A check cashing business is a growing trend in the financial industry. Many Americans may be in need of the service, especially in times of emergencies, sudden calamities or just a rise in sudden unexpected expenses. Payment is secured by using their next paycheck as collateral.
If you want to open a check-cashing business, you have to plan things carefully. There are several factors to consider to ensure you are able to operate and make money. A check cashing business is a lucrative venture, but you need to do it properly and have people you trust to help you.
- Make sure you qualify to operate a check-cashing business. You must personally have excellent credit and are of legal age. You must meet local, state and federal requirements to be issued a business permit and other necessary licenses. You must have the disposition to be able to operate this business. A check cashing business is considered a high-risk business because of the risk of robbery and imminent threat to security. You need to have enough know how to understand the operations of the business and enough money to start the venture.
- The most important step in starting a check cashing business is to generate capital. You will need money to lease a business space, buy equipment, install security features in your store and money to cash the checks. If you decide to take over an existing operation, you will need money to buy the business. You also need enough capital for your operating expenses the first few months of your business. Consider tapping into your savings, investments or getting a variety of loans to raise capital. Depending on where you live and the size of your business, you will need at least anywhere between $50,000 to $150,000 to get started.
- Determine if you want to get a franchise or start your own business. It will be more expensive to buy a franchise although you will have the benefit of an established brand. This will affect your start up capital and perhaps your eventual success in the business.
- Apply for the necessary permit and licenses. Requirements vary per state so check with your local authorities. You may also need permits from your city and county.
- Understand federal usury laws and other legal technicalities regarding your business. Make sure you comply with state and federal regulations.
- Look for a business space. There should be heavy foot traffic and ample parking space. Strip malls or space near grocery and convenience stores are popular locations. When you have secured your location, install the proper security measures for your safety such as alarms, a safe, security cameras, and bulletproof glass or security bars to protect your personnel. You must also have check scanning capability in your location. A popular service is TeleCheck.
- Hire the right personnel. You must be diligent in your hiring process. Do thorough background checks of the people you want to hire. Include a credit check, since they are going to be handling money. Make sure there are no prior arrests or convictions, especially relating to money. Interview the applicants extensively. You need to find honest and trust worthy employees to make sure you are not robbed.
A check cashing service is an important business with great demand. Operate a reputable business in the community and you will be successful in it. Good luck!