Selling a Pawn Shop Isn’t Like Selling Just Any Small Business

sg14098sdkJust about every book or article on how to sell a business advises business owners to do things like search the Internet for buyers and market their businesses online. This might be good advice for the majority of small business owners, but it’s not good advice for independent pawn shop owners.

If you’re an independent pawn shop owner and you’re not passing your pawn shop or shops down to the next generation or selling out to a partner, your best (and perhaps only) buyer is probably going to be one of the major pawn companies. If you want to sell your pawn shop for top dollar, the last thing you want to do is look up these companies, give them a call, and ask them what they will pay you for your business. Go this route, and you will practically guarantee that you do not sell your pawn shop for anything near what it’s actually worth.

The major pawn companies have been buying independent pawn shops for years, and have gotten very good at it! They have put tools, resources, and processes in place to help them get the most out of each new acquisition. If you don’t have a team on your side that has its own tools, resources, and processes in place, you can quickly find yourself woefully underprepared for what these buyers present to you and ask of you in an effort to drive down your selling price.

Unfortunately, even if all of your financials are in order and you have a solid understanding of your business’s advantages and disadvantages, it can be very hard to combat the analyses that the major pawn companies are able to perform. You need objective pawn shop exit strategy consultants to compile and analyze all of your pawn business’s unique characteristics, combine the information with relevant pawn market information—while keeping in mind the overall economic climate, and then present all of the data in a way that buyers can’t dismiss. Go this route, and you will practically guarantee that you will sell your pawn shop at the best possible price.

What Your Potential Pawn Shop Buyer Really Wants

sg23049801dA potential pawn shop buyer wants to know how much your business is worth now and how much it will be worth once they take over.

Uncovering what your pawn business is worth right now is complicated enough. You can’t just look at your inventory and sales records for answers. You have to look at your geographical location, competitors, licenses, and other assets, tangible and intangible. Then, you have to compile and analyze real data and present it in a way that buyers will understand and find indisputable.

Uncovering what your pawn business will be worth once a buyer takes over is even more complicated.

This is why, if you don’t have the right representation, buyers will almost always have the advantage. Their sole focus is on acquiring profitable pawn businesses at the lowest possible price. If you don’t know what your pawn business is worth and can’t make accurate projections that reflect what it will be worth to buyers after closing, you can bet buyers are going to use your lack of quantifiable data to their advantage during negotiations.

Without the help of the right exit strategy specialist, a pawn shop owner will usually settle on an asking price that feels good, and then go with the buyer that presents the offer that is closest to that asking price—which is usually far below the original asking price. Nevertheless, the average pawn shop owner will go ahead and settle, and even walk away from the transaction feeling relatively satisfied, mostly because he or she either believes that the buyer’s assessments of their business are sound, or simply doesn’t have enough data in hand to dispute the buyer’s assessments.

You would never grant a loan or purchase something based on what your customer tells you it is worth. Why would you sell your pawn shop based on what the buyer tells you it is worth?

Stallcup Group specializes in assessing the value of pawn businesses, whether they consist of one, stand-alone shop or multiple shops. Before you reach out to a potential buyer, contact Stallcup Group for a free pawn shop evaluation. You have nothing to lose—except for the dollars your buyer would have paid if you’d been armed with the right data prior to closing.

Hire the Broker that Speaks Your Language

There are plenty of business brokers out there, but if you’re operating in a niche market such as the pawn industry, hiring a broker that doesn’t have experience in selling pawn shops can mean losing big money.

Business brokers who don’t specialize in the sale of pawn shops are likely to overlook key components that would make your shop special to buyers. They can advertise and show your property to prospective buyers, but if they don’t know the ins and outs of the pawn industry, they’re not going to be able to get you a dollar amount that reflects that value of your particular property, period. They simply don’t have all of the insider information needed to make the publicly traded pawn shop companies pay what it is your pawn shop is worth.

Some pawn shop owners who are ready to sell hire several brokers to help them try and sell their properties. Hiring several agents has its advantages, but it also creates headaches. Your property is apt to be widely advertised, but on the flipside, you will have to deal with building relationships with multiple brokers and trying to keep track of what each one is doing. Since only the broker who sells your shop will get a commission, you won’t have to worry about paying each one for their services, but you may have some negative experiences with brokers who are less than enthusiastic about selling your property as a result of having to compete with others.

Two of the biggest problems owners who hire business brokers who don’t specialize in pawn shops face are: 1. trying to determine whether the people they’re working with are actually gathering the right information about their shop, and 2. trusting that their broker knows enough about the pawn industry at large to put an accurate value on their particular property.

Why hire a broker who has to learn your business from scratch? If you hire a broker who doesn’t know your business, you will always be at a disadvantage. Don’t hire someone to represent you if you suspect they’re going to have to backpedal and take a crash course in your business just to try and do half as good a job as somebody who already knows how the national pawn companies operate. There are countless minute details that the major pawn companies’ buyers review in order to determine a shop’s potential profitability. Someone who doesn’t know your business isn’t going to be able to anticipate and address what your buyers need to hear in order to submit a bid that is truly worth your while.

There is a certain language that pawn shop owners and buyers speak. The people who represent pawn shop owners during the selling process need to be able to speak it, too. You shouldn’t have to train your broker in your business. You shouldn’t have to tell them what information they need to gather in order to complete detailed financial analyses and negotiate sensibly with buyers. When you’re ready to sell, you’re ready to sell. The last thing you should be worrying about is whether the people helping you do the selling are just as ready.