The Importance of Being Profitable Before and at the Time of Sale

sg3409u83mPawn shop owners often opt to sell their businesses when the business is no longer bringing in the kinds of profits that they want or need. Unfortunately, selling a pawn business when business is down is not optimal for anyone. The seller usually has difficulty selling the business and winds up getting much less than they would have gotten had they sold when times were better, and the buyer, despite having gotten the business for a relatively low price, has to scramble to figure out how to make the business more profitable in order to ensure that their investment actually pays off.

In a March 2013 Huffington Post article, author Jack Garson explained, “The typical purchaser’s formula is ‘buy, build, sell.’ Buyers start with good companies. If your business is profitable, it tells a purchaser that your company has hit upon a formula for making money. And if your profits are growing every year, it means that there’s a good chance those profits will continue to grow. In fact, experienced buyers count on growing these reliable money-makers.”

The major pawn companies are like typical business purchasers when it comes to profitability. They want to know that they are going to be able to make money and grow your pawn business once you’re out of the picture. When the future is uncertain, they’re not only less likely to make a purchase, but less likely to pay what the business is currently worth if they do purchase it.

Are you considering selling your pawn shop or shops? Increasing profits, maintaining a high income, and having a high number of regular, core customers before and at the time of sale will help you achieve your ideal selling scenario.

For more information on how to prepare to sell your pawn shop or shops, click here to review Stallcup Group’s sale preparation checklist.

Are You Lowering the Price of Your Pawn Shop—Again?

sg2309ucx4It is considerably more stressful and time-consuming to try to sell an item when you don’t know what it’s really worth. As a pawn shop owner, you know this, having experienced trying to get rid of an item on your shelf that is of indistinct value. What happens? You either wait around and hope that the right customer eventually comes through your door, or keep lowering the sticker price until the item finally moves.

The same sort of thing can happen when you put your pawn shop on the market without knowing what it’s really worth. You can hope that the right buyer will come along and meet your asking price, but over time, chances are you’ll find yourself lowering your price again and again until you eventually close the sale.

In a paper put forth by the US Small Business Administration, business valuation expert John A. Johansen explains, “All too often, sellers arbitrarily decide on a price for their company and then go to the expense and effort of developing prospective buyers, only to be unable to strike a deal. It is only after repeatedly lowering the price that they learn what their business is really worth.” He continues, “A professionally prepared appraisal eliminates this problem.”

If you don’t want to wait and see if you’re going to have to keep lowering the price of your pawn business again and again, contact Stallcup Group. You should never be in the position of waiting for a buyer to bite—and at the wrong low price! Stallcup Group’s exit strategy specialists can proactively seek out the right buyers and ensure that you never have to play the wait-and-see game.

To learn why it is important to obtain your pawn business appraisal, or valuation, from experienced pawn shop exit strategy consultants rather than from business brokers with little or no experience working within the pawn industry, see last week’s blog post.

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 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.

Do I Really Need an Entire Year to Prepare to Sell My Pawn Shop?

sg3409up3qWhen pawn shop owners want or need to sell their shops right away, they quickly learn that selling is not just a matter of putting their pawn businesses on the market, calling up potential buyers, and waiting for the bids to come in. It typically takes a lot of preparation.

In a February 2013 Entrepreneur article, Brad Sugars, founder and chairman of ActionCoach, states, “If you’re looking to sell right away, you probably won’t get full value, as it takes a good year of preparation to sell before you actually put your company on the market.”

At Stallcup Group, we agree with Sugars’ statement—so long as it applies to business owners who are attempting to sell in the absence of solid representation.

When you have the right representation; that is, when you have the right exit strategy specialists in your corner, it doesn’t have to take an entire year or more for you to sell your pawn shop or shops. Perhaps more importantly, you don’t have to prepare to sell for an entire year or more prior to putting your pawn business on the market only to achieve a selling price that is unimpressive or doesn’t reflect the true value of your business.

Experienced pawn shop exit strategy consultants can help you get the highest possible return on your investment in your pawn business by accurately identifying its value and creating and implementing a plan of action that will enable you to increase your business’s value prior to reaching out to buyers—and do it quickly.

If you’ve been considering selling your pawn business, but aren’t sure how to go about selecting the right representation to help you do it, Stallcup Group suggests you start by asking your potential exit strategy consultant the six questions below.

  1. What information do your pawn business valuations typically contain?
  2. Are you able to determine not just how much my pawn shop is worth now, but to forecast what it might be worth to a buyer after the buyer takes over?
  3. How do you obtain, manage, and turn complex financial data and licenses and agreements into actionable information?
  4. How can you drive value to my pawn shop or shops?
  5. What are your established business marketing and selling/closing processes?
  6. How will working with you help me get a higher return on investment in my business than I would get if I were to sell my business on my own?

If your goal is to sell quickly and at a price that reflects your pawn business’s true value, partnering with the right exit strategy consultant is going to be paramount. The six questions above should help you determine whether or not your potential exit strategy consultant has got the right stuff.

New Reasons to Consider Selling Your Pawn Shop

sg2309u4luStallcup Group has published many blog posts on the reasons why today’s pawn shop owners should consider selling their businesses. The main reason has been that it’s been a seller’s market for some time now, thanks to soaring gold prices and the race between the major pawn corporations to buy up the majority of the market (i.e., as many profitable independent pawn shops as possible), and other market-related factors.

We’re glad to be able to report that it’s still a seller’s market. However, there have been some recent shifts in the market that indicate that things may be changing.

In an April 3, 2013 blog post, Bank Notes made the claim that pawn shops are “looking second-rate.” Why? According to the post, falling gold prices and the lowering shares of at least one major pawn corporation indicate that pawn shops aren’t doing as well as they were a couple of years ago.

The Bank Notes blog post cites some sobering statistics from a representative at the Employee Benefits Research Institute that are also worth sharing. Apparently, 20 percent is now “the share of people that will retire with more than ten years in savings.” In addition, $250,000 is now “the average sum that a couple will spend on out-of-pocket health care expenses during retirement.”

If you’ve been putting off selling your pawn shop or shops, these statistics coupled with the recent shifts in the market may give you the final reasons you need to take the leap and begin implementing an exit strategy now.

Not sure where to start? Click here to request a free, no-obligation pawn business evaluation from Stallcup Group. You can also call 214-396-4070 to speak with a Stallcup Group representative directly.

To watch a recent CNBC video on the current state of gold on the Stallcup Group blog, click here.

To read the Bank Notes blog post in full, click here.

Pawn Shop Valuations That Benefit Sellers and Buyers

sg20940sjkMost pawn business sellers, like other business sellers, believe that their shops are more valuable than their potentials buyers do. This is why it is so critical for pawn shop owners to obtain a pawn shop valuation from an objective source.

When you are armed with an accurate valuation, you can prevent yourself from becoming locked into negotiations that aren’t really negotiations, but conversations that don’t go a whole lot further than, “Well, I think this is what my pawn shop is worth,” and, “Well, we think this is how much your pawn shop is worth.”

When you and the buyer can’t point to solid data, you have no common ground from which to start a fact-based discussion. As a result, you usually either wind up settling on a price by meeting somewhere between your two price points, or just walking away from the negotiations table altogether.

A lot of pawn shop owners, and especially pawn shop owners that have never sold a pawn shop before, assume that a pawn shop valuation is just a document that reflects their current financial situation. In actuality, while a pawn valuation does include a detailed analysis of your current financial situation, it contains so much more. It should, in addition to estimating the economic value of your pawn business, estimate what the economic value of your pawn business will be after the sale of your pawn business is complete. In other words, it should enable both sellers and buyers to predict with great accuracy what the business will be worth as soon as the new buyer takes over—and what it could potentially be worth down the road.

Considering selling your pawn shop? Click here to request a free, no-obligation pawn shop valuation from Stallcup Group today.

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.

The Challenges of Selling a Stand-Alone Pawn Shop

sg234uad0cOwners of multiple pawn shops and owners of stand-alone pawn shops face different challenges when they set out to sell their pawn businesses. If you’re the owner of a stand-alone pawn shop, you may think that your selling process will be relatively cut and dry compared to the process of selling a multi-store pawn business, but the truth is that selling a stand-alone pawn shop can be quite difficult, despite the fact that the current pawn shop real estate market favors pawn shop sellers.

Unlike the owners of multi-store pawn businesses, owners of stand-alone pawn shops don’t have the ability to leverage the assets of one shop in order to compensate for characteristics or attributes that may be lacking in another shop. In some ways, they have fewer bargaining chips.

Are you the owner of a stand-alone pawn business? To make the most out of your shop’s assets, both tangible and intangible, you may have to work harder than the owner of a multi-store pawn business owner to diminish or eradicate the things about your business that buyers would point to as areas of concern and use to drive down your selling price.

What can you do to make your stand-alone pawn shop as appealing or more appealing than a multi-store pawn organization?

Work with exit strategy consultants that can provide you with a pawn business valuation—free of charge—and then market your business to buyers in a way that highlights your shop’s best assets. When you are able to present profitability scenarios that are compelling, buyers will listen and give you your due, whether you own a multi-store pawn organization or one, really great pawn shop.

Why You Should Obtain a Pawn Shop Business Valuation

sg23497ack0Nearly every financial, real estate, and business seller and acquisition expert on the planet that knows the ins and outs of selling a business will recommend that you get an honest idea of your business’s value from a qualified third party before you attempt to sell.

If you’re a pawn business owner thinking about selling your business, a true expert will tell you that are no exception. Like any business owner, you need to know what your business is really worth before you reach out to any potential buyers. Knowing what your pawn shop is worth will help you determine the value of potential buyers’ offers and give you a realistic picture of what you might be able to achieve as a pawn shop seller.

In order to gain a solid understanding of what your pawn business is worth, you need to know where you stand in the market according to your geographical location and the big-picture pawn market. You also need to have a realistic picture of your current financial situation, financial prospects as a seller, and what your life will look like after the sale of your pawn business. An objective analyst with experience in the pawn industry should be able to provide you with an accurate valuation and see you through the selling/closing process at a rate that makes good financial sense, and is contingent upon the level of success they are able to achieve on your behalf.

Your average business broker, local accountant, or hometown banker may be able to provide you with some valuable insights when you’re ready to sell, but as a pawn broker, you have special needs and requirements that must be met if you are going to sell your pawn shop the right way. Your average consultant, however savvy, is likely to have significant difficulty coming up with an accurate valuation of your pawn shop (or shops).  Most consultants will have even more difficulty presenting you with an accurate depiction of what it will take to gather the right financials and other relevant information that serious pawn business buyers typically want to see before they make a purchase.

Pawn shop owners need more than exit strategy consulting services; they need pawn shop exit strategy consulting services. In order to get the most out of the sale of their businesses, they need to work with third parties that are already working within the pawn industry and have a proven track record of helping pawn shop owners/sellers achieve success.

If you’re considering selling your pawn business, you need a pawn shop exit strategy consultant that can:

  • convert the numbers in your books into pertinent financial information that buyers will find compelling,
  • uncover your tangible assets and intangible assets, and present their findings to buyers in a way that enhances profitability scenarios,
  • work with your current accountant and/or financial advisor to pinpoint any areas of concern and minimize them prior to reaching out to potential buyers,
  • make the right first impression by presenting quantifiable data to potential buyers in a way that puts the ball in your court at the onset of negotiations,
  • understand the legal matters involved in complex sales transactions,
  • understand your reasons for selling and can help you meet your goals, whether those goals include reorganizing your capital structure, embarking upon a new business venture, or retirement,
  • successfully facilitate the sale of your pawn business to the right buyer, and
  • provide post-sale consulting services.

If you’re a pawn broker looking to sell your shop, obtaining a pawn business valuation is the first step towards achieving the sale price you truly deserve. To obtain a free business valuation today, contact Stallcup Group. At Stallcup Group, independent pawn brokers are our business.

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.