Marketing a Pawn Shop to Multiple Buyers

sg234098lrSelling a pawn shop requires committing to taking on a considerable number of challenging and time-consuming tasks, not the least of which include pricing the pawn shop, marketing it to the right buyers, managing negotiations, and being responsible for the terms outlined in contracts or agreements.

Which task takes the greatest amount of effort to perform depends on the unique attributes and challenges of a particular pawn business, but one thing that’s true for almost all pawn shop owners/sellers across the board is that they don’t anticipate how much effort it takes to properly market a pawn business to potential buyers.

If you’re marketing your business to one or more of the major pawn companies, you’re going to want to show them that your pawn business is scalable; in other words, you’re going to want to prove that your business can grow—not just now, while it’s still yours, but in the future, once the buyer takes over. This can take a lot of time to do, and can be almost impossible to do well if you don’t have firsthand knowledge of the major pawn companies’ inner workings. It’s one thing to make cash flow valuations based on your records; it’s quite another to try and prepare cash flow projections for a monster like EZPAWN or Cash America.

You should also keep in mind that although it’s almost always better to market your pawn business to multiple buyers, dealing with multiple buyers takes a lot of work. It can be all too easy to become so busy responding to buyers’ requests and inquiries that, before you know it, you’re caught up in multiple buying strategies and forking over your selling power left and right. When this happens, numbers start trending downwards. On top of that, the current business suffers. Many pawn shop owners who sell their shops on their own wind up struggling to remain profitable, or even just to keep their businesses manageable, during the marketing and selling/closing processes. Their focus is simply too split to manage both their dealings with multiple buyers and their pawn businesses well.

Pawn shop owners can make things much easier on themselves by enlisting the help of experienced pawn shop exit strategy consultants. While owners may be tempted to think, Why should I pay anything out to a consultant when I am a savvy business owner and capable negotiator, and could keep all the money for myself?, the reality is that exit strategy professionals, in addition to taking the bulk of the tasks associated with marketing pawn shops off of owners’ plates, 9.9 times out of 10, will get owners far more for their pawn businesses than they ever would have gotten on their own.

Five Questions Pawn Shop Buyers Want Answered

sg139048la3Pawn shop buyers look at your business as an investment. They want to know not just what your business is worth to you, but what it will be worth once they take over.

To sell your pawn shop at a price that reflects not only what your business is worth now, but what it will be once a buyer implements new operations, you have to be able to provide pawn shop buyers with information that will make clear exactly how their investment will pay off in both the short and long term.

What does a pawn shop buyer want to know?

Five of the most common questions pawn shop buyers ask are:

  1. How will implementing my operations improve performance and increase sales?
  2. How will my approach to outdoing nearby or local competitors increase profitability?
  3. Why will purchasing this particular pawn shop be to my advantage, considering the current market landscape?
  4. What licenses and agreements does this pawn shop have (or not have) in place that will present me with more (or fewer) opportunities right out of the gate than I might be able to find in another pawn shop acquisition?
  5. What will my profit margins be three, six, nine, and twelve months down the road? What are they likely to be in the long term?

Answering these types of questions isn’t easy for any busy pawn shop owner. An exit strategy consultant with experience in the pawn industry can help you respond to pawn shop buyer questions that require research, study, and analysis to answer. If spending a significant amount of time providing complex answers to pawn shop buyers’ questions is something you can’t afford to do, the pawn shop exit strategy consultants at Stallcup Group can provide you with the support you need to remain profitable throughout the selling/closing process.

For a comprehensive pawn shop sales preparation checklist, click here.

Passing Your Pawn Business Down to the Next Generation Not an Option?

It happens all the time: Independent pawn shop owners grow their businesses in the hopes of passing them down to their children and creating revenue streams for generations to come. Eventually, they come to the realization that, uh-oh, the second generation doesn’t want to enter into the pawn industry. They begin to look at their options, and realize that they’re not quite sure how to exit their businesses gracefully—and profitably.

When you’ve been thinking that you’d hand off your pawn business to your children or other family members rather it than sell to an outsider, it can be difficult to suddenly shift gears and re-groom your business to make it appealing to outside buyers. Outside buyers don’t really care what systems and procedures have worked for you over the years; they care about what they are going to be able to do with your business and how profitable it will be once they take over.

Are you concerned that you’ll be unprepared to sell to outside buyers when the time comes? Want to know what you should be doing now to make your pawn business more appealing to buyers down the road?

Most pawn brokers need help analyzing their financial data and finding ways to eliminate anything that might look like a red flag to a buyer. Many also need help aligning their personal goals, whether they want to make a lifestyle change or other transition, with their business goals, financial realities, and the current marketplace. Others need help with developing in-depth exit strategies that include plans to gain certain licenses or permits or ways to diversify inventory—things that will make their businesses more profitable and appealing to outside buyers over time.

To determine what you should be doing to prepare to sell to outside buyers, work with an exit strategy consultant that has experience in the pawn industry. Exit strategy specialists that have a track record of successfully facilitating the sale of independent pawn businesses can provide you with an objective point of view and enable you to identify and eliminate potential roadblocks with greater ease.

The key to getting the most out of the sale of your pawn business is having the right exit strategy in place. Without the right exit strategy, you could miss out on an enormous amount of capital and other benefits that you might have been able to gain had you known how to bring out the value in your business, present your business to buyers, and sell your business for a price that reflects its true value.

 

Does Your Business Broker Know the Pawn Industry Inside and Out?

Last week, in our blog post, “Need Help Selling Your Pawn Shop?  Watch Out for Exit Strategy Consultants Who Don’t Put You First,” we discussed the importance of working with exit strategy specialists who put your interests above the interests of buyers.  This week, we’d like to discuss the importance of working with exit strategy specialists who not only put your interests first, but are specialized.

As an independent pawn shop owner, you know that your processes are significantly more complex than, say, the processes involved in running a doughnut shop, clothing store, or a even an auto mechanics shop.  Zoning and other regulations and the licenses you need to run your pawn business also tend to be more complex than those of other businesses, even when those businesses are similar in size or have similar profit margins.

Unfortunately, many pawn shop owners who are ready to sell reach out to “catch-all” companies that claim they have the expertise to sell almost any kind of business—including independent pawn shops.  This is almost always a mistake.

Time and time again, the Stallcup Group team has heard the same story from pawn shop owners who’ve worked with “catch-all” companies to try and sell their pawn businesses.  It goes like this:  The pawn shop owner gets tired of trying to teach the pawn business to a consultant that is supposed to have the expertise required to sell their pawn business, but in reality, knows very little about what makes pawn shops tick.  Time, resources, and money are wasted as a result of working with a business broker that doesn’t have a thorough understanding of the pawn industry—much less an understanding of what it takes to market an independent pawn business to buyers.  Eventually, the owner ends the relationship with the “catch-all” business broker and turns to Stallcup Group for assistance.

The moral of the story is that if you’re considering selling your independent pawn business, you need to work with pawn shop exit strategy specialists who are knowledgeable when it comes to selling pawn shops—not flower shops and restaurants.  Pawn shops are different animals; in order to sell them at the price you deserve, you need a business broker that knows how the major companies operate and negotiate, can accurately analyze your pawn business’s tangible and intangible assets, knows how to help you achieve certain agreements, and has a proven track record of selling pawn businesses at impressive prices.

You wouldn’t go to a general medical practitioner when what you need is a dentist.  Don’t turn to a “catch all” company when what you need is a pawn shop exit strategy specialist that knows the pawn industry inside and out.