How to open a small local pawnbroker shop in the UK

Borrowers pay interest and fees to get their items back. Bargain hunters, collectors and jewellery buyers pay for unredeemed items.

Interest and fees on pawn loans, plus the margin when unredeemed goods are sold. Some shops also buy and sell second-hand items outright.

• Valuing jewellery, watches and other goods
• Careful record keeping
• Fair, calm dealing with customers
• Spotting fraud or stolen goods

• Authorisation from the Financial Conduct Authority is likely to be needed to lend, and approval can take months, so check what applies to you
• Pawn agreements have specific legal requirements, such as the paperwork you give customers and how long they have to redeem. Take proper advice on these
• Check whether you need anti-money laundering registration and ID checks
• Stolen goods risk: keep clear records, check ID, and work with your local police
• Valuation mistakes can cost you real money, especially with gold, gemstones and branded watches
• Insurance for stock, cash and public liability, plus a good safe and security, as shops holding valuables can be targeted
• Your money is tied up in loans and stock, so keep enough cash in reserve

Startup costs are typically around £25,000 to £100,000, depending on the premises, security, and how much cash you set aside for loans and stock. These are estimates, and your money will be tied up in loans, so keep reserves.

Authorisation from the Financial Conduct Authority is likely to be needed to lend, and approval can take months, so check what applies to you. Also check the legal requirements for pawn agreements, and whether anti-money laundering registration and ID checks apply.

Monthly revenue is typically around £4,000 to £18,000, depending on your loan book, location and how well you sell unredeemed items. Valuation mistakes with gold, gemstones or branded watches can cost real money, so treat this as an estimate.