“The most successful exits require considerable planning. The sooner you start, the more rewarding your eventual exit is likely to be. In fact, you already may have started planning without even realizing it. Many of the steps involved — including creating an independent board, upgrading financial reporting systems and controls, exploring growth through internal operations, and fine-tuning your company’s strategy — are the same ones required to build a successful company.”
–Inc. Magazine, October 2010
Although the above advice from Inc. Magazine was published in 2010, as we move into 2013, the advice is still worth taking. Consider it “evergreen” advice—advice that will always be true, no matter how the economy or pawn market fluctuates.
Ideally, you should develop your pawn business’s exit strategy at the start of your business, incorporate it into your initial business plan, and tweak it appropriately as your business grows and develops. At Stallcup Group, we continually encourage pawn business owners to prepare to sell their businesses now, whether they anticipate selling five, ten, or thirty years down the road. Why? We believe that making a graceful exit is a big part of being successful in business. A disappointing exit is one that doesn’t honor what you’ve invested monetarily, professionally, and personally. It diminishes the successes you’ve had as a business owner, and doesn’t satisfy your future needs. An exit that honors your hard work and what you’ve been able to accomplish is one that prepares you for the future, whether the future includes reorganizing your capital structure, launching a new business, or preparing for retirement.
In reality, when pawn business owners are trying to get their new businesses off of the ground, and later, are busy maintaining and operating their established businesses, developing an exit strategy is often low on the priority list. Fortunately, if you don’t have an exit strategy in place and it does become apparent that it may be in your best interest sell, there are still things you can do to ensure that you don’t undersell your business. Three of the most important things you can do are:
1. Refrain from reaching out to potential buyers without adequate representation.
It can be tempting to reach out to potential buyers, including the major pawn companies, and attempt to obtain fast quotes. This is not in your best interest! Buyers have their own interests and agendas. You can’t rely on them to tell you what your pawn business is worth—and you most definitely shouldn’t base your decision to sell or not to sell based on what a potential buyer is able or willing to offer before you both know your business’s true value.
2. Get your finances in order.
Even if you’ve been keeping good financial records, preparing your financial records for review by outsiders is a good idea if you’re hoping to sell. Depending on the structure and size of your pawn business, you may or may not need the help of an outside accountant to help you prepare your financial statements for review. What financial statements do you need? You need a balance sheet that reflects your assets (what you own) and liabilities (what you owe), a profit and loss statement that reflects how your pawn business has performed over a significant period of time (at least 12 months, in most cases), and a statement of cash flows that reflects the monies that pass in and out of your business.
3. Obtain adequate representation.
Contact Stallcup Group for a free business evaluation. We will help you determine whether or not it is in your best interest to sell, what it will take to help you package and market your shop or shops to potential buyers, determine what makes your pawn business a promising buy, identify potential hurdles, and perform a preliminary valuation of your business. If it is in your best interest to move forward with the sale of your business, Stallcup Group will perform an in-depth analysis of your business using a proven financial methodology that will help you see your business through the eyes of potential buyers. We will then market your business to appropriate buyers and walk you through every step of the closing process.
While developing an exit strategy at the start of your business is ideal, the absence of a solid exit strategy is no reason to simply sell your pawn business to the highest bidder without making a concerted effort to uncover what your business is actually worth. In order to launch your business, you had to take ownership and control of it. Don’t give up ownership and control when it’s time to sell your business. Instead, own the selling/closing process by making sure that you have the representation you need long before you reach out to any potential buyer.