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.
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