Putting a Price on Your Pawn Shop

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.

Shop Talk: Gold Still Falling; Is the Gold Trade Done?

It would be premature, or just plain wrong, to assume that the gold trade is done. At least, that’s what Peter Schiff, CEO of Euro Pacific Capital, seems to be saying in a CNBC video report released just yesterday. Nevertheless, with gold having two losing quarters in a row and the dollar staying strong, traders, gold dealers, pawn shop owners, and many others are concerned.

What does Schiff think? Schiff predicts that gold isn’t going anywhere. Says Schiff in the video below, “And, in fact, if you remember, gold did really well going into the last financial crisis. Maybe it’s-it’s appropriate that it’s doing poorly going into the next one, because I think the crisis that we’re headed for is much worse than the one in two thousand and eight, and I think it’s gonna be a very good environment for gold.”

Shop Talk: Will the Supreme Court Rule You Need Permission to Resell Items Made Overseas?

Les Gold of the popular show, Hardcore Pawn, seems to be making the rounds. In yet another guest television appearance, Gold discusses an appellate court ruling that could make it extremely difficult for anyone to sell any personal items manufactured in countries other than the US. If the Supreme Court upholds the ruling, any person or entity—including resellers—would have to get permission before reselling items that were made overseas.

In the Fox Business video below, Gold expresses his frustrations with the appellate court’s decision, saying, “I mean, there’s enough government regulations now. Now that corporations can rule us, I don’t know what effect it’s gonna have. What kind of effect is it gonna have on charities, Salvation Army, Goodwill? There’s gonna be so much flack from it, I-I don’t know where it’ll ever end.”

It’s not just mom-and-pop pawn shops that would be impacted by the ruling if it is upheld. Large corporations such as Amazon, eBay, Craigslist would also be impacted.

Need Help Selling Your Pawn Shop? Watch Out for Exit Strategy Consultants Who Don’t Put You First.

A large number of companies that claim to help independent pawn shop owners sell their businesses also offer services to buyers. If you’re a pawn shop owner, on the surface, this seems ideal. After all, if you need to sell your pawn business, doesn’t it make sense to work with exit strategy consultants that have interested buyers on the hook and ready to go?

Pawn business owners should know two things about working with companies that offer both business selling and buying services: the first is that just because these companies claim they have buyers in their pockets doesn’t necessarily make it true; the second is that because these companies have split interests, you, the seller, may not always be their biggest priority.

Companies that claim to have pawn business buyers in their pockets still have to market your business to buyers. There’s no getting around it—unless they have built-in agreements with buyers that work to their advantage.

Do you really want to work with exit strategy consultants that may have separate deals with buyers that could potentially put you at a disadvantage?

In order to guarantee that your interests as a seller are always put first, the only truly sensible thing to do is to partner with pawn shop exit strategy specialists that have one goal in mind: to help you sell your pawn business at the best possible price.

As an experienced pawn business owner, you’re probably not one to be fooled very often by slick verbiage and hustler tactics. Use your talent for seeing through too-good-to-be-true claims as you search for the right exit strategy specialist to help you sell your business. As you know, anyone can claim just about anything. Forget about claims, and instead, ask yourself whether or not you believe a potential exit strategy partner is truly on your side, has a solid plan for marketing your business to buyers, and an undisputable track record of success. If you can answer all three questions in the affirmative, odds are you’re on your way to getting the sale price you deserve.

Selling Your Pawn Shop Items via Social Media

All it takes is one or two Google searches on social media, and it becomes very apparent that according to just about every marketer on the planet, having personal and company profile pages on social media sites like Facebook, Twitter, and LinkedIn is something all business owners should do.

However, for most independent pawn shop owners, having social media pages is little more than another way for their local residents to find out about their shops and shops online.  They hope having a greater online presence will encourage local residents to come in and do some business, but they don’t consider their social media pages to be moneymakers.  Many pawn shop owners don’t even bother to create social media profiles, they see so little value in them.

If you’re one such pawn shop owner, it may be time to rethink your opinions.

An article put out by the Second Hand Social website last year looked at online sales being generated by four different independent pawn shops, and found that anywhere from 5% to 70% percent of their total business came from online sales.  In addition to advertising items for sale via social media, the shops sold items via eBay, Gunbroker.com, Craigslist, Amazon.com, and their own websites.

More and more companies have been selling items directly via Facebook.  In the past, Facebook acted only as a storefront.  Companies could add things like “Add to cart” buttons, but when Facebook users clicked on the buttons, they’d immediately be taken to the company’s website to complete the sales transaction.

Today, entire sales transactions can be completed on Facebook.  There are apps and other online tools that enable users to sell directly on Facebook, and even entire companies dedicated to helping businesses launch and maintain their Facebook e-commerce transactions.  While Facebook e-commerce is still relatively new, you can bet you’ll be hearing more and more about it.  Already, Facebook e-commerce has been given its own name:  F-commerce.

You can sell items directly via Twitter, too.  The company, Chirpify, has recently developed an e-commerce platform that, according to an article on the GIGAOM website, allows users to reply to reply tweets on sale items and buy the items automatically through their PayPal accounts.

If you’re resistant to the idea of getting involved in the somewhat complex and sometimes sticky business of online selling, or if you’re just plain intimidated by the many online selling options that are out there, seek out a Web-savvy friend who can help you navigate the waters, or, better yet, hire a qualified employee to help you manage online sales.  Your urge may be to resist selling online, but ask yourself this:  If someone told you that by making a minimal investment in a change to your shop or property, you could increase sales by up to 70% annually, would you hesitate to move forward?

A relatively small investment in e-commerce applications could help you do just that.

In today’s marketplace, no business owner can afford to ignore the potential value of e-commerce (or F-commerce).  Want to sell your business, retire, or begin a new business venture?  Engaging in e-commerce could help you make those things happen sooner than you think.

One Deal You Should Never Broker Alone

In the pawn industry, many believe that in order to be successful, you have to have an innate sense of the value of things.  Pawn shop owners who’ve had to let go employees who just didn’t have what it takes to make good value assessments know that not everyone has an innate ability to make good deals consistently.  There are few tricks you can learn, and certainly, you can get better at appraising items and brokering deals over time, but if you don’t have that certain something, you’re probably not going to be successful in the pawn business.

Most independent pawn shop owners who actively run their shops have that certain something.  Perhaps that is why so many of them are resistant to the idea of seeking out representation when it’s time sell their businesses.  Why would they need help?  After all, they have a good idea of what their shops are worth and know how to the buyer-seller relationship works.  Why shouldn’t they be able to get a good price for their businesses and come to fair agreements with buyers on their own?

The reason you need representation when you’re ready to sell is because the same way you have an innate sense of what items that come into your shop are worth, there are people out there who have an innate sense of what your pawn shop is actually worth—from the buyer’s point of view.  They know how to properly assess the value of your location, the local population, the licenses you have in place, and much more.  They have honed their appraisal and negotiation skills over time, and already have the resources in place required to remain organized, run accurate numbers, and negotiate with savvy buyers throughout the closing process.

As you know, your behind-the-scenes operations are much more complex than most people realize.  In addition to the many other tasks you perform daily, you have to keep up with a large amount of paperwork, track every piece of inventory, adhere to federal and regional government regulations, engage in good accounting practices, maintain your reputation through solid management and good customer service, and, of course, accurately assess the worth of a wide variety of items.

At Stallcup Group, our behind-the-scenes operations are more complex that most pawn shop owners realize.  There are certain steps that have to be taken at certain times in order for the sale of your business to come off without a hitch.  Just like you, we have processes in place that ensure that all of the proper steps will be followed.  We have honed the skills necessary for coming up with contingency plans when snags do arise, and have amassed enough experience and knowledge to think on our feet and come up with solutions quickly.

We can also help you determine whether the time is right for you to sell.  Contact us today for a free business evaluation.  We will be happy to discuss your future goals, and will tell you honestly whether or not you should move forward with the sale of your business based on actual analytics.

If you’re a pawn shop owner, you know that one simple misstep during the appraisal or negotiations process can cost you money.  You may run an excellent business, but if you haven’t spent years and years learning how to go about getting the most out of the sale of your business, chances are, despite having a thorough knowledge of the pawn industry, great instincts, and strong negotiation skills, you’re just not going to get what you should have gotten out of the sale of your shop or shops.

You can’t act on what you don’t know.  When you’re ready to sell, Stallcup Group can help you fill in the blanks.

I Should Have Left Vegas on Saturday

I recently took a vacation to Las Vegas with a couple of friends to celebrate some milestone birthdays. Everyone in the group enjoys gambling, which, as you might guess, was the primary activity. Eating a lot of good food was the second.

Thursday night at the tables went well, and I ended up a couple of hundred dollars ahead. Friday night went even better. Somehow, I parlayed my hundreds into thousands! I was ecstatic, and had a sense of invulnerability. It was obvious I was on a heater and couldn’t lose.

Then came Saturday.

On Saturday, the dealers whose chip trays I had pillaged the two nights before suddenly started changing the name of the game from blackjack to “you lose.” I got very good at it. Basically, I would place money on the table and they would take it from me…hand after hand after hand. My thousands quickly became hundreds. Before I knew it, my hundreds became numbers with minus sign in front of them. Finally, Sunday came and it was time to go home.

On the way home, I sat contemplating what had transpired. I tried to justify the ridiculousness of my experience by saying, “Well, I spent as much as if I had taken a trip somewhere else”. But who was I kidding? If I had spent the same amount of money somewhere else, I could have at least seen an ocean, some mountains, or significant monuments to human accomplishments. I saw none of those things. I simply went to the desert, sat in a dark room for three days, and lost a bunch of money.

My Vegas trip got me thinking about the reaction I often get when I approach a pawn shop owner about planning an exit strategy. The typical response I get goes a little like this: “In the last few years I have made more money than I ever have. Why on God’s green earth would I want to sell my business now?”

The simple answer is that you should want to sell now because your business is worth more now than ever, and because there is absolutely no guarantee that its value will continue to increase, or, for that matter, remain as high as it is now. Stallcup Group’s financial models suggest that a 25% decrease in the price of gold, which is not out of the question in the current market, would decrease the value of pawn shops somewhere in the neighborhood of 32%—which is almost one-third of their current value! This is one of the many reasons we are encouraging pawn shop owners to take a pause and consider how much their stores are worth today, and how much—or how little—they may be worth tomorrow.

Because business is good, pawn shop owners today may feel as invulnerable as I did in Vegas, but the reality is that along with the price of gold and other variables, the value of their shops can turn on a dime.

Wondering what the value of your business is now? Stallcup Group can help. Contact us for a free, no-obligation analysis of your business’s worth. Once our analysis is complete, you will be able to make a truly informed decision. Whether you decide to stay in or exit the market is completely up to you. We’ll just give you the information you need to make the right choice.

Don’t wish that you’d left Vegas on Saturday. Consider planning your exit strategy today—before the tides turn and you’re left trying to justify having stayed too long at the table.

Jeremy Bowman, Executive VP, Stallcup Group