Pawnshop business plan
The essence of the business
The lower the standard of living of people, the higher their need for pawnshop services. Who does not know, a pawnshop is an organization that provides short-term loans secured by material assets. As a rule, jewelry, cars, household appliances, computers and the like are used as collateral. Unlike microfinance organizations, the borrower's risk is limited to the loss of the collateral. If you do not buy your item from the pawnshop on time, then it is sold and all questions are removed for you.
Assuming such a scenario, pawnshops evaluate the collateral at a greatly reduced cost in order to be able to quickly sell the item at a competitive price. Therefore, the borrower is in every possible way interested in the redemption of his collateral.
As noted above, the main risk is that the borrower does not repurchase the collateral. To minimize this risk, the collateral is assessed at a significant discount in order to be able to quickly sell the product and return the money to circulation. For a pawnshop, turnover is much more important than maximizing earnings for a single item.
Another group of risks is pledges obtained by criminal means. Very often, things obtained by criminal means are handed over to pawnshops, since a pawnshop can immediately give real money. In this case, there is a risk not only not to receive the money, but also to lose the subject of the pledge, since the stolen goods will be looked for in pawnshops in the first place. Try not to contact suspicious clients, but in practice, this risk is simply included in the cost of the collateral, since it is not always possible to distinguish a normal borrower from an attacker.
Target audience - people with average income. As a rule, their money is enough for a normal life (otherwise there would be no collateral), but any unforeseen situation unsettles them. These are people who have found themselves in a difficult life situation, but expect to solve it in the near future.
Competition in the segment is above average. In cities with a population of over one million, the number of pawnshops is measured in tens and even hundreds. This is due to the high level of profitability of the pawnshop business and the low standard of living of most of the people.
To stand out from the competition, you can specialize in a particular type of collateral. For example, cars or gold jewelry. This will allow us to offer more favorable conditions against the background of competitors who take any types of collateral.
It will not be a big surprise that the activities of credit institutions are subject to numerous rules and regulations. The need to maintain a large amount of documentation, as a rule, leads aspiring entrepreneurs to the decision to leave this direction and switch to something less burdensome. For this reason, it is quite appropriate to consider a pawnshop business plan, which will avoid many mistakes. Also in our catalog you will find a wide selection of various options.
- a pawnshop is an organization that issues money on bail and keeps collateral;
- apart from these two types of activities, pawnshops are prohibited from doing anything else;
- the recipient of the pledged property is obliged to insure it;
- the assessment of the received pledge is mandatory;
- when transferring the pledge, the recipient must draw up an agreement in which all the terms of the transaction must be stipulated ;
- the recipient of the loan undertakes to return the money received by him within the agreed period. If this does not happen, the collateral provided by them becomes the property of the creditor;
- the pawnshop has the right to sell the collateral. If the price of the latter is more than 30 thousand rubles, it is necessary to organize an auction;
- an entrepreneur has no right to sell collateralized items within the framework of a pawnshop. This should be done exclusively in a separate private enterprise.
Another document related to the activities of such organizations is RosFinMonitoring order number 203, which regulates the following issues:
- personnel training and training;
- the frequency of this training and its form;
- accounting for the completion of the training provided.
Failure to comply with these regulations will lead to the liquidation of the company.
Risks and target audience
The pawnshop business plan, which you can read in detail at the link, must take into account all aspects of this direction. In essence, the entire work of such an institution boils down to the fact that the lender provides microloans in exchange for any property. Most often, the latter is played by jewelry, appliances, cars.
The main risk that a lender may face is non-repurchase of collateral by the borrower.
One more danger lies in wait for entrepreneurs regarding the legality of the pledge. After all, it often happens that things that are handed over to a pawnshop are stolen. And it is this credit institution that will be the first to look for things that are on the wanted list.
Recently, pawnshops have been growing like mushrooms after rain. Every now and then you can see advertisements in the metro, transport, on the Internet, in various newspapers and magazines, that certain financial institutions are ready to give you a loan against an outpost of precious metals, real estate and movable property. Each pawnshop offers some of its own, special conditions, attracting customers with low rates, preferential terms for granting a loan, various loyalty systems and discounts.
A completely logical question arises, is the activity of pawnshops really so profitable that their number is increasing every day? In this article we will talk about how to open a pawnshop, what is needed for this, and what profit you can get in the first month of your activity.
How to open a pawnshop: studying the legal framework
The first thing to start with opening your pawnshop is to study the legal framework and all regulatory legal acts regulating the work of a pawnshop. When starting any business, it is important to clearly understand what you will work with, how to protect yourself, and what to rely on, and opening a pawnshop is no exception. Already at the planning stage, study all the intricacies of this case, delve into the standards for conducting financial activities of a pawnshop, understand what rights you, as a borrower, and the one to whom you will lend money to. It is necessary to understand everything in detail, so as not to "break the wood" later, and not to get into a difficult and unpleasant situation.
In Russia, the main law regulating the activities of pawnshops is the Federal Law of 2021 N 196-ФЗ dated July 19 "On Pawnshops".
In the context of this article, we will not consider in detail the entire law, because you must do it yourself, giving it due attention, but we will highlight the main aspects that everyone who wants to open a pawnshop just needs to know and understand.
- A pawnshop is a commercial, financial organization, the main purpose of which is to give money to the population on the security of some material assets.
- Pawnshops can store things that are collateral and issue loans for a period not exceeding one year. Any other activity within this financial institution is prohibited.
- Pawnshops are obliged to insure things that serve as collateral for the entire period of the loan.
- All operations for issuing loans must be formalized by drawing up a contract. The contract must describe all aspects of providing money for loans - loan term, interest rate, liability of the parties, penalties, etc.
- When issuing a loan, the pawnshop is obliged to provide the borrower with one copy of the document, which will describe the security of which property the money was issued. Such a document is called a "security ticket". One copy of the ticket must remain in the hands of the borrower, one in the pawnshop.
- The agreement specifies the term of the loan, and the borrower is obliged to return the amount, plus the accrued interest for using the money, within a clearly established time frame. If the borrower does not return the loan, or does it in an incomplete amount, then the pawnshop has every right to sell the item received on security in order to compensate for its costs.
- The pledged thing is sold by selling it. If the item is valued at more than 30.00 rubles, then it needs to be sold only at open auctions, which can be accessed by anyone.
As we said above, the pawnshop has the right only to store things and issue loans. But what if the borrower did not return the money within the agreed period, and the pledged property needs to be sold? Here you will have to open an additional enterprise (as a rule, this is a legal entity), the main activity of which will be retail trade in jewelry or other goods (depending on the type of pawnshop).
It should also be noted that the activities of the pawnshop are still regulated by Order No. 203 of RosFinMonitoring dated 03. 8. 010 “On Approval of the Regulation on Requirements for Education and Training of Personnel Carrying Out Operations with Funds or Other Property for countering the legalization (laundering) of proceeds from crime, as well as the financing of terrorism. "
Read this legal act in detail, because it describes in detail:
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Organization of a pawnshop: business specifics
There are about 4000 thousand companies on the pawnshop services market in Russia, and this figure is increasing every year. Some companies go out of business without having worked for six months, others come to their place, and their owners are confident that they will be able to stay afloat, despite any problems.
A pawnshop business can bring significant profits, but huge sums should be invested in its promotion. A small package of documents for opening a pawnshop is required, but the cost of creating it will amount to at least 1-1.5 million rubles. Only in this case there is a chance that the activities of the company will not stall in one far from fine day due to lack of available funds.
The main task of the pawnshop owner is to create favorable conditions for the issuance of a loan for the client. There are many risks in this business, but the main one is the acquisition of stolen goods. In addition, in the absence of an experienced specialist, there is a high probability of getting a fake, especially for jewelry.
The more loans a pawnshop issues, the higher its profit, which directly depends on interest. On average, the rate for issuing a loan secured by valuable products fluctuates in large cities from 5 to 20% per month. Initially, while there are few customers, the owners are forced to set higher rates in order to survive. And this can become the main mistake when opening a pawnshop: in the event of an excessive increase in interest, customers will bypass your pawnshop.
Most pawnshop owners prefer to do business in the resale of gold items. Other items - household appliances, furs, computers - are less profitable, since they require much larger storage areas, in addition, in this case, the owner needs to purchase special equipment for the pawnshop.
Regardless of what items will be accepted in the pawnshop on bail, special attention should be paid to the preparation of the premises. Bulletproof glass on showcases, powerful metal doors, alarms, professional locks - it is not recommended to save on this, because a pawnshop is a tasty morsel for thieves and robbers. Meanwhile, the responsibilities of the pawnshop include the safety of all items accepted as collateral. But you don't have to spend a lot of money on the tools needed to evaluate valuable things. Used equipment will be much cheaper and will work just as well.
More details about the specifics of this business are described in a professional example of a business plan for opening a pawnshop with ready-made calculations. From it you will learn how to open a pawnshop and gain a foothold in the leaders of this market segment for a long time.
Opening a pawnshop: choosing a specialization
The future belongs to highly specialized pawnshops, experts are convinced. As the experience of opening pawnshops shows, in this case a businessman has much more chances to find his client and gain a foothold in a certain niche. Most entrepreneurs today prefer to specialize in jewelry, but such firms often turn into a banal purchase of gold scrap. It is quite difficult to maintain a brand and secure a positive reputation in this niche.
Another direction - car pawnshop, is also becoming more and more popular today. It is profitable for clients to take loans secured by their iron horses, since the loan amount in this case is significantly higher. But an entrepreneur who decides to organize his own pawnshop should prepare for significant financial costs.
A detailed pawnshop business plan with recommendations, ready-made calculations, tables and graphs. Take it and create!
♦ Initial investment in a pawnshop: 12,000,000 rubles. ♦ Payback according to the business plan: 60 months. ♦ Business profitability: 35.5%
Any person in life can have a situation when a certain amount of money is urgently needed, and there is no way to take out a bank loan.
And when some have a need, others can organize a profitable business on this.
The high demand from customers for this service leads to regular replenishment of the number of such organizations. But as a rule, after a year, 25% of them are closed.
The reason is the large volume of required permits, poor work of appraisers, and most importantly, the pawnshop's business plan was not drawn up in sufficient detail and competently.
In general, writing a document yourself is not as difficult as it might seem at first glance. It is enough to be well versed in your business, follow the structure below and check the text for errors.
Pawnshop business plan: planning
This business plan describes the stages of the project to create a network of pawnshops in Moscow.
It is planned to open four points: three points of receipt of products and one point of sale.
For implementation, it is necessary to attract investments in the amount of 12,000,000 rubles.
- To meet the needs of the population in the possibility of pawning values in the pawnshop at an acceptable interest rate.
- Provide customers with the opportunity to purchase values that are not redeemed by other people at a discount.
- Get profit from a business project.