You may be considering starting a check cashing company. You can earn big profits if you know how to make it work. The services of a check cashing company are usually available to customers who require speedy access to payroll funds, as banks require at least 2-3 days for cashing checks issued by other banks. When starting a check cashing company apart from cashing checks, you can also offer other products and services such as stamps, money orders, payday loans, transit bus passes, and wire transfers. These help in creating repeat customers and generating additional profit. Many people may find starting a check cashing company more attractive than giving out loans because customers are sure to give you collateral which is their paycheck. However starting a check cashing business can be tricky, therefore you must put in sufficient effort to acquire as much knowledge as you can about how the system works.
When starting a check cashing company. There are rules, regulations as well as federal and local policies that govern such kind of financial businesses. Proper licenses need to be secured as well. When starting a check cashing company make sure you have enough capital and a business plan ready. The business plan should take into account all aspects of starting the business and running it in the long run. You will need to find a suitable location to start the company. This is a high-risk business therefore you should have a security mechanism planned out. Since you will be working with large amounts of cash, your security measures should be impenetrable. For check cashing companies there will always be danger from burglars, therefore security cameras, alarm systems, and protective glasses should be installed. Insuring your business, clients and workers separately will help.
When starting a check cashing company the initial investment will be around $50,000 to $150,000. If you have a good personal credit score, banks will be willing to grant loans. Interested venture capitalists can determine the company’s viability from your business plan. You will require money for buying equipment, paying rent and cashing checks. You will have to pay for utilities and maintenance. Marketing and advertising along with profit sharing or licensing fee will also require money.
Where will your work?
When starting a check cashing company choose a location that is highly visible and near your target market. You will first need to determine who is your target market(who is more likely to use your services), then choose a location convenient to them. Most people use check cashing businesses instead of taking their check to the bank because of convenience and because they need the money quickly. Therefore in order to attract people to your check cashing company you must be in a convenient location. It should have significant drive-by traffic. Ideal locations for starting a check cashing company include areas near shopping centers (not high-end), large employers, pawn shops, convenience stores, or bus stops.
Tips for Starting a Check Cashing Company
Starting this business requires cautious planning. Here are some tips for starting a check cashing company.
- Licences and Permits– When starting this business you need to make sure you have all the necessary licence and permits. Check with your city and state and inquire about the necessary licence and permits to start a check cashing company.
- Insurance– Consider getting Insurance to protect your business in the case an unexpected event should happen. If you will be hiring employees, many states will mandate that you get workers compensation insurance.
- Find a Mentor– Find current or previous owners of check cashing businesses. (Just make sure they don’t see you as competition). They can offer you valuable advice since they have the experience. Learn from the mistakes of others so you don’t have to repeat the same mistakes they did.
- Hire responsible employees– Since your employees will be responsible with handling of money, you should conduct background checks and get references to help you determine if they can be trusted. They should all be honest as well as customer service oriented.
- Post your fees– Many check cashing companies can charge about 1% to 3% of the amount in the check, or they can charge a flat fee. There are state laws that limit how much you can charge so be sure to check with your state.
- Be prepared for a burglary– When starting a check cashing company you should be aware that there are high risks associated with this business. You must protect your business from burglary. Consider purchasing check cashing/ fraud detecting software. Many of your customers will be repeat customers, so become familiar with them. Have a plan of action in the case a burgury does occur. When customers come to cash thier check be sure to ask for proper ID to make sure the check is not stolen.
- Be creative– Consider adding other services or products to your business such as preparing income taxes, selling lottery tickets, stamps, phone cards and money transfers. Try to provide one stop solution for customers.
Advertising a Check Cashing Company
When starting a check cashing company choosing a location will be key. Most of your customers will be walk-by or drive-by traffic. Therefore be sure to have bright and bold signs to get the attention of possible customers. Here are also other forms of advertising for a check cashing company. Test various forms of advertising to see which are the most effective for your business in your location. Keep the advertising methods that are paying off and dump the ones that are not.
- Business Cards– Give out your business cards whenever an opportunity appears. Network as much as possible.
- Flyers– Determine if you can put up flyers in local grocery stores, parks, bakeries, restaurants, community centers, and more. It is best to ask the owner of these businesses for permission first. Also hand out flyers to passer byes on the street.
- Yahoo Local Searches– If you include your business in the Yahoo Local Searches, when people search for your service in your local area your business will appear in the list. To add your business to Yahoo local search, enter the term “add business to yahoo local search” in Yahoo.com and click on the first link.
- Google Local Searches– Google has a local search as well. To add your business to Google local search, enter the term “add business to google search” in Google.com and click on the first link.