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.