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.

It’s Prime Selling Time for Multi-Store Pawn Businesses

If you ask any seasoned pawn professional what thing has had the most impact on the pawn industry in recent history, they’ll most likely tell you that it was the listing of the three pawn giants on the New York Stock Exchange in the early 1990s.

Ever since the three major pawn companies, Cash America, First Cash, and EZCorp, began taking on public investors in the 1980s, the three pawn giants have been competing to gain the biggest share of their market by buying up independent pawn shops across the US and abroad.  Since it is more profitable for these giants to invest time, money, and resources into purchasing pawn businesses that are made up of multiple shops, multi-store pawn businesses in the have been getting scooped up at a fairly steady and rapid rate for more than three decades.  As a result, there are now relatively few US-based multi-store pawn businesses left for the major pawn companies to purchase.

Sellers Beware

If you are the owner of a multi-store pawn business, you may have already been approached by one or more of the major pawn companies and presented with offers to buy.

If you are currently considering an offer or thinking of selling, perhaps the biggest mistake you could make is thinking that because you are in a position of power due to the current market landscape, all you need to do is pit one or more buyers against the other in order to close at the highest possible dollar amount you are capable of achieving.  Why?  It’s just not true.

The major pawn companies are trying harder than ever to not only buy valuable independent businesses quickly, but to gain as many advantages as they can during the buying process in order to make their investments as worthwhile as possible.  Make no mistake:  The major pawn companies are not throwing their monies around; they are doing everything they can to buy up the majority of the market strategically.  As the powerhouses of the pawn industry, they are using all of their resources to make potential acquisitions as profitable as possible.  In other words, when it comes to closings, they’re not going to do you any favors, and they’re not going to give you what you want simply because there are other buyers in the mix.

Sellers Relax

The good news is that you don’t have to through the selling process alone, and you don’t have to accept the best offer on the table blindly.

One of the main reasons Stallcup Group has had so much success in the pawn exit strategy consulting business is that its leaders have an advanced view of what is going on in the market.  They understand the tactics that the major pawn companies employ in an effort to avoid paying what an independent pawn business is actually worth, and have put in the time required to develop strategies that keep the ball in the seller’s court.

Enough time has passed since the major pawn companies appeared on the New York Stock Exchange for a considerable amount of expertise to be gained by those who are on the side of the seller.  If you’ve been approached by one or more of the major pawn companies or are considering selling your multi-store independent pawn business, contact Stallcup Group.  Stallcup Group will ensure that rather than being forced to sell your pawn business to highest bidder, you are empowered to sell to the right buyer at the right price.

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.

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.

Why You Need to “Authenticate” the Value of Your Pawn Business

If a customer were to walk into your shop claiming to have a baseball signed by Joe DiMaggio, you wouldn’t think of giving him or her a loan without first seeing a letter of authenticity.  You would also assess the baseball’s attributes.  Does it have inscriptions that add to the value?  Is there a personal inscription, such as, “Best of luck, Burt,” or, “Knock it out of the park, Billy?”  Did Joe sign the ball, “Joltin’ Joe?”  You would make sure you knew the baseball’s worth before making the customer an offer or completing a transaction.

When you’re ready to sell your pawn shop or shops, essentially, you become the customer.  You have to know what your business is worth and be able to offer proof that backs up your claims.  You can have the most valuable independent pawn business in the country, but you won’t get what it’s worth from the national pawn shop buyers if you don’t have your financial information in order and haven’t properly assessed your business’s tangible and intangible assets.

A baseball signed by The Yankee Clipper can go for half of what it’s worth when a letter of authenticity doesn’t accompany it.  Your pawn business needs to be “authenticated,” too, or you could miss out on thousands, or even millions, of dollars that you could have and should have gotten.

Uncovering what your business is really worth may be a pain, but let’s face it:  a much bigger pain is finding out later that you got convinced to sell your business for less simply because you hadn’t used the right financial methodologies to come up with numbers that accurately reflected its value.

Stallcup Group can help you determine your business’s true value, put the right data in your hands, and walk you through every step of the closing process.  We give you all of the information you need to prove your business’s worth and force multiple buyers to make competing offers based on a base price that you set rather than on their own pricing models.  In other words, we put you in a position of power.  When it comes to negotiations, would you really want to be in any other position?

Three People You Need at Closing

Every pawn shop owner has an idea of the dollar value of his or her business, but without the assistance of objective third parties, it is practically impossible to know whether that number is correct.

Selling your pawn shop is an undertaking you should never attempt on your own.  To determine what your business is really worth, at the very least, you will need an accountant, a lawyer, and an exit strategy expert that can perform valuations based on your financial data and the unique characteristics of your shop or shops.

Enlisting the help of outside individuals does not imply that you don’t know your own business or aren’t capable of negotiating your own deal; it just means that you recognize that by enlisting outside help, you’re going to be much more likely to get what your business is actually worth.  Qualified accountants, attorneys, and financial advisors are people that every legitimate business needs at one time or another.  There is no better time to make the most of the qualified professionals and resources available to you than when you’re ready to sell.

Your Accountant

If you have an in-house accountant, use that person to organize your books.  Make sure that in addition to having experience in the pawn industry, any CPA you use is able to advise you on personal and corporate tax matters.

Your Lawyer

You don’t need a lawyer to negotiate the sale of your pawn shop.  (Your exit strategy expert will help you do that.)  However, you do need one to review your closing agreement and leases.  If you are planning on using the funds from the sale of your business to make new acquisitions, you will also want a lawyer to review any non-compete agreements.

Your Exit Strategy Expert

Exit strategy experts like those at Stallcup Group are the people who analyze your financial data, your shop’s tangible and intangible assets, and the current market in order to help you put an accurate value on your business.  At Stallcup Group, our knowledge of how the national pawn companies approach negotiations and the tactics their buyers use to lower sale prices gives us a significant advantage throughout the closing process.  Experience in these areas and an unparalleled number of successfully closed acquisitions set us apart from other financial advisors.

While it may be tempting to sell your shop on your own, the truth is it’s just not worth the trouble.  Before you pick up the phone and call a major pawn company to find out what they believe your business is worth, contact Stallcup Group.  We’ll make sure you won’t ever have to wonder whether your final agreement reflects the very best deal you could have gotten for your shop or shops.

Fewer Surprises and More Money

“One thing I’ve learned after 21 years, you never know what is gonna come through that door.”

That’s what pawn shop owner Rick Harrison says at the opening of each episode of Pawn Stars, the popular History Channel reality show. If you’ve worked at a pawn shop for even a short length of time, no doubt you can relate to Rick. When it comes to running a pawn shop, expecting the unexpected is part of the job.

The FlashNews website once reported that Borro, a pawn broker in the UK, had to turn away a farmer who came in to pawn his livestock. According to The Florida Times-Union, employees at Value Pawn and Jewelry in Jacksonville, FL, have seen sellers come in with everything from artificial limbs and gold teeth to a used toilet and Chuck E. Cheese tokens.

Like other pawn shop owners, you probably consider most of the unexpected things that occur from day to day to be well and good. They keep things interesting, and sometimes result in valuable, unexpected acquisitions.

There is, however, at least one time in every pawn shop owner’s life when it’s better to get fewer surprises. When you’re ready to sell your business, the only surprise you really want to get is a higher bid than you’d anticipated.

It is not uncommon for pawn shop owners who are ready to sell to simply call the major pawn companies and ask what price each company would pay for their shop or shops. Usually, they have an idea of what they might be able to get, but they don’t know the true value of what they’re selling. As a result, they accept the best offer without knowing whether they could have gotten thousands, hundreds of thousands—or even millions—more.

Whether you want to sell your shop in order to deploy capital into new start-up stores, buy real estate for new locations, reorganize your capital structure, or prepare for retirement, doesn’t it make sense to determine independently what you might be able to get from your shop’s sale versus allowing a big corporation to determine it for you? Doesn’t it make sense to get the most out of the sale of your shop no matter what your reasons for selling?

If you’re thinking of selling your pawn shop, contact Stallcup Group. Having an accurate company profile can help you determine whether or not it’s time to sell and what kind of sale price you might be able to achieve. If you’re serious about selling, we’ll do an initial analysis of your business for free!