As my name suggests, I am starting my own pawn shop business. It's the only thing that I've ever done, and after getting an offer from a friend, I decided to go off on my own. I had a great job as an executive level employee with a growing company, and it would have rewarded me very well eventually. But I felt that I was one of only a couple of people with enough knowledge about every aspect of the business to be able to do it all. So when a friend offered to invest capital and help with securing a loan, I quit my job and began putting together a business plan.
My partner allowed me 50% ownership without investing any capital, while he invested $300k in cash and co-signed on the loan for an additional $300k. I put together a projected P&L, balance sheet, and cash flow, designed the layout, got in-fill estimates, obtained the loan, and we're about to sign the lease. Now I'm really looking forward to the fun part.
As I stated, I have about 10 years experience in this field. My last job consisted of handling store acquisitions for my company, which allowed me to learn even more about the right and wrong ways to go about running a pawn shop by seeing how other pawn shops were run by their previous owners. So coming into this, I feel more prepared than someone who has worked in a single store, and not been exposed to different ways to go about running this type of business.
My focus is on having very nice, clean, well merchandised stores, and focusing on customer service and sales. The stores' focus will be on jewelry and firearms, while also dealing in the other common merchandise such as electronics, tools, and musical instruments. We will not handle porn, cigarettes, novelty nick-nacks, or antique merchandise. We will also do no loans other than pawn loans. Payday and title loans get people into a never ending cycle of debt that they have no way out of.
Our forms of revenue will be retail sales, precious metal recycling, and pawn service charges. Having worked with P&L's for many different size stores, all operated in different ways before being purchased by us, I have a good understanding of income to expense ratios, profit margins, etc. Well-run stores the size of our first location are capable of just over $1 million EBITDA per year once established. Stores half the size of our first store, and located in small towns, are still capable of $300k-$400k EBITDA.
Our growth plan is to focus on making stores self sufficient as soon as possible, and then continuing on to open an additional store. Most pawn shops never grow past a single store because the owner doesn't know how to put systems in place to allow the store to function without him/her there constantly. Beginning with our first store, we will design and operate stores to function without an owner as soon as possible. I'm still not sure exactly how fast we'll be able to grow, and growth will obviously be slowest at the beginning. I hope to be opening my 4th store 5 years from now. Having a capable partner should help make this possible. My hope is that in 5 years my 50% ownership of the company will be worth around $1.8 million total in after tax owner distributions and equity.
I know that this isn't a "turn a hundred dollar bill into a million dollars in a year" kind of plan, but it's realistic, sustainable, and will provide real tangible equity along with good cash flow. With 25 stores (our current goal) we could see around $13 million a year EBITDA and have around $19 million in non-depreciating tangible equity not including any property/buildings.
I plan on staying on this site and updating as things progress. If anyone has any questions though please feel free to ask. I hope I can answer most any question pertaining to this plan, as I don't believe there is anything that I haven't already thought about and planned out. Obviously any pawn shop specific questions that people have are welcome, as I know many people have preconceived notions and opinions about pawn shops.
My partner allowed me 50% ownership without investing any capital, while he invested $300k in cash and co-signed on the loan for an additional $300k. I put together a projected P&L, balance sheet, and cash flow, designed the layout, got in-fill estimates, obtained the loan, and we're about to sign the lease. Now I'm really looking forward to the fun part.
As I stated, I have about 10 years experience in this field. My last job consisted of handling store acquisitions for my company, which allowed me to learn even more about the right and wrong ways to go about running a pawn shop by seeing how other pawn shops were run by their previous owners. So coming into this, I feel more prepared than someone who has worked in a single store, and not been exposed to different ways to go about running this type of business.
My focus is on having very nice, clean, well merchandised stores, and focusing on customer service and sales. The stores' focus will be on jewelry and firearms, while also dealing in the other common merchandise such as electronics, tools, and musical instruments. We will not handle porn, cigarettes, novelty nick-nacks, or antique merchandise. We will also do no loans other than pawn loans. Payday and title loans get people into a never ending cycle of debt that they have no way out of.
Our forms of revenue will be retail sales, precious metal recycling, and pawn service charges. Having worked with P&L's for many different size stores, all operated in different ways before being purchased by us, I have a good understanding of income to expense ratios, profit margins, etc. Well-run stores the size of our first location are capable of just over $1 million EBITDA per year once established. Stores half the size of our first store, and located in small towns, are still capable of $300k-$400k EBITDA.
Our growth plan is to focus on making stores self sufficient as soon as possible, and then continuing on to open an additional store. Most pawn shops never grow past a single store because the owner doesn't know how to put systems in place to allow the store to function without him/her there constantly. Beginning with our first store, we will design and operate stores to function without an owner as soon as possible. I'm still not sure exactly how fast we'll be able to grow, and growth will obviously be slowest at the beginning. I hope to be opening my 4th store 5 years from now. Having a capable partner should help make this possible. My hope is that in 5 years my 50% ownership of the company will be worth around $1.8 million total in after tax owner distributions and equity.
I know that this isn't a "turn a hundred dollar bill into a million dollars in a year" kind of plan, but it's realistic, sustainable, and will provide real tangible equity along with good cash flow. With 25 stores (our current goal) we could see around $13 million a year EBITDA and have around $19 million in non-depreciating tangible equity not including any property/buildings.
I plan on staying on this site and updating as things progress. If anyone has any questions though please feel free to ask. I hope I can answer most any question pertaining to this plan, as I don't believe there is anything that I haven't already thought about and planned out. Obviously any pawn shop specific questions that people have are welcome, as I know many people have preconceived notions and opinions about pawn shops.
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