Six Things You Can Do Now to Prepare to Sell Your Pawn Shop

sg3er5ua8jSelling your pawn shop isn’t just about selling a storefront: it’s about making good on all of the hard work you’ve put into your independent pawn business over the years.

A lot of pawn shop owners dread the idea of selling their pawn businesses because they anticipate that the process will be unpleasant, but the truth is that selling a pawn business doesn’t have to be a long, grueling, unpleasant process. In fact, selling your pawn business can be one of the most satisfying things you do in your long career as a pawn broker, provided that you prepare appropriately and obtain the right representation prior to beginning the selling process.

Here are six things you can do (in addition to obtaining the right exit strategy consultant) to make your pawn business attractive to buyers and ensure that your closing will go smoothly—long before you actually put your pawn business on the market:

  1. Establish a history of profitably through smart accounting and good record keeping.
  2. Track the numbers of long-term and short-term customer relationships you typically maintain.
  3. Determine your competitive advantages, including those that have to do with location and licenses, and put down on paper the things that make your pawn shop or shops unique.
  4. Think about the opportunities for growth you’ve considered in the past and how a buyer might be able to take advantages of the opportunities that you, for whatever reasons, did or did not implement. Relay these potential opportunities to your pawn shop exit strategy consultant.
  5. Make a list of the things you could do to improve your pawn business affordably and then start checking off the items on your list one by one. Are there simple repairs you could make? Are there partnership or investor relationships that you could improve or dissolve prior to closing that would make selling easier?
  6. Have your accountant and/or exit strategy consultant go over your profit and loss statements, balance sheets, recent tax returns, tangible and intangible assets, inventory, existing contracts, and property or lease agreements.

Undertaking the tasks outlined above may seem incredibly burdensome, but if you start hacking away at them early on, they don’t have to be thorns in your side. In fact, they may even enable you to run your business more smoothly and obtain higher profits even as you prepare to sell.

For more insights on how to prepare to sell your independent pawn business, contact Stallcup Group. Stallcup Group’s exit strategy specialists are ready to answer your questions, whether or not you’re 100% sure you’re ready to sell.

Shop Talk: Are Pawn Shops Banks?

An news report released on September 26, 2012, suggests that more and more people are treating pawn shops like banks.

Featured in the video below, Jeff Bernard, owner of Palace Pawn in San Diego, California, says, “I am a bank.  I’m a banker for the under-banked and un-banked.”  He goes on to explain, “I’m seeing people that are living paycheck to paycheck, day to day, so they don’t have the luxury like they had many years ago of having three, four hundred, and five hundred dollars sitting in the bank so they can pay their bills.”

The Feds claim that 17 million people in the US don’t have a bank account, according to the news report.  Ron, a Palace Pawn customer also featured in the video below, is said to have explained that the reason he relies on the pawn shop is because banks simply charge too much for accounts and too much when he falls behind.

Bernard helps sum the news report up by saying, “Banks haven’t made the transition to deal with what’s going on with society, where a pawn shop can make adjustments on the fly.”  Pawn shop owners are not only benefitting from increased business, but, according to Bernard, higher loan amounts and high numbers of customers who pay off their loans and retrieve their items.

Why Close Your Pawn Shop When You Can Sell It?

When pawn shop owners talk to Stallcup Group about the value of their businesses, in addition to talking about their assets, they inevitably wind up talking about how much they value their businesses on a personal level.  We hear stories about how pawn shops were passed down from family members, about how by making various business choices, they positively impacted their communities, and about how they’ve served the same customers for several years and know many of them by name.  They talk about their most valued employees, and how it will be strange or bittersweet to no longer see them on a regular basis.

As an independent pawn business owner, you’ve invested more than time and money in your business; you’ve invested your blood, sweat, and tears in building your business into something in which you can rightfully take pride.

There are a lot of reasons to sell your pawn business rather than simply close it. One big reason to sell rather than close is the current seller’s market (thanks to the race the major pawn companies are in to outdo each other by buying up more of the market). But perhaps the biggest reason you should sell rather than simply close down is that if you find the right buyer, whether that buyer is someone you know, such as your current manager or family member, or whether it’s one of the major pawn companies, is that if you find the right buyer, some of the things you value about your business and its legacy in your community don’t have to disappear along with your pawn shop’s signage.

Obviously, if you sell your pawn business to someone you know rather to one of the major pawn companies, you have a greater chance of seeing the new owners run your business in much the same way you’ve been running it.  But even if you sell your business to a major pawn company, you can build certain assurances into your selling agreement that will enable some of the things that are important to you, personally and professionally, to be carried out once your business is out of your hands.  The selling price is important, of course, but what else is important to you?  Do you have certain partnerships that you want to see remain intact?  Do you want your current employees to be given the opportunity to apply for positions within the new business before the buyer advertises job openings publicly?

To build certain assurances into your selling agreement, you need solid representation that understands what is important to you, what is important to the buyer, and can negotiate terms using solid financial data and analytics that can be used as bargaining chips to achieve not only the highest possible selling price, but the other concessions and terms that are important to you.  Trusted exit strategy specialists can also help you understand what is achievable so that you enter into negotiations with a clear idea of what it is you’re asking for and what it is you may actually be able to get.

There are definite benefits to be gained by selling to a major pawn company.  When you sell to someone you know, the finance agreements tend to be longer, which means your immediate payoff is less.  A large immediate payoff can not only help you move quickly into the next phase of your life or career, but help you to do things like give valued employees generous severance packages.

Whatever your decisions for dissolving your independent pawn business, the one thing you should be one hundred percent clear on is that closing your business is almost never the best option.  Why close when you can sell, especially when you can sell responsibly to a buyer that you can trust to continue to operate in a way that you can feel good about?

Shop Talk: What Would Your Pawn Shop Patrons Do?

Ever seen the show, What Would You Do?, hosted by ABC’s John Quinones?  Well, a recent episode of the show tested pawn shop patrons by bringing in actors who pretended to sell fake items.  If you’re a pawn shop owner, you won’t be happy with the results of this little experiment. Whether it was a man, woman, or couple doing the scamming, it was only rarely that another patron would speak up and tell the owner or pawn shop employee that something shady was going on.  Highlights from the episode are below.