Who We Are: a Boise/Meridian Pawn Shop
Good intentions in your endeavors is the foundation of a good life lived. We all make mistakes. Some are greater than others, but it is how we learn from those mistakes that shapes our future. We built Sam’s Locker a Boise Pawn shop, located in Boise, near Meridian, to reflect this core belief within every transaction.
“We invite you to look for us on Facebook: https://www.facebook.com/samslockerboise, our webpage at www.samslockerboise.com, or email us at firstname.lastname@example.org to see the progression of our store, see our online inventory or receive any support or advice you need during your business ventures.”
Although we often deal with people in difficult positions, it is beyond important to do the right thing, keeping both parties’ interests in mind. This belief is paramount to every transaction and demonstrated throughout our entire process. Those in the pawn industry are, of course, in business to make money. At Sam’s Locker we are not in the business to rob people of their items, nor are we here to take advantage of peoples’ hardships. We have adhered to these founding principals while working with valued customers and finding a place in the community for Sam’s Locker Pawn and More. Our business ethos has layering effects, which enables us to grow our business and customer base quickly while reducing the risk of theft and being a target for offloading stolen items.
Sam’s Locker and the Pawn Industry in Boise, Idaho
Sam’s Locker formed in late 2014 when its founder, Samuel Reading, decided to turn his attention to the Pawn industry. Sam’s impetus to pawn didn’t originate from a childhood dream, nor a long thought out and formulated business plan, rather, it arose from a variety of goals and desires that coalesced, including his persistent lust to be a business owner. Sometimes the stars align and things just fall in place. Hard work and the patience to wait for the right moment made Sam’s Locker a reality.
The pawn industry is ruthless, and interest rates are higher than any other industry. While we hold your item as collateral, we loan 25-60% of its value and charge up to 20% interest monthly. How is this legal, or at the very least morally right? When we started doing business just months ago, we asked ourselves these exact questions.
Shortly after opening, we realized that people came to Sam’s Locker for multiple reasons, but those reasons can be boiled down to two categories: (1) they need money now, and/or (2) they simply don’t want/need their items anymore. All walks of life come to our store to get money and we do not discriminate, instead, we direct our focus to creating a healthy and fair environment for everyone. This begs the question, is 20% interest a month fair?
Business is costly, employee expenses are high, taxes and state requirements make business nearly impossible. These governmental regulations result in the necessarily high rates. We still aim to work towards lower interest rates, but for now we have to stick with industry standards. 20% interest on items that require nearly an hour of processing time isn’t unfair for the first month of the pawn term. As items move into a term rate longer than a month, this is when we will start to drop interest rates. As time goes by and the item sits, there isn’t the cost of assessing the value or checking to see if it works. What a ramble this industry can be. Now throw guns and firearms into the mix. Accompanying firearms are Idaho State laws requiring a mandatory 20 day hold period on any item sold to a pawn broker, as well as, reporting to required systems so stolen items can be found. There are tons of moving parts and things to know. Being a pawn broker is hard work and you have to stay on top of tasks otherwise they will get ahead of you, and before you know it you’ll be behind.
[quote]For those who are thinking of starting a pawn shop, let the next bit of writing serve as a starting guide to help address variable situations you might experience, to answer questions about the basics of what we went through while opening our pawn shop, and to provide some resources to help you in the process.[/quote]
Start listing some items as you move towards opening a pawn shop.
Before devoting time to finding a location, and determining product cost, read about the ins and outs of what it takes to operate a pawn shop.
- How much time do you have to invest in the endeavor?
- When do you need to see a return on your investment and how much capital do you have to invest?
- What kinds of resources can you leverage to supplement your inherent abilities to open and run a store?
- What kind of Pawn shop do you want to run? (Your target market and business functions)
As you step into the Pawnshop industry or even begin thinking about opening one, start to form an idea of your goals. There are unique ways of generating income and identifying your avenues to shape your source of income. After Sam’s Locker’s opening day, an old owner of a very successful Pawn Shop walked in. This provided us a valuable opportunity, of which we took full advantage. We asked him the one most important piece of advice he’d give to a new pawn operation. We were surprised by his response:
[quote]“Don’t limit yourself to certain types of items; accept anything you can make money on.”[/quote]
This resonated more and more as we started moving through the days, weeks and months. There aren’t a lot of local pawnshop startups, and the ones that have been around a while limit what they take in due to storage constraints, and being tainted by their past failures. Don’t limit your ideas to where your target market should be, but consider some of these options:
- Focus on high volume of online sales, targeting items to buy/pawn that are easy to ship and move quickly online.
- Be selective to the point that the items will generate a larger pawn base and lower default rate, which decreases the amount of sales you need.
- Run a pawn shop that has a focus on customer service as the driving factor.
- Generate a niche market for sales such as guns, bows, electronics, games, tools etc….
- Pawn high end items at reduced interest rates.
- Create a store that has an efficient pawn and sales process in place with your inventory automatically streaming to the online market. This generates a high recurring pawn base, large amount of sales, and a niche market for firearms. We have found creating a smooth efficient process is the most important piece to reduce overhead, enabling you to support the multitude of aspects to running the store. In addition, we found that introducing firearms to the store, creates a great referral base. Those who pawn their guns always get them back with a nearly 0% default rate. This could be unique to the area of our store and the large firearms industry in Idaho. We’d recommend building your market based on the location of your pawn shop. Don’t be so strict that you are not open to changing your market based on the feedback you receive during the first few months of being open.
Figure out how much capital you have to invest and let this drive some of your decisions concerning location, employee cost, and target market. Be prepared to find alternative routes of capital for investment because the worst thing you can do is not have money to lend when people come asking.
Choosing a location
This is tough and requires finding one that is conducive to the type of pawn shop you intend to run. Do not settle. It would be painful and costly choose a location that would later require you to relocate. Ensure you have a location that provides ease of access and is centrally located for sales and pawns. Storage is essential. They say 80% of your pawn shop is run out of the back and only 20% is in the front. Consider build out cost. Often a building owner will pay for a percentage of your build out cost or “tenant improvements”. Depending on your state regulations the zoning of your location is important, so contact the city to determine what the zoning is for your location of interest. There are endless amounts of things to look at here, and doing some google searches for recommendations on things to consider when choosing a location will help guide you.
Start to put accounts in place. This is the most time consuming and difficult part of opening a store next to finding a location.
The types of accounts you’ll need are determined by several factors to include; type of business you set up (tax structure), bank account, county and state regulations such as a Pawn Broker License, firearms regulations, point of sales system, security, insurance, utilities, product type you want to be able to pawn and sell, and target market for your sales.
There are several types of businesses you can set up and the main ones to consider here are an LLC and an S-Corporation. There are several benefits to both, and to determine which one to choose will be based on several factors. We recommend talking to a Certified Public Accountant to help decide.
In the pawn industry setting up a bank account with the larger nationwide banks can be difficult and time consuming. They will likely require you to already have a lease in place, at least your pawn broker license, and signage posted on your store front. Be ready to start from your personal account, before having a business account to work from. Keep receipts for everything.
County and State Regulations can be found online, understand these regulations as they are very important to follow, but it’s even easier to call your county and state licensing offices. Typically they are very helpful, but in case you are anything like us, you’ll probably exhaust your time looking on the internet. The Idaho regulations are found here: https://cityclerk.cityofboise.org/licensing/
Firearms regulations are very important since the ability to capitalize on your pawn market and generate income will also stem from the ability to pawn and sell firearms. The required Federal License can be obtained from the ATF and is called an FFL – better known as a Federal Firearms License. This will allow you to obtain whole sale accounts and leverage your ability to sell firearms. Be careful here because nationwide bank accounts may drop your account if your online firearms sales yield is too high.
Your point of sales system is singlehandedly the most important piece of your day to day business cycle. Choose wisely. We choose a system simply based on its technology systems, and its ability to streamline day to day function in order to have a smooth running pawn shop with great pawn and inventory management. We can provide recommendations upon request.
Utilities include: phone, internet, power, water, security alarm system, workman’s compensation insurance, limited liability insurance, Facebook, store website, Google plus, Google maps, Apple maps, eBay, Gunbroker, Craigslist, local wheeling and dealing sites, etc… the list goes on and on.
Move towards build out and opening. As you move to build out try not to spend too much on your inventory before opening, but ensure you have enough to support your customers coming in to purchase items. One of the hardest things we experienced was trying to find fixtures. Look locally for a fixture store or a local Habitat for Humanity. We recommend considering slat board for your walls. It is a great type of fixture with easy installment and universal use.
As you look to hire employees, consider the knowledge they need to have, the trust you can place in them, and their ability to learn new subjects. Do they have a basic understanding of online research? Are they quick to learn, and can they identify a product type quickly. The learning curve is steep but a smoothly operating business will only make their ability to grasp these items quickly. After being open a few months, sales will start to become increasingly important, and it will be vital to accurately assess your employees’ ability to work with customers.