Shop Talk: Gold’s Seven-Straight Weekly Loss

May 17, 2013 by

According to a CNBC video report released today, gold is experiencing a seven-straight weekly loss (the longest losing streak in four years) at a drop of almost five percent.

In contrast, a recent article by Frank Holmes, chief executive officer and chief investment officer of US Global Investors, Inc., promotes having a positive outlook for gold. Holmes explains how “the price of gold moves in near-lockstep to each increase of the Fed’s balance sheet,” and that since the Federal Reserve is printing more and more dollars, the price of gold is likely to move along with it, as it has historically.

Gold’s ability to recover sooner rather than later may be debatable, but one thing is for certain: The precious metal promises to remain a hot topic for a very, very long time.

Click here to read the Holmes article in full.

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Selling a Pawn Shop Isn’t Like Selling Just Any Small Business

May 8, 2013 by

sg14098sdkJust about every book or article on how to sell a business advises business owners to do things like search the Internet for buyers and market their businesses online. This might be good advice for the majority of small business owners, but it’s not good advice for independent pawn shop owners.

If you’re an independent pawn shop owner and you’re not passing your pawn shop or shops down to the next generation or selling out to a partner, your best (and perhaps only) buyer is probably going to be one of the major pawn companies. If you want to sell your pawn shop for top dollar, the last thing you want to do is look up these companies, give them a call, and ask them what they will pay you for your business. Go this route, and you will practically guarantee that you do not sell your pawn shop for anything near what it’s actually worth.

The major pawn companies have been buying independent pawn shops for years, and have gotten very good at it! They have put tools, resources, and processes in place to help them get the most out of each new acquisition. If you don’t have a team on your side that has its own tools, resources, and processes in place, you can quickly find yourself woefully underprepared for what these buyers present to you and ask of you in an effort to drive down your selling price.

Unfortunately, even if all of your financials are in order and you have a solid understanding of your business’s advantages and disadvantages, it can be very hard to combat the analyses that the major pawn companies are able to perform. You need objective pawn shop exit strategy consultants to compile and analyze all of your pawn business’s unique characteristics, combine the information with relevant pawn market information—while keeping in mind the overall economic climate, and then present all of the data in a way that buyers can’t dismiss. Go this route, and you will practically guarantee that you will sell your pawn shop at the best possible price.

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Shop Talk: Delaware 11th State to Require Pawn Shops to Photograph Jewelry?

May 3, 2013 by

sg23409dv01On April 29, 2013, Newsworks.com reported that Delaware could become the 11th state in the country to require pawn shops and secondhand dealers to take photographs of all of the jewelry they buy. If the proposed bill goes through, pawn shop owners and secondhand dealers will be required to keep photos of all of the jewelry they accept or purchase in their records for one year.

This new legislation could come through on the heels of other legislation that requires the mandatory reporting of lost or stolen firearms in Delaware. Senate Bill 16, according to another Newsworks.com article published on May 3, 2013, states that all gun owners (including pawn shop owners), “have one week to notify police; the seven-day clock, however, starts running when the gun owner discovers the weapons are missing.” Per the article, the bill passed by a single vote and now moves to the House.

For pawn shops, there are advantages and disadvantages to both pieces legislation.

On the upside, taking photos in order to help prevent theft and help jewelry owners recover stolen property is good for communities and helps improve the image of pawn shops. On the downside, having to take photos on top of recording and keeping detailed written records of all jewelry transactions could present yet another barrier to successfully completing transactions. Customers would have more time to change their minds; pawn shop owners may decide to forego smaller transactions just because they don’t want to go through all of the red tape.

When it comes to the lost or stolen firearm legislation, in theory, pawn shop owners will be able to find out much sooner that a firearm was stolen if people have fewer days to report lost or stolen firearms. This should logically lead to fewer purchases of stolen firearms, which would be good for everybody. However, one has to question whether the legislation will really make that big a difference. After all, no one can ever really know exactly when a firearm owner actually noticed a piece was missing but the firearm owner.

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Are You Lowering the Price of Your Pawn Shop—Again?

May 1, 2013 by

sg2309ucx4It is considerably more stressful and time-consuming to try to sell an item when you don’t know what it’s really worth. As a pawn shop owner, you know this, having experienced trying to get rid of an item on your shelf that is of indistinct value. What happens? You either wait around and hope that the right customer eventually comes through your door, or keep lowering the sticker price until the item finally moves.

The same sort of thing can happen when you put your pawn shop on the market without knowing what it’s really worth. You can hope that the right buyer will come along and meet your asking price, but over time, chances are you’ll find yourself lowering your price again and again until you eventually close the sale.

In a paper put forth by the US Small Business Administration, business valuation expert John A. Johansen explains, “All too often, sellers arbitrarily decide on a price for their company and then go to the expense and effort of developing prospective buyers, only to be unable to strike a deal. It is only after repeatedly lowering the price that they learn what their business is really worth.” He continues, “A professionally prepared appraisal eliminates this problem.”

If you don’t want to wait and see if you’re going to have to keep lowering the price of your pawn business again and again, contact Stallcup Group. You should never be in the position of waiting for a buyer to bite—and at the wrong low price! Stallcup Group’s exit strategy specialists can proactively seek out the right buyers and ensure that you never have to play the wait-and-see game.

To learn why it is important to obtain your pawn business appraisal, or valuation, from experienced pawn shop exit strategy consultants rather than from business brokers with little or no experience working within the pawn industry, see last week’s blog post.

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Putting a Price on Your Pawn Shop

April 24, 2013 by

sg2309dsdl9A price that’s too high will make buyers think that you don’t understand the market and are overvaluing your pawn shop. A price that’s too low is bad because, well, it will most certainly result in a lower payoff than you deserve! Arbitrarily deciding on a price that’s somewhere in-between your highest imaginable price and lowest imaginable price isn’t a good idea either because it’s not a compromise based on facts; it’s guesswork.

How, exactly, is a hard-working pawn broker supposed to come up with the right price for his or her pawn shop?

There are many, many things that go into determining what price you should put on your pawn shop or shops, which is precisely why you need as much support as you can get when you’re planning or ready to sell.

Lenora Chu, a CNNMoney.com contributing writer, suggested in a 2009 article on pricing small businesses, “If you’re serious about selling, the best first step is to consult with a business broker or investment bank to evaluate the specifics of your business and determine an appropriate multiplier.” For most small business owners, this would be perfect advice, but if you’re an independent pawn shop owner, you’re probably going to need the assistance of professionals who use a financial methodology designed specifically for pawn shops in order to come up with the right selling price. Exit strategy consultants like those at Stallcup Group have a proven financial methodology in place that enables them to valuate pawn businesses appropriately.

In addition to providing you with a pawn business evaluation that reflects the true value of your shop based on your financials, tangible and intangible assets, and a number of other factors, pawn shop exit strategy consultants can help you develop an entire sales and marketing strategy that will allow you to locate the right buyers and put the right information in front of those buyers. They can also help you navigate through every step of the negotiations and selling/closing processes.

While you can certainly come up with a price for your pawn shop on your own, it’s not advisable. Your price isn’t just a dollar amount, but a reflection of your entire sales strategy. Going into buyer negotiations with the wrong price can be catastrophic. It’s an exit strategy consultant’s job to make sure that you go into negotiations with the right price and walk out with the best possible price you could get.

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Shop Talk: Can You Use Your Shop to Dip into Other Markets?

April 19, 2013 by

sg2349ujlk3On April 12, 2013, Sun Star Davao reported, “The Cebuana Lhuillier Insurance Solutions (Clis), the insurance arm of pawnshop chain Cebuana Lhuillier, launched on Thursday its latest product to offer a more affordable compulsory third party liability (CTPL) insurance to vehicle owners.”

In case you haven’t heard of Cebuana Lhuillier, it’s the largest pawn shop chain operating in the Philippines. According to the company website, Cebuana Lhuillier has branches all across the country, some of which serve more than 30,000 customers daily.

The Sun Star Davao article explains that Cebuana Lhuillier wants to be much more than a pawn organization. Expanding Clis by offering more affordable insurance options is a way for the company “to become a total micro finance solution center other than being a pawning and remittance outlet,” the article states.

Obviously, moving into the insurance sector may not be in the cards for a lot of pawn shop owners, but Cebuana Lhuillier’s approach to pawnbroking and expansion has to make pawn brokers everywhere wonder what unique or out-of-the-box business ventures they might be able to engage in through pawnbroking.

Click here to read the Sun Star Davao article in full.

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Arm Yourself with Pawn Shop Business Selling Knowledge

April 17, 2013 by

sg2304v98ajIt is now more important than ever for pawn shop owners to arm themselves with selling/closing knowledge.

Most pawn shop owners don’t put a lot of thought into selling their businesses when they’re just starting out. Nevertheless, a pawn shop’s typical business cycle and the rate at which the major pawn companies are buying independent pawn shops show us that most pawn shop owners will sell—perhaps sooner than they might have originally predicted.

If you’re a pawn shop owner, whether you’re planning on embarking on a new business venture, reorganizing your capital structure, or hoping to retire, you should know exactly where you stand as a potential business seller at all times. If and when the right opportunity to sell comes along, knowing precisely what you want and need and where you stand in the current marketplace will prepare you to do everything you’ll need to do to get the highest possible return on your investment and honor all of the hard work you’ve put into your pawn business.

Below are some questions that you should be able to answer long before you actually engage in the selling/closing process.

  • Why are you selling?
  • What physical and intangible assets are you selling?
  • Is it the right time to sell?
  • Do you have to sell?
  • What is your pawn business worth to you?
  • What is it worth according to your objective pawn valuation?
  • What is it worth to a potential buyer?
  • Is your business ready to be sold?
  • Does the way your business looks appropriately reflect its value, or could/should it look better?
  • Are your financial and other records up to date?
  • Can you account for every piece of inventory?
  • Are all of your agreements and licenses current?

Finally, the most important question you need to ask and answer is: Do you have the right pawn shop exit strategy consultant to assist you throughout the selling/closing process?

Even if you’re not thinking of selling your pawn business any time soon, there is no time like the present to prepare to sell. The one certainty in life is that nothing is certain. You never know when the opportunity to sell might come along. When it does, you’ll be much more likely to make the right decisions if you’ve done yourself the service of arming yourself with selling/closing knowledge ahead of time.

Click here to review Stallcup Group’s sales preparation checklist.

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Shop Talk: New Proposed Meltdown Regulations for Pawn Brokers, Secondhand Jewelers

April 12, 2013 by

sg23490ibqPawn Times reported yesterday that a bill that proposed that pawn shops and resellers of precious metals wait 30 or 60 days before melting down any jewelry was amended after business owners complained to a rep at the House of Representatives. According to Pawn Times, the bill now proposes that pawnbrokers and secondhand jewelers wait 10 or 15 days, depending on their participation in a data collection program.

In related news, a March 30, 2013 article by Mike Shedlock on TownhallFinance.com reveals that another bill that might be of particular interest to pawn brokers is scheduled to be voted on soon. Explains Shedlock, “The bill, which advanced in a 4-2 vote by a House committee Monday, states that gold and silver should be legal currency not subject to tax or regulation as property.” He continues, “The Republican-led Senate gave the bill its blessing in February in a 17-11 partisan vote.” Democrats are opposed.

To read the full Pawn Times article, click here.

To read the full TownhallFinance.com article, click here.

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Do I Really Need an Entire Year to Prepare to Sell My Pawn Shop?

April 10, 2013 by

sg3409up3qWhen pawn shop owners want or need to sell their shops right away, they quickly learn that selling is not just a matter of putting their pawn businesses on the market, calling up potential buyers, and waiting for the bids to come in. It typically takes a lot of preparation.

In a February 2013 Entrepreneur article, Brad Sugars, founder and chairman of ActionCoach, states, “If you’re looking to sell right away, you probably won’t get full value, as it takes a good year of preparation to sell before you actually put your company on the market.”

At Stallcup Group, we agree with Sugars’ statement—so long as it applies to business owners who are attempting to sell in the absence of solid representation.

When you have the right representation; that is, when you have the right exit strategy specialists in your corner, it doesn’t have to take an entire year or more for you to sell your pawn shop or shops. Perhaps more importantly, you don’t have to prepare to sell for an entire year or more prior to putting your pawn business on the market only to achieve a selling price that is unimpressive or doesn’t reflect the true value of your business.

Experienced pawn shop exit strategy consultants can help you get the highest possible return on your investment in your pawn business by accurately identifying its value and creating and implementing a plan of action that will enable you to increase your business’s value prior to reaching out to buyers—and do it quickly.

If you’ve been considering selling your pawn business, but aren’t sure how to go about selecting the right representation to help you do it, Stallcup Group suggests you start by asking your potential exit strategy consultant the six questions below.

  1. What information do your pawn business valuations typically contain?
  2. Are you able to determine not just how much my pawn shop is worth now, but to forecast what it might be worth to a buyer after the buyer takes over?
  3. How do you obtain, manage, and turn complex financial data and licenses and agreements into actionable information?
  4. How can you drive value to my pawn shop or shops?
  5. What are your established business marketing and selling/closing processes?
  6. How will working with you help me get a higher return on investment in my business than I would get if I were to sell my business on my own?

If your goal is to sell quickly and at a price that reflects your pawn business’s true value, partnering with the right exit strategy consultant is going to be paramount. The six questions above should help you determine whether or not your potential exit strategy consultant has got the right stuff.

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