Statement of Purpose: This business plan will offer a general outline highlighting key details for opening Kyle's Killer Pawn Shop as well as providing a basic operational guide for running the day-to-day business activity.
I. THE BUSINESS Description of Business: Kyle's Killer Pawn Shop will be a local pawn shop that serves the loan and retail needs of the community. Consumers will be able to secure reasonable loans by offering collateral (in the form of their own personal goods) for the loan. The pawn shop and borrower will establish a contract outlining the time frame in which the borrower must repay the loan in full. Once the borrower repays the loan, the pawn shop will return the collateral. If the borrower fails to repay the loan by the specified date, he/she will forfeit the collateral to the pawn shop. Kyle's Killer Pawn Shop will offer all forfeited items to the general public for resale.
The Market: Our business seeks to provide services and goods to consumers who need collateral based loans and whose needs and wants are satisfied through the consumption of used goods. People commonly come under financial hardships and need other alternatives besides banks to secure short-terms loans. By taking out loans with a local pawn shop, the consumer bypasses the need for credit, and their credit history remains unaffected by the loan since it is based upon collateral. People of lower income levels also a selection of used goods to satisfy their needs and wants. Consumers who do business with pawns shops tend to come from a particular demographic. Most of the consumers are male. 55% of all consumers who actively borrow are male, and 63.1% of all consumers who shop are male as well. In terms of age, most consumers belong to the 25-34 age bracket (38.4%) and the 35-44 age bracket (31.6%). In terms of education, consumers mostly have either a High school diploma (26.9%) or college education (26.6%). Most consumers also tend to be married (43.6%). In terms of race, most consumer are either white (48.3%) or black (44.6%). In terms of economics, most consumers are employed, and 30.4% make between $25,000-49,999. However, it is important to note that 23% make between $15,000-24,999 and 21% make between $5,000-14,999.
With all of this in mind, I believe that the amount of consumers who will be interested in doing business with Kyle's Killer Pawn Shop will be around 2,000-5,000 people. Because our pawn shop is the only place that serves the needs of the local community, we will for the most part control the entire share of the pawning market. To expand our customer base, we will continually aim to improve the quality of the shopping experience, use effective advertising, and strive to guarantee customer satisfaction.
The types of personal goods we will accept as collateral are broad, so our business model offers an extensive selection of goods at a range of prices. To calculate the price of goods, we must take into consideration the loan amount. Ideally speaking, we anticipate to sell all goods at a price around 250% of the loan amount. With this in mind, customers will find an array of products ranging from $5 to over $1,000.
Competition: Kyle's Killer Pawn Shop does not face serious competition within Howland, but there are pawnshops outside of town that could pose some competition to our business. The five closest pawn shops are Larry's Super Pawn (10 miles), Cashland (3.8), Pawn World (16 miles), Austintown Pawn (14 miles), and Boardman Coin, Jewelry, and Estate Buyer (18 miles). Apart from Larry's Super Pawn, none of these businesses pose a serious threat to our market share. We are confident in our ability to provide a superior customer experience over Larry's Super Pawn because our store is located in a better area of town, will provide a quality selection of goods, and will offer superior loan agreements.
Location of Business: Kyle's Killer Pawn Shop will be located in the main plaza at Howland Corners. Consumer are commonly drawn to this location as it is a high traffic area. Likewise, it is on a good side of town and situated near other popular shopping areas. Consumers will not be able to access the store through public transportation, but there is an abundance of free parking nearby.
Management: As the owner, I will appoint two supervisors to lead the management team: one supervisor will work the morning shift, and the other supervisor will work the afternoon shift. They will each be paid a salary of $30,000 per year.
To hire an effective manager, I will ensure that they possess certain qualities, including the ability to communicate effectively, to set and achieve goals, to collaborate well with others, to lead by example, to delegate work wisely, to problem-solve difficult situations, and to be consistent in their work. They must also possess past managerial experience in either retail or loan services, or have other equivalent experience.
Both supervisors will take on extensive duties and responsibilities, including oversight of day-to-day activities, scheduling, employee staffing, advertising and marketing, employee training and development, ensuring a safe and clean work environment, establishing strategic goals, maintaining quality services, providing job counseling and discipline, among many others things.
Personnel: I will hire at least 4 additional employees to ensure that the business operations are carried out successfully. They must have retail experience and good communication skills. These employees will be hired full time and will receive a base pay of $10 per hour with the opportunity to earn future raises. Some employees will assist with sales while others will take on other tasks in inventory and estimations for pawns.
II. Operational Costs Capital Goods: To open for business, we will need to purchase a great deal of capital goods to create an inviting showroom. Below is a list of capital goods needed to open for business:
III. Financing Proposal Based upon the total costs of overhead and capital goods, I estimate that I will need at least $150,000 to open Kyle's Killer Pawn Shop and to cover overhead costs for a couple months until the business becomes profitable. To raise the necessary funds, I will seek to secure a business loan from a local bank.