Your pawn business may be doing well but doesn’t mean that you can’t make it even more profitable, or, if you’re planning on selling your pawn business, make it more irresistible to buyers by reassessing some of your current practices and making key changes.
Below are three things that you can do right now to make your pawn business more profitable while simultaneously preparing to appeal to buyers.
1. Charge the right loan rates.
In some cases, low loan rates can help an independent pawn business. If you can get more of the market as a result of low loan rates, charging less than your competitors may actually help you to be more profitable. On the other hand, charging higher loan rates could also help you be more profitable, depending upon demographics, your shop’s location, and other criteria.
Do you really know if your current loan rates are the optimal rates for your independent pawn business?
If you’re planning to sell your pawn shop while the market is still a seller’s market, you need to know whether or not your current loan rates are enabling your pawn business to earn to its full potential. Uncovering this information may require the help of third-party exit strategy specialists who can perform financial analyses that reflect accurate profitability ratios. Even an initial low-cost or free business evaluation. by such professionals can help you uncover the true value of your pawn business and point to areas in which you might be able to achieve higher profits. Having accurate information regarding your pawn business’s true worth allows you to create realistic goals for your business, determine when it would be most profitable for you to sell your pawn shop business to the right buyer, and plan for the future.
2. Keep the right number of people in the right positions.
When you’re an independent pawn shop owner, it can be tempting to hire your favorite nephew, uncle, or old high school buddy when you don’t really need an additional employee, but having more people on staff than your pawn business requires can be a recipe for disaster if you hope to sell your pawn shop in the not-so-distant future. While it can be painful to turn down certain applications, hiring more people than you actually need is like adding extra bacon bits to a loaded baked potato: unhealthy. Having too many people on staff creates scheduling conflicts and often forces pawn shop owners to either keep too many people on the floor or cut the hours of regular employees to accommodate a newly hired employee’s needs, which can cause high turnover.
Hiring people to be managers, assistant managers, or closing managers, etc., and paying them a higher wage when you don’t really multiple levels of management can also hurt your business. While you should provide incentives to employees, before you make those incentives a higher salary or hourly rate, consider offering commissions for high sales numbers, excellent performance based on your observations and customer feedback, or other things that are important to the success of your pawn business. Offering the right types of incentives can not only help you be more profitable, but help you foster a positive work environment that inspires employee loyalty and improves service levels.
3. Regularly revisit—and revise—your business plan.
Is your state or county requiring that you obtain new licenses that could potentially make your business more desirable in the eyes of the major pawn companies or other potential buyers? Is the surrounding neighborhood experiencing significant growth that could change the worth of your pawn business? Are other shifts in the market or economy impacting the value of your pawn business?
Whether you want to make your current pawn business more profitable, reorganize your pawn business’s capital structure, close your current pawn shops and open new ones, or are looking for the smartest way to enter into retirement, you should constantly be revisiting and revising your business plan in conjunction with local and big-picture market changes. Your original business plan may be outdated or just plain nonsensical when you take into consideration all of the changes that your pawn business has experienced both externally and internally as a result of shifting market trends and the upgrades and strategic decisions you’ve made as a business owner. If you modify your business plan as changes occur, you will increase your chances of making better business decisions down the road or over time.
Whether you’re looking to sell right now, while the window of opportunity for sellers of independent pawn businesses is wide open, or planning on selling in the future, making your business more profitable and using those profits smartly TODAY will put you in a better position tomorrow.
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