A Special Message For Anyone
Who Wants To Start or Open Their Own
Pawn Shop Business.

Dear Fellow Entrepreneur,

So you’re thinking about opening a pawn shop? You want to start your own pawn shop, but you’ve begun to do your research on the industry and due diligence on the business and you’ve come up nearly empty handed. Don’t worry, I understand, I’ve been there before myself, and I realize your frustration.

My name is Steve Krupnik and I’ve been a pawnbroker for over 30 years. Back when I got into the industry there was practically NOTHING available on how to successfully open and manage a pawn shop business. Because of this I struggled mightily to succeed. But I did, and I tell you this with sleeves rolled up bloody nosed dogged determination experience. It is my hope to help you ease your struggle.

Times have changed. So has pawnbroking. There is so much to learn about opening and running a successful pawn shop and yet it is so difficult to locate practical and useful information on how to make it happen. That’s why I’ve created this website for you.

Here is how you can make the best use of your time on this website. Enter your name and e-mail address into the box you see on this page and click on submit. By doing so you will receive by e-mail two special reports I’ve written for people just like you who are doing research on the pawnbroking industry. You will also receive directly from me occasional e-mails about updates that have been made to this website and additional valuable information that has been added. Don’t worry, I do not sell or rent your information. You can also opt out of these e-mails at any time.

Top 10 Mistakes People Make
When Starting A Pawn Shop Business

The first report entitled “Top 10 Mistakes People Make Getting Into The Pawnbroking Business” may help clear up some misconceptions you have about the industry. I’ve seen these mistakes made time and time again by otherwise intelligent entrepreneurs like you. You may not agree with me about these top 10 mistakes, but remember this.

These mistakes are not based on my feelings. They are based on my observations.

That’s because I was in charge of a State Pawnbroker Association for 17 years. I witnessed many business people who wanted to get into the pawnbroking industry, and these are the biggest mistakes they made. I am providing you with this special report in hopes that you will not follow in their footsteps and make the same mistakes.

Tips For Opening A Pawn Shop:
How To Become
A Pawnbroker Yourself

The second report entitled “Tips For Opening a Pawn Shop” will give you many useful ideas on choosing pawnbroking as a business, what you will need to prepare to enter into the business, the best way to choose potential locations, and many other helpful tips in your pawnbroking endeavors. I can only wish I would have had such a report available to me when I first entered into the business. It would have vaulted me to success in a much smoother and timely fashion.

Now that you’ve gotten this far with me I feel it’s wise to inform you of what owning a pawnshop is not. First of all, it’s not a part-time business that you can run from your kitchen table in your underwear. It’s not a get rich quick scheme where you can be here today and gone tomorrow. It is not loan sharking, a flea market, or a secondhand junk dealership. And it’s certainly not a licensed opportunity to take advantage of people or to deal in stolen merchandise. If you would happen to believe the pawnbroking industry is any of these you have been watching too much television.

Becoming a pawnbroker requires dedication, education, and resources. It is a reasonably recession-proof business that can offer you and your family business freedom, financial security, and peace of mind. It will provide you with an opportunity to truly help many consumers in your market area. The main focus of the business is on short-term consumer credit. Pawnbroking is the oldest form of consumer credit. But because you accept personal property as collateral for the customer to obtain credit from you, there are none of the typical qualifiers as there are in more mainstream credit. There is also no recourse on the loan except for the personal property that was pledged.

If you are still interested in getting into “the business” I again advise you to enter your name and e-mail address into the box you see on this page and click on submit. The two special reports you receive on the next page will assist you in making decisions about your new business venture and will also help you to utilize the additional resources available on this website. Good luck with your new business enterprise and welcome to the world of pawnbroking.

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Steve Krupnik Signature

Steve Krupnik

Creator of the Pawn Shop Advisorâ„¢ coaching program
Creator of the Pawn Shop Performerâ„¢ coaching program
Author of the best selling book Pawnonomics

Questions and Comments Answered by Steve Krupnik:

  1. Matthew Kalvaitis says:

    The guy is from Knox. 1st choice pawn is his shop name. I would like to come talk to you in person, would that be a problem?

  2. Matthew, Thanks for the link. It’s unusual to say the least. The thing I find the most disleveling is that I’m located in Indiana and am well connected with the industry in the State and the regulators. Heck, I founded the Indiana Pawnbrokers Association in 1993 and I’ve never heard of this group before today. I searched every page on the site to try and locate a name or address or location that might help me find out who’s behind it and came up empty handed. Let me know if I can help you out. You may also want to opt into my email pawn tips list at pawnshopadvisor.com. Good luck, Steve

  3. Matthew Kalvaitis says:

    Can you look into http://www.indianapawnconsulting.com and give me your thoughts on it? I think it is a lot of money to come up with to get help starting a pawnshop. Am I out of line thinking so?

  4. Steve, My best guess would be in the 500k – 750k range at it should pull itself into the black within a year done properly. For information on State and local licensing and regulations check here: http://www.floridapawnbrokers.net/contact.php Good Luck, Steve

  5. Steve says:

    In an area with a lot of competition in central florida, plus being in a high rent area, how much money do you think it will take to start and run an average size store until it becomes profitable? Also, is there a list of things I need to do in regards to the state to open up in florida? Thanks

  6. Hey Angela, First of all congratulations on you and James finding each other! I could help you on the regulation part via email. Use support@cloudteninc.com For your first question I can also help there but would need to know a few things, also best handled via email. Please be aware there are no, and I mean no, conventional business lenders currently making business loans to start a pawn shop. Not a show stopper, just something you need to know. Question 2 I’ve provided the best email for me and hopefully I can save you some pains. All the best, Steve

  7. Angela Mallard says:

    Hello Steve,
    I started dating this guy (James) back in “June.
    He works for a local Pawn Shop here in our hometown.
    He has always dreamed of one day owning his own pawn shop. We talk quite often of it.
    He asked me to research the rules & regulations of starting one of our own. I found you just by typing in how to start a pawn shop. I really want his dream to come true. Which leads me to my two questions. 1.Do you happen to know where he might find out information on exactly how much money he needs to start this & possibly a place to get a loan to start his own pawn shop? 2. Can you give me an e-mail or some way to contact you to let him discuss starting this business with you so we don’t have a lot of unnecessary headaches in starting this? Thanks for your time in reading this and hope to hear from you soon.


  8. Israel, The kid is not running a pawn shop per-se. He’s buying sneakers and giving the seller first right of refusal on a sale. That said, the first thing you should do is look at regulation for your market area to see if this business model is doable. If so, you should go to Brooklyn to learn as much as possible from the operators of this unique business model. Keep in mind this is also a business that can be internet based. Good Luck, Steve

  9. Israel Santiago says:

    I’m wanting to start a pawn shop but not a typical pawn shop where anyone can pawn jewelery, electronics, etc.. I’m looking to open a pawn shop for high end sneakers. there is only one shop in the entire world which does this so I’m wondering how to go about starting this venture. Any advice?

  10. Mario, As long as you have a good working knowledge of precious metals, gemstones, jewelry, and finance, you’ll do just fine. Determining fair market value on practically everything else can be found on the internet. Of course, investing in the Pawn Shop Advisor(tm) http://pawnshopadvisor.com/ coaching program will assist you in your new venture in many ways. All the best, Steve

  11. Mario says:

    hello Dear Steve

    you great guy to help every body and also you are very knowledgeable how do you get around the two years experience if you don’t have any

    thanks Mario

  12. Mario, As long as your expenses are in line and you focus on building your pawn loan base and turning inventory quickly you should be profitable within the year. Of course, some aggressive marketing will also lend to your profitability. Good luck, Steve

  13. Mario says:

    my main concern is the capital witch i have i don’t need no banks i have located nice shop in real nice area safe and secure i have 6 month reserved for purchasing and expenses can you please advise i can have one year secure expenses no problem



  15. jacob says:

    What are the laws for opening a pawn shop in western new york? Buffalo – Rochester area (not nyc)? Primarily I am wondering about interest rates and fees allowed to charge the customers. Thanks, j

  16. Randall, Sorry for the delay. I’m afraid 100k is not going to get you up and running and profitable in a reasonable amount of time. Depending on your market area I’m guessing twice that would be more in line. I do not do one on one consulting but do have some real pros I can refer you to. Just let me know. Thanks, Steve

  17. randall florio says:

    steve i have a inheritance of a 100000 im am 50 yrs old im looking for a business investment that i can run with my wife is it possible to rent a location get a inventory and open a small pawn shop with this amount i am in florida and we have 2 chain style pawn shops and also we have a family that owns 4 separate locations they all seem to be doing very well i must invest my money wisely also do you do consulting besides your books

  18. How do you start? With a vision. Then you’ll want a plan, working capital, licensing, marketing, equipment, location, insurance, fixtures, and enough backup to operate at a loss for 18-24 months. With these, anything is possible.

  19. tniyah ford says:

    What do me and my husband need to start?

    How do we start?

  20. Raymond,

    Here’s a link to some Wisc ordinances: http://www.govtogovsolutions.org/Default.aspx?tabid=76

    There also may be local and federal licensing and regulation according to your circumstances. Startup costs vary greatly depending on market, regulation, type of pawn shop, and style of lending. Any where from $25k to $500k+ but an average shop (you should not choose average in my mind) in an average location would require an initial investment of at least $50k. Hops this helps, Steve

  21. I’m trying to open up a pawn shop in Wisconsin about how much would it cost to start up the business & what kind of license would I need ?

  22. Danielle, Wow, GREAT demographics for a high-end pawn operation. However, a high-end business requires a high-end initial capital investment. I would take an educated best guess at between $200k – $300k will hold you over and put you in the black. This is considering a modest overhead and moderate marketing budget. Determining fair market values of items has never been easier thanks to the internet. Although different types of items are researched in different ways. This process is far easier than it sounds. Especially if you have a working knowledge of gemology and metallurgy. Good Luck!

  23. Danielle says:

    Hi Steve, what is the minimum investment to rent a place, lawyer’s fee… and start a pawn shop business in Markham, ON, Canada? I am thinking about opening one in Markham area. What is the best environment to be successful? I have seen bad poor area pawnshop who have more pawnshop stores. My area is mostly for rich people. I am not rich. I just moved here recently and looking to open a new business. I have been selling and buying items on net for a while. How can you know the value of the items you purchase? Thank you

  24. Kunie, In your situation the best advice I can offer is to have a LARGE amount of capital on hand. With that amount of transient activity on the island the demand for pawn loan transactions will be immediate and huge. The last thing you would want to do is run out of cash or storage space.

  25. Hey Phil, Simple question with a not so simple answer. First, determining fair market value (FMV) of pre-owned merchandise has never been easier thanks to the Internet. There are thousands of websites dealing with used goods. One easy example would be the results of eBay’s closed auction results which shows what a willing buyer is willing to pay and what a willing seller will settle for.

    The sharp operators detemine percentage of FMV for purchase or pawn loan based on the type of merchandise being pawned or sold. Premium goods, merchandise that sells extremely well and has a stable FMV, will usually bring 70-75% of FMV. Average goods, ordinary stuff that is frequently discounted and my have a shelf life or an obsolesence factor, is closer to 50% of FMV. Inferior goods can bring as little as 20% of FMV if the dealer chooses to make an offer at all.

    I could write an entire book on inventory turns in pawn operations. There are specific reasons why a pawnbroker might choose to turn certain items faster and other items slower depending on the customers and merchandise they want to attract to the business. But generally speaking, faster turns at lower margins will always prove the more profitable business model. The best turnaround time is having the thing pre-sold before ever making the purchase. With a well run efficiently managed store this happens more times than what one would think. Causing this to take place also puts you in a position to out-pay your competitors every time.

  26. kunle says:

    i will like to a pawn shop in an island in african city,which is an ecomnomic capital of a state,the in flow traders/workers into this island from other part of the state daily is about a million people,but it has no one known legal pawnshop at the moment.
    what advice can you give on this idea? although some people might have doing some of the pawn business on individual bases like lending money for gold or buying gold for cash etc.


  27. Phil says:

    Is there information available on pricing pawn goods and buying goods outright. What would the average percentage value be offered to the customer for his goods. What wood be a good turnaround for good purchased to resell.

  28. Jonathan,

    1. Premium goods. Quality anything. What you lose in lower margins you recover in faster turns.
    2. It depends on market area and regulation but the more you have to invest the quicker it will become profitable.
    3. For an “average” pawnshop business model, square footage, traffic count, and signage availability.

  29. Jonathan Pyron says:

    1 – What are the items that have the largest ROI for personal property?
    2 – How much capital should be invested for a start-up location?
    3 – What are the 3 main characteristics I should consider when looking for a brick and mortar location?

  30. Hi Connie, There are a number of questions you need to ask yourself. First, what constitutes a “real good one for sale?” Marketshare? Profitability? Proprietary systems? A seasoned and well performing pawn loan base? A highly responsive loyal customer base? What exactly makes it “real good” and why is it being offered at a good price? Well managed profitable privately owned pawnshop businesses are currently being offered and sold at premium prices because of industry growth and an aquisition trend. How is the Fair Market Value of this business being established? You should strive to know exactly what it’s really worth and why. Do not fall in love with the purchase until all of these questions are crystal clear and you are comfortable with the answers.

    The threat of robberies, burglaries, assults, bait and switches, smash and grabs, etc. are always present in the pawn business. They are not something you should worry about. They are something you should take preventitive measures about. This process will make your pawnshop a difficult target for crimes against pawnbrokers and will greatly reduce your chances of becoming a victim. Nothing, of course, is fail-safe. But the proper preventitive measures will greatly stack the odds in your favor.

    Employee theft and internal losses are a whole different story. But through modern loss-prevention systems, smart hiring processes, and faithful monitoring of activity, you can hold these to a minimum. There are hundreds of ways for a store owner to fall victim to theft at the hands of his or her employees and you should know every one of them. My coaching materials would prove especially valuable to you in this area as I explain many of these ways in great detail. I’m not trying to scare you with my reply. I’m just painting an accurate picture for you to base your decisions on. Thanks, Steve Krupnik

  31. Connie says:

    I’ve always wanted to run a pawnshop and now there is real good one for sale at a good price but I worry about getting robbed or assaulted . Does that happen very much?
    Also the present owner says he has trouble finding people to work for him that don’t steal, is that a big problem too?
    Thanks Connie

  32. Jason, Thanks for the great question. I always suggest to have a limited amount of retail inventory from day one. But here’s the key. Only display items in the showroom that you desire to come through your front door. Clean, quality, desirable, and reasonably priced goods attract the same. Junk attracts junk. It really works that way and I’ve proven this many times. Where do you get the stuff? Numerous places. Estate sales, auction houses, and other second hand dealers and pawnbrokers for hard goods. You may want to consider attending the Midwest Pawn Conference http://www.midwestpawnconvention.org/ coming up in May as there will be prime wholesale jewelry companies exhibiting. Nothing like filling up your rolodex from the get-go. Steve

  33. jason says:

    Hi Steve,
    when opening a new pawn shop, is it better to have an empty store and fill it up slowly with your customers items(lost pawns and buys) or do you actually open with some type if inventory? If starting with some inventory where do you go to purchase inventory(jewelry, electronics, etc)?

  34. As posted on this website, startup costs for a pawnshop are much higher than most retail businesses and will depend on market area, regulation, business plan, licensing, and numerous other factors. That said, no one, and I mean no one, is currently providing business loans for pawn shop startups. The loans simply do not exist. You may want to seek employment in the pawn industry at this time for the experience and down the road locate an existing pawn operation that can be aquired with a long-term buyout. Good Luck, Steve

  35. sam says:

    so what does it cost to start a pawn shop? and how easy would I be for a young entrepreneur to get the loan to do so?

  36. Hey Rickie, While Mountain Grove may be convenient for you, you need to ask yourself if the shop you envision will work in a town with only 1200 families. If so you will need to add many profitable services besides pawn loans since it’s obvious you cannot generate enough of them to meet the overhead let alone pay yourself. A few might be payday loans (if legal in MO), firearms, jewelry repair, bill pay, estate liquidation, appraisal, internet sale, etc. It depends on what is currently needed in the community that’s either underserved or unserved. The business model their would be extremely low overhead to generate enough to be profitable. $100k to kick it off there would be a reasonable amout of startup capital. If you’re thinking bigger, look west to Springfield. Always plenty of room for a new well-run shop in a town that size. If Springfield is out of the budget maybe the existing pawnbroker in Mountain Grove is looking for a buyer? You don’t know if you don’t ask. Good Luck guy. Steve

  37. rick says:

    hello steve my name is rickie renegar and I have worked in my family’s pawn shops since I can remember. I am looking to open my own, And I am looking at opening one in mountain grove Missouri population is 4,756 I am planning on having a little bit of everything like all my familys shops. I just had a couple questions for you. first do you think this would be a good place to have a shop, I have just seen a lot struggle in the past and they only have one still in business, or what town in Missouri would you recommend, Then the big question how much money do you think ill need to start out.

  38. Hi Chad, Great questions thanks. This is a very doable process that can prove quite profitable. I’ve known numerous successful jewelers who have added pawn to their jewelry stores with great results. The most successful business model to do so has changed a lot in the past five years. Here’s what you may want to consider since it will work very well in your market area. Become a “Secret Pawn Shop”. In other words, do not change a thing in your jewelry store. Except for maybe a private closing room for pawn loans and buys. No in store signage, no outdoor signage, and no cash for gold stuff. All of your pawn marketing is Internet and direct mail based and laser focused on consumers I call the “secretly poor”. And you’d be amazed at how many are out there. This is the guy standing in the driveway of his McMansion next to his Bentley with zero cash in his wallet. It’s an incredible new niche that is very easy to identify and reach out to. But here’s the key. Your business will attract high-end pawn loans from persons who would NEVER consider walking into a pawnshop. Not even on a bet! Professionals, CEOs, small business owners, etc. Yet they are very comfortable borrowing from Noble Jewelers because they do not feel they are walking in to a pawn shop. The wording here is critical. They are not pawning their jewelry, they are leveraging their assets. Initial marketing costs will be high but profitability should be reached within the first year. Once established you can dial back on your pawn marketing by establishing a high-end VIP referral system. Damn, I’m excited for you. Should you choose to become a client of mine in the Pawn Shop Advisor(tm) coaching program I’ll be happy to provide you with numerous details on this type of business model. And with your experience and your market area it’s a real winner. I’m here if you need me, Steve

  39. Chad says:

    Hello Steve,
    I own a jewelry store and have been a goldsmith for over 25 years. After being open for a year and worked for “BUY GOLD” stores, it seems that merging my business into a PAWN STORE would be a easy transformation. I already have items to sell, can provide jewelry repair and custom services as well I have a large network of appraisers in different fields to also help advise on merchandise. And given the difficulty to transform my store into a higher end jewelry store with greater demand to buy higher priced inventory, would you suggest this type of move into the pawn business to be beneficial?

  40. Hi Larry, Not enough information to give a rational guess. Your capital requirements will depend on market area, local and state regulation, lending style, marketing effort, and physical storage. The best approach is to calculate how much of a loan balance you will need on the street on average to remain profitable and shoot for that number. I explain these calculations in detail in my program. Thanks, Steve

  41. How much capital/cash should I have to fund the loans there are about 10,000 people in my 8 mile radius.

    Thanks larry

  42. Tim, First of all, the demand for pawnshop goods and services have never been higher in my lifetime. Locally, Nationally, and Globally. Your level of success will depend mainly on your level of professionalism and expertise. Besides what you’re learning in school you should choose to study Fair Market Value determination, gemstone identification, precious metals, and salesmanship. Startup capital is usually higher than most believe, so be expecting that. During your summer break apply for work at pawn stores to get your legs. You may even seek out one with elderly owners who might be looking to sell down the road. The pawn business can be a stable and profitable business venture in nearly any market area and in any economy. By the way, I opened my first shop at 22 years of age. Good luck!

  43. Tim says:

    Steve, I’m currently 22 years old studying business in College. Upon graduating I can see myself wanting to get into the pawn business. I may not have enough money at the time of graduating (I can guarantee that) however I’m willing to educate myself in the mean time and take the necessary steps.

    Besides reading your books which I’ll take a look at, what advice can you give a 22 year old business student living in Maine on perhaps starting your own pawn business? Demographically is there demand that you know of? I see a lot that don’t seem too successful however their still all in business as well. Thanks.

  44. Skyler,

    You can find all of your state regulations here:


    There are likely some additional local regulations in the market area you wish to enter. That said, it is unlikely there will be a two year experience requirement for licensing but it is highly likely there will be a minimum net worth requirement. This is because it’s dang near impossible to open a successful pawn business on a shoestring budget. Good Luck, Steve

  45. skyler says:

    Steve, I have been a pawn shop employee for just under two years (by one month) I am venturing out and wanting to start my own shop, but everywhere I look I see that there is a minimum requirement of two years pawn experience before you can apply for a pawnbroker’s licence. Is this true? If so, what can I do to get around it? Thanks so much in advance. HELP!-from KY

  46. You’re in the right place. After reviewing the information contained here maybe you can ask something specific?

  47. gie cruz says:

    i want to know more about in opening and operating a pawnshop. please help me.. thank you very much.

  48. Hey Terry,

    There are many pluses in aquiring an existing pawn business. The most important being to see an ROI from day one. That said, look at current earnings, potential future earnings, strength of loan book, health of customer data base, and business reputation. Not saying any of these cannot be fixed if sub-par, yet with enough of them lacking there may not be much there to purchase in the first place. Also consider licensing and regulation in the market area before proceeding. Could be simple … or could be a worst nightmare. Best of luck, Steve Krupnik

  49. Terry says:

    Hey Steve,

    My partner and I are looking into purchasing a small pawn shop in a neighboring town. The shop has been in business for around 10 years. What is your advice on what we should look into before we dive into something we may not want.

    Neither of us has had any experience in the field but my partner seems to feel it will be a good investment.

  50. Hey Tony, For the straight scoop on your area give Jackie Kinlaw a call (770) 932-6101 for the latest requirements. Jackie is head of the GA Pawn Association and a GREAT guy to boot! Steve

  51. I’m starting a Liquidation Store / Pawnshop. can you tell me what License or Legal requirements I will need for Georgia on the Pawn side of the Business , thanks Tony.

  52. Jason, A practical education in precious metals and gemstones is not just important in a pawnshop, it’s essential. You can find nearly everything you will need to know about this topic on this page:


    Best regards, Steve

  53. jason says:

    How do I start a pawnshop if I dont have any experience with jewelry, gold, diamonds, gems, etc? How do I obtain this knowledge?

  54. Donald, Your business plan is sound and there’s a decent demand for this type of collateral lending. Most pawnbrokers do not write these higher maintainence difficult to store loans so you should easily be able to attract them. That said, I would strongly suggest finding some lines of credit for your business because you could easily find yourself tapped out in your very first month.

  55. Donald Butts says:

    Steve, I have a business location on a busy highway in a rural area not far from a larger city. The building and land is paid for and I have $50,000 in capital I can use. I am an equipment appraiser an have been for almost 30 years. I am interested in opening a pawn & loan business Specializing in larger items such as boats, ATV’s equipment ETC and getting into guns and other items as we progress. Do you think that is possible.

  56. Thank you James for the interesting question. While most would answer this question a resounding no because of your age, I will answer it by challenging you to begin to assemble your online pawn shop business plan. Keep in mind you will need at least one adult on board with your new venture to handle contracts, licensing, and finance. Good Luck! Steve

  57. James says:

    Can u open an online shop at the age of 12????

  58. Ben, As I’m sure you’re aware of, your market is a very competitive area. The research I would recommend highly is to visit as many pawnshops in the community as is practical and keep a journal regarding what you feel they are doing really well. More importantly make note of what you feel they are doing poorly or not doing at all. Who are they not serving? Who is seeking short-term credit in the area that would choose not to do business with them? Your best bet starting out in this market area is to envision exactly WHO you want your best customer to be and how specifically you can serve them best. The reason this is an important step is because this process is one that your competition has not done. In choosing the exact customer you want to serve in your pawnshop you can create a business that caters specifically to them. A comfortable environment to do business in, business systems and processes created especially for them, marketing and advertising laser focused to this best customer, and follow-up designed to keep them from going elsewhere. You will be amazed at what will happen in your new venture should you choose to follow my recommendations. Please let me know how I can help you. Best of luck, Steve

  59. Ben says:

    I’m currently working at a family owned pawnshop in Phoenix and am trying to learn all the basics to open my own shop in AZ. Do you have any sources/recommendations for research in my area? (Arizona, Maricopa and Yavapi Counties specifically.

  60. John, Having specialties is an excellent marketing move for a pawn shop and guns and guitars are both desirable and profitable. That said, you should not consider limiting your business to these two. Over 50% of your loan/purchase transactions should and will be fine jewelry. Again, desirable and profitable.

    The capital question comes up a lot and there is no one-size-fits-all answer. Your capital requirements depend on local and state regulation, your market area needs, your lending/buying style, your ability to quickly turn inventory at a fair profit, your aggresiveness in dealing in precious metals, and your vision of the business you wish to build. I could say 50K or 500K and either could be correct. You open the door every day to rent cash. The last thing you want to do is run short of it. The more capital you have available in the business, the more of an economic advantage you have over your competitors.

  61. John Bohn says:

    Does it make sense to open a pawn shop specializing in guns and guitars?

    How much capital would be required excluding store fit up and fixtures and equipment?

    Thank you

  62. Ashlea, One of the best places to get accurate information besides the OCCC is the Texas Association:


    I’m sure you will find the Association Directors both friendly and generous with information.

    Finding an existing store for sale at workable terms is always recommended since you begin realizing a return on investment immediately.

    Good Luck,

  63. Ashlea says:

    I am wondering if you know of a concise website or write up about opening a pawnshop in Texas the OCCC information is very confusing and I have found conflicting asset/start up capital numbers online. Also would you recommend starting your own shop vs. attempting to purchase an existing shop?
    Thank You

  64. Brandon,

    This truly depends on the people in the community’s needs and also on the state and local regulations for the area. Define small.

  65. Brandon says:

    Is opening a pawn shop in a small community a good idea?

  66. Bruno,
    Opening a pawnshop near a casino is a good business model. That said, it is however a different business model. Depending on the business you wish to build, this type of operation will be heavy pawn loans, light purchases, light retail, and heavy wholesale. Also depending on your preferences, this type of business model will prove to be between 75% and 100% jewelry and precious metal based. This is where your line of expertise needs to be. There are some additional stealth promotional opportunities available to you being near a casino. Contact me directly for further details. Good luck, Steve

  67. Bruno D"Angelo says:

    Do you think opening a pawn shop near a casino is a good idea.I have no experience in this business but I am definitely interested in opening one up.
    I KNOW I need to find out all the state laws and licensing required.

  68. Mike,
    The business venture you are proposing is not a pawn shop. It is a second hand dealer or buy/sell store. Depending on regulations in your locale, odds are you will need to be licensed as either a second hand store, a precious metals dealer, or both. This type of business can be started with minimal investment however the business model is very different from that of a pawn shop. Remember, most second hand stores that do well tend to specialize in some type of merchandise. Find your specialty! Steve

  69. mike ballar says:

    I would like to know more about opening a pawnshop without a license. ?I would like to buy and sell not offer loans at least for now. Also what would u think would b a reasonable start up fund for this, just a small pawnshop buying and selling? Thanks

  70. Edd,

    That’s the million-dollar question in this economy. There are currently no conventional commercial lenders willing to invest in pawn shop start ups that I know of. At least not in the US. And private capital has been on strike for several years now.

    This is a growing problem in this growing industry.

  71. Edd says:

    Steve, seems that the big question is how much capital is needed to get rolling. My question is related to this, any ideas where to get finacing and investors? Im in Eastern Colorado, wanting to start a new shop, no other shop within 70 miles… Interested???

  72. Dustin, Minnesota does have a state statute that can be located here:


    The statute is administered and enforced by local city or county government. Odds are pretty good that there’s additional code on the books at a local level. A quick check with the city clerk’s office will confirm this. Licensing is also local.

    Operating a pawnshop in a small community is not much different than operating in bigger cities or towns. However, in order to operate profitably you should choose to offer many additional goods and services other than just buying selling and loaning.

    This is because you will be quite limited on the finance charges you will be able to collect on your pawn loan base. An example of some services to offer that may be a good fit to your area might be jewelry repair, gunsmithing, estate evaluations, consignment sales, Internet sales, and even bill pay. But again, this will depend on the needs of your prospective customers. Find out what they want and then figure out a way to give it to them.

  73. dustin says:

    Hello Steve, Would you be able to tell me the laws/regulations/license for minnesota? i live in a small town (le sueur,mn) which currently has no pawn shop and wonder if a pawn shop could make it in a town of less then 3000? most of which are farmers and country folk. I would imagine more buying and selling of goods vs loans on goods. I assume pawnbrokers main income comes from loans vs the buying and selling of goods? thanks for all you do and your help.

  74. Hi Chris, To directly respond to your question my answer would be Alaska. That being said, the easiest opportunities are not necessarily the most profitable opportunities. Your choices should be based on the type of customers you wish to attract to your new business and also on the amount of capital you have behind you to get going.

    In this currently unknown economic climate there are many pawnbrokers experiencing wild cash flow swings and great difficulty locating additional operating capital. Conventional commercial lenders are not loaning to the trade and private capital is on strike. This will not change anytime soon and many more opportunities in the pawn industry will begin to surface. No matter what your plans I suggest you try to remain as liquid as possible. It’s going to be a bumpy ride for even the most savvy of entrepreneurs.

  75. Chris says:

    Hi Steve-

    Awesome book! I have a question: which states would you consider to be the easiest to set up a new pawnshop in?

  76. Shea, There is not a one-size-fits-all answer to your question. How much cash you should have on hand to get the new business to cash flow properly will depend on your market area, your lending style,
    your state regulations, the type of customers you choose, and of course your overhead. That being said, starting a pawn business on a shoe-string budget is a recipe for failure. If you run out of money to make small loans you are no longer a pawn shop owner. You’re a broke second hand dealer!

  77. shea says:

    how much money do you need to start a pawnshop thanks

  78. Hi Dave,

    I have a number of fine clients in the UK who benefit from the programs I provide for the industry.

    Your #1 source for info is the National Pawnbrokers Association of the UK. You’ll find them here:


  79. Dave E says:

    Hi Steve

    Come across your website which i find very interesting but being from the UK i find a bit limited do you have any UK based contacts that can provide UK relevant info.

    Thanks for your time


  80. John, The only degree required to enter this industry is an advanced degree in “Street Smarts.” Although, considerable knowledge of precious metals and gemstones are a huge asset. I’ve included many fine reference materials on this here: http://startapawnshop.com/vendors/books-and-publications.html

  81. Donald, In So Carolina there is a minimum $35,000 liquid capital requirement to be issued a pawn license. Depending on your market area and your lending style this may or may not be sufficient to get running until profitable.

  82. John says:

    I’m a high school graduate. Do I need a degree to get into this business?

  83. Donald Beckner says:

    How much start up seed money will I need to start an pawn shop in S.C. Thank you!

  84. Frank, yes, licensing is required. Please download and read the free reports on this website. They contain the information you seek.

  85. Frank says:

    Hello i want to start a Pawn shop but i was wondering if there is a Pawn Shop License you need to obtain or no ? Please get back to me in my email thank you.

  86. Tom, When looking for a location to start a pawnshop nothing trumps population. Louisville, Lexington, Bowling Green, Owensboro, or Covington would really do the trick. With that type of population you never need to concern yourself with competition. There’s plenty of business for everyone.

    If nothing else at least find an area that contains less than one pawnshop per 10,000 inhabitants.

  87. Tom Gatewood says:

    Steve, what town in Ky would be the best to open a new Pawn shop with new shops opening such as Dan’s Throughout central Ky?

  88. Bill, One of the biggest factors in your capital flow starting to rotate back into your shop is your state and/or local regulation. In other words, what your holding time is on a pawn loan. A few places are 30 days period. More often you see 30 day loans with another 30 day grace time. There are also areas with longer holding times. 120 days up to a year in some places. Longer holds can sometimes produce a longer period of time from loan date to return on investment. The good news is it no longer has to be the rule.

    In the Pawn Shop Advisor(tm) coaching program I outline a number of ways pawnbrokers can leverage technology to gently encourage their pawn loan customers to come in monthly and at least renew any pawn loans they have outstanding. This helps immensely in monthly cash flow and will also greatly improve your overall redemption rate on your loan base. Rule of thumb in the industry is a 70% redemption rate on pawn loans and a 30% default rate. That being said, there are many steps an aggressively lending pawnbroker can take to improve this redemption rate to 80% or higher.

    Once you can accomplish this, reinvesting your profits into your business to grow your loan base as fast as possible, you may even be able to change your diet to something more substantial than beans and water.

    Many of my clients have tweaked their business to accommodate this unknown emerging new economy by aggressively lending and even more aggressively turning over unredeemed pledges. They no longer view defaulted loans as valuable inventory. They look at this stuff for what it is. A bad loan that has produced no income for the business. The quicker you turn it the quicker you can get the money back out on the street to work for you.

  89. BILL V says:

    I get a large variance on how much money it takes to operate a Pawn Shop on loans going out from 5k to 20k a day. I actually had a gentleman that had a shop tell me all I needed was 5k to open a shop and after I heard that. I knew that there was not nothing else I could ask him. Because after my overhead and stock. I was figuring on spending at least 8k going out the door daily just on loans. My biggest question is what is a fair reasonable time to expect my capital flow to start rotating back into my shop. Not counting any of my other expenses or upkeep. Because each of us have our different ways of keeping our expenses other than the loans going out to a minimum. So I would have a lot better perspective on how long I would need to fund the money’s going out on loans. With what avg. percentage of loans defaulting. Even if I have to eat beans and water for a yr. I know that it will be fine in the end.

  90. Yes Sharon,

    I highly recommend Today’s Pawnbroker: http://bkbpublications.com/pawnbroker/

    You may even be able to receive The Midwest Pawnbroker magazine free by requesting it here: http://indianapawnbrokers.org/Home.html

  91. sharon says:

    Is there a magazine for people who own pawnshops?

  92. Hey Mark, Trying to enter the industry with a 50K investment would be a struggle without a large dependable line of credit. Many start-up costs involved including location, fixtures, licensing, insurance, marketing, signage, security, vault or safe, etc would consume that amount quickly. Then as soon as you get the front door open your REAL product is not the limited inventory, it is $$$$$$ for rent.

  93. Mark says:

    How much captial will I need? I worked at a pawn shop a few years back in between jobs and realized there is a TON of money in it. I can drum up about 50K to start one up in N Florida but dont really know if that is enough. I dabble in Estate sales,buy and selling on EBAY and buying storage units so can stock a store pretty easily with less than 5K. Any help on the subject would be great. I currently have a job and make about 70K a year but want to work for myself, is it worth giving it up and spending my last dime to get this started?

  94. Michael Cox says:

    Hello Steve,

    I just wanted to comment on the PawnMaster software that you listed above. Based on your recommendation I went to them to get the software, they then asked me about hardware and I said “sure” but after I got the quote I was insulted and angry that they would think myself or anyone else was really that stupid.

    For instance for a $300 item they wanted to charge me a 1x fee of $354 and a Annual user agreement of $101 effectively turning a $300 item into an almost $800 item. This is just one example there are many more on there just like this.

    I only bring it up because you always seem to have sound advice for me in your newsletters but this maybe one company that you shouldn’t associate your name with.

    Just my $0.02 worth.

  95. Hey Frank, Sorry for the holiday delay. It really depends on your situation and is a good question for your attorney and tax accountant. That being said, here in the US there are currently several advantages to going the LLC route. Of course, further changes in the tax code could change this immediately.

  96. Frank says:

    Hello Steve. What business structure in your opinion works best? LLC or Corporation?

  97. Beneficial info and excellent design you got here! I want to thank you for sharing your ideas and putting the time into the stuff you publish! Great work!

  98. While my coaching programs for the pawn industry have hundreds of useful tips for a startup operation, they do not actually contain a startup blueprint. Why? Because there is no one-size-fits-all. The correct formula for your business start up will depend on your market area, state and local regulations, and most importantly your vision of the business you are building. But large or small, urban or rural, the commitment will still be large.

  99. Jeff says:

    Hello, I live in a small town in Kentucky where pawn shops have been established but have always went under. My family has such a big interest in pawn shops we would like to start one in our hometown. Does your program show you how to do this from scratch, straight from startup? Also how to not make serious mistakes and what is needed to run it? Thats what we are looking for, something to show us what we need to start this business venture as far as capital, licenses, etc. Thanks. As I said we are in kentucky and we have never worked in a pawn shop so my father is retired and wants to start this up, is it still too expensive to start?

  100. Hi Terry,

    There are many fine software programs available to the pawnbroking industry. There’s one thing you should keep in mind when choosing. This is no place to cut corners in your business. I cannot stress this enough and go into detail on this in my Pawn Shop Advisor(tm) coaching program. The three software companies I’m the most familiar with are Pawn Master, Compupawn, and Pawndex. You cannot go wrong with any of these.

  101. Terry says:

    What software do you recommend to run your pawn shop? I also noticed some ‘Gold Buying” software online as an “add on” to pawn software, I don’t imagine it to be needed if you have half a brain but I could be wrong. This is all new to me. Any input would be great. Thanks.

  102. Justin, At your age I would suggest you apply for work at a pawn shop to learn the ropes and get your feet wet. Texas licensing is both complicated and very expensive. The new venture will take considerably more startup capital over what you may think.

  103. Justin Cox says:

    Hi I am a 22 yrs old and I live in Dallas Tx. I wont to try to open a small p.s to start with. I dont have never worked for a pawn shop but know how they work and uderstand the basics of it but how do I get the ball rolling. Anywhere from stuff to fill the shevls on opening day,how much money is need to start ferm but reasonable. Pease just give me any tips you can on this please.

  104. Peter,

    There is not a one-size-fits-all answer to your first question. How much cash you should have on hand
    to get the new business to cash flow properly will depend on your market area, your lending style,
    your state regulations, the type of customers you choose, and of course your overhead.

    A smaller town can easily support more than one pawnbroker. The key here is not to attempt to
    “win over” your competition’s customer base, but to go after your own. Most pawn shop owners
    do a rather pitiful job of marketing and advertising if they do anything at all. But by choosing the
    type of customers you care to do business with and adjusting your marketing accordingly, you
    can quickly and easily build a successful business with brand-new pawnshop customers.

    Of course, you should choose to make your business as different as possible from your competitor.

  105. Thank you, I’m glad you benefit from my e-mail tips.
    Anyone reading this who does not yet received these
    free pawnbroking tips can sign up for them here:


  106. David,

    Thank you for sharing your story. A mistake is only a mistake when you continue to make it.
    There are always new things to be learned in this industry. Best of luck with the Fort Lauderdale location.

  107. Jon,

    I believe you may be able to find some useful information here:


    Thank you for letting me know about the link not working properly.

  108. Charles,

    Much lower than a restaurant! Seriously, failure rate is under 10%.
    And those who do fail are generally because of being undercapitalized
    or refusing to run the business in a legal manner.

  109. Eric,

    All of the info for your state can be found here:


  110. Peter L says:

    I actually have two. Lets say I am looking at a 4000 SF shop. I have plenty of “stock” to put on shelves, and the build out to make it look as it should is not an issue… HOW MUCH CASH do I really need to get the ball rolling so to speak, and secondly.. can a smaller sized town support more than 1 pawn shop, with mine the larger, newer entity???

  111. jon says:

    the link for new york guidelines isnt working is there anywhere else i can look?

  112. charles says:

    what is the failur rate in the first 5 years of a new pawn shop.

  113. Eric says:

    I’m having a problem finding the regulations for Oklahoma. I there another site that might help me?

  114. This depends on your market area. Details are in the pawnbroker reports on this website and also on the website here:


  115. dan farwell says:

    i just wanna know what licenses i need and how to get them.

  116. Loren, The biggest advantage to purchasing an existing shop is that you will realize a return on investment from day one. You are also purchasing an established customer base.

    The most important question to ask yourself is, does the existing business and established customers come close to matching the vision I have of my pawn shop business? If so, it could be a big advantage.

  117. Bill, Percentage of fair market value (not retail value)depends on the type of item. Does it have a shelf life? How quickly will it sell if unredeemed? How stable is its value? How stable is the customer’s history? These and other factors will have you loaning between 25% and 80% of FMV.

  118. Mike, There are many. More than ever actually. Determining fair market value is a skill best learned through practice. Not just books or websites.

  119. Leon, Range of capital will vary widely by market area, State Regulations, aggressiveness of operator, and prospective customers marketed to. I’d be happy to help you further. Send details to: steve@startapawnshop.com

  120. Leon McLaughlin says:

    Range of capital required to open a pawn shop

  121. Mike Ontiveros says:

    Are there valuation resources available to help pawn brokers determine the value of items?

  122. Bill Shivers says:

    What percentage of retail value (used) do you pawn and for how long?

  123. Loren Pearce says:

    Your articles are extremely helpful. Thank you! I am trying to purchase an existing pawn shop. I guess my biggest question is how do I evaluate the pros and cons of purchasing an existing one versus starting one from scratch? Any tips on doing due diligence?

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