Neighborhood pawn shop

Borrowers who need quick cash and bargain hunters buying used goods. Some shops also buy items outright from sellers.

Interest and fees on loans, plus the margin on reselling forfeited and purchased items. Careful valuation is what protects your margin.

• Valuing used goods (gold, tools, electronics)
• Negotiating fairly and staying calm
• Basic bookkeeping and record keeping
• Customer service

• Startup cost is mostly working capital: the cash you lend out and the stock you buy. A well-stocked shop often needs a six-figure sum on top of fit-out, security and licensing, so build your budget from real quotes
• Pawnbroker licensing: many states and cities require one, often with background checks, so check with your state and city
• Limits on interest rates and fees, loan hold periods and required paperwork, which vary by state
• Reporting of transactions to local police is often required, to help catch stolen goods; check your local rules
• Selling firearms usually requires a federal firearms license (FFL) from the ATF plus state rules, so decide early if you will handle them
• Risk of taking in stolen or counterfeit goods and of over-valuing items; verify IDs and keep careful records
• Security and cash handling: check insurance options and costs for theft, robbery and inventory
• Needs real capital tied up in loans and stock, so only risk money you can afford

Startup costs are typically around $150,000 to $500,000, depending on loan capital, stock, fit-out, security and licensing. Most of it is working capital, so build your budget from real quotes and only risk money you can afford.

Estimated monthly revenue is typically around $8,000 to $40,000, depending on loan volume, resale of unreclaimed items and location. Revenue is not profit, as your capital is tied up in loans and stock.

Check pawnbroker licensing with your state and city, plus limits on interest and fees, hold periods and paperwork. Check police transaction reporting rules. Selling firearms usually requires a federal firearms license, so decide early whether to handle them.