How to start a Pawn Shop Business in UK USA (Business Plan)

Pawn Shop

Do you have these questions in your mind?

  • How to start a Pawn shop?
  • How much does it cost to start a Pawn Shop?
  • How to find the best location to open a Pawn shop?
  • What are top-selling Pawn Shop items?


In this article, you will find answers to all your questions. So please grab a cup of coffee, and let’s get started.

Table of Contents

What is a Pawn Shop?

With a global market value of around $26 billion growing at a CAGR of 8.1%. The Pawn Shop Industry is one of the biggest industries in the world right now. 


A Pawn Shop is a business that offers loans to customers in exchange for personal property items such as jewelry, electronics, musical instruments, and other valuable items.


These items are used as collateral for the loan, and the customer must repay the loan with interest within a specified period to reclaim their item.


If the customer fails to repay the loan, the pawn shop can sell the item to recover the loan amount. In addition to loans, pawn shops may buy and sell items outright, typically at a lower price than retail.


By the end of this article, you’ll learn the steps you need to take to start a Pawn Shop business and the critical considerations for making it a success.

Market Insight: In the UK, the Pawn shop market is valued at around £1 billion, while in the US, the market is valued at $7.9 billion and growing at a CAGR of 3.5% during the forecast period.

Pawn Shop

Types of Pawn Shop Business models

There are several pawn shop business models, each with its approach and strategies.


Here are some of the most common types:


1. Traditional Pawn Shop:

This is the most common type of pawn shop, where customers can bring in items to pawn or sell. The shop will then offer a loan or purchase the item outright, and the customer can either reclaim the thing by repaying the loan or receive cash for the sale.


2. Online Pawn Shop: 

This pawn shop operates primarily online, allowing customers to upload photos of their items for appraisal and to complete transactions remotely. Online pawn shops can offer a more convenient option for customers needing access to a physical pawn shop.


3. Luxury Pawn Shop: 

Luxury pawn shops specialize in high-end jewelry, watches, and designer handbags. These shops typically offer larger loans and may require more stringent authentication procedures to ensure the authenticity of the items.


4. Automobile Pawn Shop:

As the name suggests, automobile pawn shops offer loans on vehicles such as cars, trucks, and motorcycles. These shops may require a vehicle title as collateral and typically provide larger loans than traditional pawn shops.


5. Retail Pawn Shop: 

Retail pawn shops combine the business model with a traditional retail store, offering pawn services and selling new or used items. These shops may sell various products, from jewelry to electronics to sporting equipment.

Remember, as a startup, your goal should be to keep your costs low and depend on your skills. If you push the process and try to go full-service from the very beginning, there is a good possibility that you’ll be overburdened and may get lost in the process.

Pawn Shop

Pros and Cons of a Pawn Shop

Pros of a Pawn Shop include:

  • Offers quick and easy access to cash for customers.
  • Provides a way for customers to access loans without needing good credit.
  • Allows customers to sell unwanted items for cash.
  • Offers a variety of unique and interesting items for sale at discounted prices.

Cons of a Pawn Shop include:

  • High-interest rates and fees for loans can be a burden for customers.
  • The industry can be stigmatized and perceived as shady or untrustworthy.
  • Legal requirements for operating a pawn shop can be strict and complex.
  • Pawn shops can be targets for theft and fraud, which can impact profitability.

How much investment is required for your Pawn Shop

The investment required to start a Pawn Shop Business in the UK & the US can vary depending on many factors, such as the size and location of the company, the type of equipment and supplies needed, and the labor cost.


The average cost to open a small pawn shop in the US ranges from $100K – $250K. While in the UK, the average cost to open a small pawn shop ranges from £50K to £150K.


Some Common Expenses in running a Pawn Shop Business include:


  • Rent or mortgage payments for the building or space
  • Equipment and supplies such as coffee makers, grinders, cups, and utensils
  • Ingredients such as coffee beans, milk, and syrups
  • Employee wages and benefits
  • Insurance
  • Marketing and advertising
  • Maintenance and repairs for equipment and the building
  • Utilities such as electricity, water, and internet
  • Point of sale systems and software
  • Professional services such as accounting and legal fees.
Pawn Shop

How much will you earn in the Pawn Shop?

Estimating earnings in the Pawnshop business with more information about the specific company, such as location, target market, and competition, is easier.


In addition, factors such as overhead costs, sales volume, and pricing will all play a role in determining earnings.


The average US Pawn Shop revenue is around $700K annually, with the average payment in the UK being around £500K per year, with a profit margin of about 5%-20%. 

Seasonal Business:

From late November to early January, the holiday season tends to be a busy time for pawn shops, as people may need quick cash for holiday expenses and may sell pawn items they no longer need.

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Pawn Shop

Checklist of Equipment needed for a Pawn Shop

Here is a quick checklist of equipment and supplies you will need to start a Pawn shop:


  • Cash registers
  • POS system
  • Computers
  • Security cameras
  • Alarms
  • Safe and secure storage units
  • Shelving units and display cases
  • Appraisal tools such as magnifying glasses, scales, and testing kits
  • Office supplies such as pens, paper, and file folders
  • Telephone systems
  • Internet service
  • Furniture for customers and staff
  • Lighting fixtures
  • HVAC system
  • Fire extinguishers
  • First aid kits
  • Cleaning supplies
  • Shipping supplies such as boxes and envelopes
  • Advertising and marketing materials such as banners and flyers
  • Insurance policies for liability, property, and employee coverage.


Note: This list is still ongoing, as you may need additional equipment depending on the specific needs of your coffee shop. It’s essential to consult with professionals to ensure you have everything you need.

A typical day in a pawn shop business involves handling customer transactions, appraising items, managing inventory, performing administrative tasks, ensuring security, and preparing for the next day's business.

Pawn Shop

Types of things you can sell as a Pawn Shop!

There are many different types of things you can sell as a Pawn shop. While there is no limit to the things you can sell as a pawn shop, you can also be more niche oriented depending on your customer and you target market. 


Some of the more popular things which are sold at pawn shops are:


  • Jewelry
  • Watches
  • Precious metals (gold, silver, platinum)
  • Coins
  • Electronics
  • Musical instruments
  • Tools
  • Sporting equipment
  • Video games and consoles
  • DVDs and Blu-rays
  • Cameras
  • Designer handbags
  • Artwork
  • Antiques
  • Collectibles
  • Musical records (vinyl)
  • Laptops and computers
  • Smartphones and tablets
  • Power tools
  • Home appliances
  • Bicycles
  • Musical equipment (amplifiers, microphones, etc.)
  • DVDs and Blu-rays
  • Firearms
  • High-end fashion items

Trends and Challenges in the Pawn Shop Business

Trends in a Pawn Shop Business:

1. Diversifying product offerings to include high-end luxury items
2. Embracing online and digital technologies
3. Implementing sustainable practices
4. Offering flexible payment options
5. Focusing on customer experience and engagement.

Challenges in a Pawn Shop Business

1. Negative stereotypes and perceptions surrounding the pawn shop industry
2. Difficulty in acquiring quality inventory or high-end luxury items
3. Managing risk and minimizing losses due to non-payment or fraud
4. Adapting to changing regulations and legal requirements
5. Competition from other pawn shops

Pawn Shop

Employees to hire for your Pawn Shop

When hiring employees for a Pawn shop business, You should fill several key positions to run the business smoothly. 


Here are some types of people you may want to hire:


  • Pawnbrokers
  • Sales associates
  • Appraisers
  • Customer service representatives
  • Security guards
  • Administrative assistants
  • Marketing specialists
  • IT technicians
  • Accountants
  • Inventory managers
  • Cleaning staff
  • Shipping and receiving specialists
  • Social media managers
  • Website developers
  • Human resources specialists
  • Legal advisors
  • Operations managers
  • Loss prevention specialists
  • Technical support staff
  • Cashiers


Hiring the right people is crucial to the success of your pawn shop. Find employees with a good attitude and a good fit for your business.

TIP: People like coming to clean & hygienic places, keep premises neat & clean. If you are operating from home or counter-selling, make the area clean & safe. Unhygienic products can make your customers fall ill. It will again make you lose your customers.

Pawn Shop

Licences needed for your Pawn Shop 

While the basic licences such as Business Licence, Health and Safety regulation, Sales Tax Permits are applicable to almost all business (To read more about the licences ‘Click Here to read our Mini Guide’). 

Some specific licenses and permits might be needed to open a Pawn shop business in the UK and the US. Those licenses are as follows :



  • Pawnbroker license: 
    Many states require pawnbrokers to be licensed and may have specific requirements for obtaining and maintaining a license.
  • Secondhand dealer permit:
    Some states require a separate permit for businesses that deal in secondhand goods, including pawn shops.




  • Consumer credit license:
    Pawnbrokers in the UK are regulated by the Financial Conduct Authority (FCA) and must obtain a consumer credit license to offer credit to customers.
  • Secondhand dealer license: 
    Pawn shops may need a license to operate as secondhand dealers.
  • Pawnbroker license: 
    Some local jurisdictions may require a separate license specifically for pawnbrokers.



Some tips to help your Pawn shop business grow:

1. Offer quality products
2. Have a unique atmosphere
3. Make use of social media
4. Provide excellent customer service
5. Offer a variety of food and drink options
6. Use technology to your advantage
7. Continuously innovate
8. Partner with local businesses
9. Keep an eye on your competition

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Find a good location for your Pawn Shop

Tips on finding a good location for your Pawn Shop:


  • A location with many people passing by will increase the chances of attracting customers.
  • Look for areas with a diverse population where people may need quick cash.
  • Research the existing pawn shops in the area to see how many are already in operation and how successful they are. 
  • Choose a location that is visible from the road and easy to find. 
  • Check local zoning laws to ensure a pawn shop is allowed. 
  • Pawn shops can be a target for theft. Look for a location with good lighting, security cameras, and alarm systems. 
  • Evaluate the rental or lease agreement before signing it to ensure it is favorable to your business. 
  • Consider locating your pawn shop near businesses that complement your services. 
  • Ensure that the location you choose is easily accessible by car and has ample parking available.
  • Before selecting a location, evaluate the cost of rent and overhead to ensure it is financially feasible for your business.
  • Check the crime rate in the area before selecting a location for your pawn shop. 
  • Look for a location that has room to accommodate growth. 


A good location will determine whether your business will succeed in the future. A perfect place will always bring profits to your business in the future. 

Pawn Shop

Shall I go for a Pawn Shop franchise?

Buying an existing Pawn Shop Franchise of a recognized brand is a good idea; however, it is expensive also.

On the other hand, the franchisor will benefit you will all the existing brand image, customer loyalty, advertising, market research & strategies.

In addition, you will get guidance from the franchisor about training the workforce & ambiance of the premises. 

Some of the top Pawn Shop Franchises in the UK and USA:


  • Cash America Pawn 
  • EZ Pawn
  • Pawn America
  • USA Pawn 
  • National Pawn and Jewelry
  • H&T Pawnbrokers
  • Cash Converters
  • Ramsdens
  • The Money Shop
  • Albermarle Bond


In conclusion, starting a Pawn Shop Business in the UK and the US can be rewarding and profitable.

However, conducting thorough market research, creating a solid business plan, and securing the necessary funding are crucial.

It is crucial to find the right location, choose the right equipment and suppliers, and create a unique and inviting atmosphere for customers.

Following these steps, you can set your pawn shop up for success and build a business that customers will love for years.

Want to Save Time in your Business Launch?

  • How to Create a Business Plan
  • What is Market Research, USP, Niche & Positioning
  • How to find a suitable name for your business
  • How to create your brand image (Logo + Branding)
  • How to Register Your Business
  • How to Register for Taxes
  • How to get Licenses / Permits
  • How to Open a Business Bank Account
  • How to Get Business Insurance
  • Which Payment Processing Terminal (POS) to buy
  • How to get Funds for your Business
  • How to do Sales & Marketing – Offline & Online
  • Why have a Website / Blog / Social Media
  • How to build & train your Dream Team
  • How to provide Excellent Customer Service
  • Buying an Old Business Vs Franchisee Vs Own Brand from Scratch

Handpicked inspirational Youtube videos for you

Hardcore Pawn’s Les Gold Made $925,000 in this deal – YT Channel ‘X – List’

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A. The value of items that customers bring in to pawn will depend on a variety of factors, including the item’s condition, age, rarity, and market demand. It’s important to research the value of the items you plan to accept and use tools such as price guides and online research to help you determine fair prices.

A. Pawn shops typically accept a wide variety of items, including jewelry, watches, electronics, tools, musical instruments, and firearms. You should focus on accepting items that have a strong resale value and that you feel comfortable evaluating and pricing.

A. The legal requirements for starting a pawn shop vary by state and country, but in general, you will need to obtain a pawnbroker’s license, adhere to local zoning laws and regulations, and follow federal and state laws related to financial transactions and reporting.

A. You should have strong security measures in place to prevent theft or robbery, including surveillance cameras, alarm systems, and secure storage for high-value items. You should also have policies in place to limit the amount of cash on hand and to ensure that employees are following proper procedures.

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