This is from 7 years experience running a shop 10 years ago in OK for someone else, so take it for what it is worth:
What pawn software program do you use? Why?
We had a cheap pawn program. It would not be worth consideration today.
What's your percentage mix between retail sales versus pawn charge income?
Probably 20/80. We worked really hard at keeping reliable customers. We had bad ones too (no way to prevent this), but we bent over backwards to ensure people could keep their stuff rather than us sell it.
What's your buy/pawn percentage (do you spend 50 percent as much buying as loaning? 80 percent? 200 percent?)
We usually loaned about 50% of what we expected to be able to sell the item for, in case we ended up with it. Sometimes a little more for good customers, but that tended to be a bad decision. Purchase we would give closer to 60%, as long as it was a fast moving item. We looked at it this way, money loaned brought us 240% APR (set by the state), which is doubling your money every 5 months. The required time to keep something in pawn without an interest payment was 60 days, so that gave us 3 months to sell the item in order to maintain our rate of return.
What's your default rate?
We ended up with about a 20% default rate.
Any tips to reduce defaults?
As long as you get good merchandise you can turn over in around 3 months, defaults are not a problem. In order to reduce defaults, we were very explicit with our default policies and let our customers know that if they contacted us before the due date for an extension, we would go an extra month for the (at the same interest rate). There were occasions we held merchandise for as much as a year without an interest payment, but that was rare and I personally did not care for the practice. I am not found of having someone pay $340 to pick up an item I loaned them $100 on. That is one of the problems of running a shop for someone else.
Any idea what the average length of loan is (how long before its picked up)?
In OK, term of loan is 30 days with another 30 day grace period. The rate is flat for the first 30 days, then prorated per day. So, for a $100 loan, any time within the first month it is $120 to pick it up. Each day after the first 30 is $0.67 per day. The rate is 240% APR for loans under $150. After $150, the APR goes down fast.
What security measures do I need to take (beyond a good alarm system, locks, safe, etc.)
We had a handgun safe and a jewellery safe. We kept money in the jewellery safe as well. Bars for windows and doors. If someone can get in the building and rob you, they will.
What kinds of merchandise do you refuse to deal with (car audio)
Car Audio is definitely one. I would avoid anything you cannot readily test for function. You need to be sure you have a good diamond tester and gold/silver testing chemicals.
What about insurance? Do you carry it on contents?
No.
How do you attract new customers/market your operation?
We advertised in the newspaper and Radio, but things have changed since then.
Any tips/secrets to storage?
Have a lot of shelving and a system for locating something within a 2 ft cube. We had each layer of shelf label alphabetically and then each 2 ft section of shelf labeled numerically. Then we wrote the location of the merchandise on the pawn ticket. You must be meticulous about this or merchandise will get lost. Also, have certain layers of shelving for specific items (i.e. tool boxes on the floor, first shelf TVs, second shelf automotive tools, etc.)
Any great ideas for retail display
This is all up to your budget. For firearms and jewellery you need enclosed counters and a way to lock them. You need a set pattern to where you display like items. Clean and well lit will always get you more retail customers (and better quality customers) than dirty and dark. No surprises here.
For those of you who have started your own shop, what were the first months like? How quickly did the business/loan book grow?
When my dad started his shop, it took about a year before interest income started paying the bills (i.e. building, utilities, payroll). Steady growth was seen for 5 years, then things leveled out with normal ups and downs, and retail business growth after that. He focused heavily on retail with sporting goods, tools, and jewellery. Guns were his best selling merchandise, followed closely by jewellery and tools a distant third. Ammo, clothing, etc after that.
Tell me what you wish someone had told you. Feel free to do it by IM or e-mail if you prefer.
The best advice I every got, and the hardest to stand by, is when someone is across the counter from you, it is always a business transaction. It cannot be done on an emotional level, because 90% of the time, you will get screwed. By the people you
KNOW
won't screw you. It will cost you friendships and family relationships.
Also, go with your instincts. They will lead you wrong some at first, but will get better with time.
Last, if you don't know what something is worth, don't be afraid to research it with the customer standing there, but if you don't know if it works or not, don't take it.
If this is the info you are looking for, and if you have more questions, feel free to IM me. I am in NW AR these days, and my pawn knowledge if mainly from OK, but I'll help any way I can.