• High profit margins – Pawn shops can make high profits on the items they sell. This is because pawn shop owners are able to purchase goods at a fraction of their retail value and resell them for much higher prices.
• Low overhead costs – Pawn shops typically require minimal overhead costs and have few expenses, making them a great option those looking to start a business with low capital.
• Fast cash – Since pawn shop owners are able to purchase items quickly, they are often able to turn around profits in a short period of time.
• High risks – Pawn shops are considered high-risk businesses because of the potential for theft and fraud.
• Strict regulations – There are many state and federal regulations that pawn shop owners must abide by, which can be difficult to keep up with.
• Reputation issues – Pawn shops often have a negative reputation due to their association with the buying and selling of stolen goods. As a result, it can be difficult to attract customers who are not looking for second-hand items.
• Limited customer base – Pawn shops typically only serve a small subset of the population, which limits their potential customer base. This can make it difficult to generate enough sales to cover expenses and turn a profit.