing a name, immediately check to see if a domain name with that name is taken.
Step 5: choosing an office space
How to open a pawnshop so that it makes a profit? Answer: choose the right place for the office. About 70 percent of the success of any business depends on this, regardless of its type of activity. In megacities, the ideal location for a pawnshop is considered to be sleeping areas, in which there is a lot of human traffic. At the same time, it is better not to go to the city center at first, because, as practice shows, when people search for a company to get a money loan, they simply don't reach it. But in small towns the trend is completely opposite. Among other things, it is desirable that there are no other companies nearby working with the same group of collateral property as you, because in this case the lion's share of customers will go to your competitors. If we talk about the requirements for the premises, then it should be about 60-70 square meters, so that the company can fully function.
Step 6: registration of legal entity
In Russia, the most common type of credit institution, in terms of profitability, is a pawnshop. You can open a business as an LLC or a company operating on a common taxation system.
At the same time, the following activities should be indicated in the charter documentation:
- short-term loans secured by movable property;
- provision of storage services for valuables;
- provision of consulting and information services.
It is worth noting that when registering a legal entity, the name must necessarily contain “Lombard”. This is a requirement of the current legislation, therefore, compliance with it is mandatory.
Step 7: paperwork
So, you decided to open a pawnshop. What documents will need to be obtained from regulatory authorities? To engage in collateral lending, the company must have appropriate certificates. As for licenses, today their registration is not required. If you will work with jewelry, then you must register the company in the assay chamber and receive the appropriate document from the assay supervision. In addition, it is necessary to develop the charter of the organization for the implementation of internal supervision, as well as acquire laboratory scales, which will have to be checked once a year.
Step 8: development of design and promotional materials
Opening a pawnshop (documents must be drawn up in advance) is quite simple, but untwisting it so that as many people as possible who would like to use the services of the company would know about it is much more difficult. Firstly, you will need a high-quality signboard for the office that can attract the attention of passers-by, and secondly, you need to prepare promotional materials. In addition, if you plan to expand in the future and want to create a network of pawnshops, then you should immediately think about creating a corporate logo. Do not try to do everything yourself, as this should be done by a qualified specialist. Better hire a professional designer with experience in this area.
The sign should not be too colorful and bright. It is better to adhere to minimalism. The font must be large so that the information is easy to read.
Step 9: technical equipment of the room
Many people are interested in the question of how to open a pawnshop from scratch. We have already examined the legal formalities, and also talked about what documents will be needed. The next stage is the technical equipment of the room. The size of the necessary financial investments depends on many factors, the main among which are the specifics of the company and the level of decoration.
Mandatory equipment is:
- Trading: showcases, metal racks, counters, office tables and chairs, a safe.
- Technical equipment: computer or laptop, MFP, Internet. Fixed and mobile phone, Internet.
- Security: burglar alarm, video surveillance system, metal door, window grills.
- Specialized equipment: laboratory scales, reagents and tools for evaluating precious metals and diamonds, a stand for testing acoustic systems.
- Advertising: signboard, pillar, facade lighting.
It is worth noting that the choice of equipment depends on the specifics of the company, so this list may vary for each specific case.
Step 10: software selection
Opening the topic of what it takes to open a pawnshop, you need to say a few words about the software. It plays a very important role and allows you to monitor the functioning of the company, keep track of its work, quickly serve customers, simplify document management and improve the quality of service as a whole.
The most common software is SmartLombard. This program has excellent functionality, high security and a simple interface, so you can learn it very quickly and easily. In addition to this, a big plus of this product lies in the fact that it is adapted for pawnshops of various specifics, so it does not need additional refinement.
Step 11: search for employees
When talking about how to open a pawnshop, special attention should be paid to finding employees. The thing is that credit companies have to deal with various groups of goods that act as collateral. Each category of property has certain characteristics, therefore, the staff of the pawnshop should be specialists who are well versed in those products with which the organization works. In addition, if the client refuses to repay the debt, you will have to sell his property, so you can’t do without experienced sellers here.
Here is a list of posts that should be in any credit institution working in the field of collateral lending:
- appraisers;
- loan managers;
- sellers;
- accountant;
- security guard.
Not only the profitability of the business, but also the prestige of the company depends on the skill level of the working staff, therefore, hiring employees should be approached very responsibly.
Conclusion
Now you know what it takes to open a pawnshop in Russia. Following the simple steps listed in this article, as well as following all the tips and tricks, you can build a profitable company that will generate monthly income. But starting a business is only half the battle, as it is much more difficult to promote it, as it will take time. Therefore, work honestly and openly in relation to your customers, because the best advertising, as you know, is the people themselves. And you will certainly succeed.