- E-Commerce. My kids have coined the phrase, “If you’re not online, you’ve flatlined.” to describe how their lives are so interwoven with the Internet and social media. This also describes any pawn shop not utilizing various sales platforms (eBay, Amazon, Craigslist, GunBroker, etc.) or social media such as Facebook and Twitter for marketing. Remember that rising inventory levels are a negative to the bottom line – its cash you already spent that’s now sitting! The most active and successful pawnshops are constantly adding items to the Internet for sale. In the old days when business was slow, my boss would tell me, “Go clean something!” Now, the motto should be “Go post something!”
- Texting. Why should you be texting your customers? The simple answer to why pawnshops should text customers is because texting produces results. Business text messaging is convenient not only for your customers, but also for your business, as it provides a highly effective and measurable tool for delivering important messages. A whopping 90% of text messages are read with within three minutes, and 95% of text messages are read within five minutes. Considering that nearly 90% of Americans own a cell phone and 83% of those use text messaging – automated messaging has a giant reach. Text messages are turning out to be even more reliable than email messages when it comes to reaching people. If your pawnshop isn’t texting yet, it should be.
- Set monthly goals. The beginning of the new year should prompt each owner to review and evaluate your performance. Go back, on a monthly basis, and compare 2017 to 2016. Did you sell more? Loan more? Buy more? Why? Our industry has a seasonality component that will often repeat itself. But if it didn’t, why not? Did you let go a veteran employee? Hire a new one? Stop advertising? Find the answers and then set your monthly goals for 2018 and make sure every goal is attainable and realistic.
- Discount your aged inventory. If merchandise is still around after a year, it’s priced wrong. But what is the right price? Here’s a way to do it. Start with a modest discount, say 20% off and see if it sells. After a week, move it to 25%. Another week, 30%. And so on. We are trying to find the “market” price for each item and slow, sequential discounts will eventually land on the right figure. Take that information to the loan counter so you can buy/pawn appropriately the next time that specific item shows up. Discounts aren’t just for creating cash, they help avoid future pitfalls.
- Pay better. We, as pawnbrokers, are notorious for penny-pinching but when it comes to employee compensation, we shouldn’t be. The most successful pawnshops in the country are that way because they have a reputation for high pay and benefits. It’s easy to recruit and retain quality staff. So, how do you start? Easy, start with a simple (and simple to compute; remember that employees should always be able to figure out their own commission) monthly sales bonus program. You can make the bonus personal or a team goal – either way, create some excitement in your store and put money in everyone’s pocket. Second, perform written evaluations of each employee with specific targets with tangible financial rewards such as a Christmas bonus or an hourly pay raise once he/she or the store achieves success.
If you need help with your 2018 business planning, check out our Pawnbroker Development program. In the meantime, here are some tools to start your planning.