PawnMaster Blog

Pay 'em and Play 'em

Posted on 14 Dec 2017

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As I travel across this country touring pawnshops from coast to coast, the most common challenge facing owners is rising inventory levels.  Their monthly sales are simply not keeping up with the amount of “pulls”, also known as inventory added through forfeited loans and purchases.  The conversation usually begins like this:

“How do I correct this long-term?  Because if I don’t correct it, I can’t loan competitively which means I can’t stay in business.”

I usually respond with questions of my own. 

“How are you paying your employees? Are they eligible for sales bonuses each month?”

Answers vary, but typically it’s a convoluted formula with little to no impact on their monthly wage – usually less than 5% of his/her check will depend on sales performance.  Well, you get what you pay for.  You want more sales each month?  Pay on sales only.  Want some knockout sales performances?  Pay huge bonuses for huge sales production.  Absolute fact – You want higher sales, pay huge sales commissions!

As my friend John Thedford of Smart Financial likes to say, “Keep your compensation plan simple. Make sure the employee can always compute their commission check each week.”  Powerful words and he’s right.  For the last 11 years, I paid anywhere from 3-6% commission on all sales (including the full value of layaways) plus a monthly bonus opportunity from $100-$500.  Simple math for employees (managers included), full-time focus on sales.    And, once an employee begins to earn a regular diet of high commissions and bonuses it becomes an expected part of monthly income – they will do whatever is necessary to continue earning it – thus, continued excellent performance.

The idea here is to align your company’s long-term goals with your employees’ short-term needs.  You want more sales and lower inventory levels, they want a bigger check.  Historically, if you take an examination of your store’s financial statements, your “killer” months almost always implied “killer” retail sales.  Average months, average retail sales.  Poor months, poor retail sales.  The other revenue factors rarely vary month to month so why not focus your time, energy and money on a factor you can control – sales. 

 

Corby Logue

Written by Corby Logue

Mr. Logue has over 30 years of experience in the pawn and collateral loan industry. He has held and operated almost every position the industry can offer including tenured positions at a strategic level in the sales, operations and acquisition lines of business. Before coming to Data Age Business Systems, Mr. Logue was the Chief Operations Officer at National Pawn and Jewelry, one of the largest privately owned chain pawn shops in the United States with 33 stores. Prior to that, Mr. Logue began his career with EZ Pawn, his family’s pawn shop, which grew from a privately owned, single-store operation to 225 publicly traded locations. He managed operations on the private side and lead the acquisitions team on the public side. Mr. Logue has an extensive business background and earned a degree in Communications from The University of Texas at Austin. Mr. Logue’s success and contribution to the pawn industry has gained him great respect and visibility which he will use to advance the success of other pawn shops.

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