Over the years, this industry has changed a lot and because of that, is it safe to say that the old ways and the old teachings of a turn and burn style pawnbook that has been taught for so many years in this industry does not work anymore? We believe it is not only safe to say that, but guarantee that you need to do things differently if you want to continue to be an industry leader and to be profitable in this marketplace. The days of just growing your loan balance and making it as large a possible by loaning the maximum dollar amount just does not work if you are taking in bad loans and cannot sell those items later at a profit. So you may be thinking “what kind of things do you need to do to stay on top of your game, and what should you be looking for in a pawn consultant”? That change must also be embraced by the pawn consultants
Before you understand what you need from a pawnshop consultant, you must first understand some of what caused problems in this industry. We Often hear that “my problems began when the price of gold went from $1980 an ounce down to $1200”. Sadly, the problems more than likely began before that. We became dependent upon the high price of gold and we used the profits in that area to believe we were more successful than we were. In that time many businesses in this industry expanded. This just drove up overhead, and many pawnbrokers had to take some of their best staff and put them into their new locations to help them get open and be successful. This caused stress on the successful existing locations and ultimately less profit in those money-making shops. In addition, a common practice in the industry was to loan as much as possible on the items, because in theory if you are in a high interest state especially, you collect as much interest as possible on those items. The theory behind it was basically charge the customer as much interest as possible and if they couldn’t pay, pull the item as soon as the law allows and sell it. In the words of many “experts” in the industry, you either get 20% return on investment on the sale or 20% or more return on investment on the interest. Sadly, that is just not true if you overpay for the item and while it sits in pawn, it depreciates to the point where it has no value or not enough value to cover your cost. In addition to that, many folks in the industry decided to pay a commission on the amount of loans written (to drive up the loan balance) and the amount of retail sales done (to sell more). this is not managed to perfection only bonuses staff to overpay for items and discount them when sold. Imagine the impact of a transaction where you paid too much for the pawn, it never collected interest, and when you went to sell it, it was worth less than what you paid for it and you paid a commission on the front end; twice!
What you should be looking for
In a pawnshop consultant, you should be looking for someone that teaches you how to write excellent loans while almost never turning away a customer over the difference in their “perceived value” and the cash they “need” and what you are willing to pay for it. That excellent pawn should achieve a much higher gross profit than 20% instead of the turn and burn teachings from the past. That excellent pawn should also not only collect interest for many months but they should also be picked up and re-pawned frequently. In the turn and burn process that is still trained today, you burn out your customer base and they run out of items to bring you. Thus, you run through all the items that your limited customer base has. At Devoted Pawn, in addition to how to sell these items in new ways at higher margins, is just a portion of the training and the teaching that we do. Our training and teachings, which are extremely unique and not seen before in this industry, often scare folks until they see the ROI almost immediately. This is because we have used what works in other similar industries and brought it to this world. This is why we began the #takethechallenge initiative. It allows you to take extremely good care of your customer, never abuse them while achieving higher profit margins like never seen before. It is so unique that we guarantee its success for long periods of time. This is not just something that works for 3 to 6 months and then you burn out your customer base. If done right they should sustain you forever even when this industry continues to change.
Doing the same thing over and over again and expecting a different result?
In Summary, this is not the death of the pawnshop consultant, but instead the death of what was old and needs changing. A rebirth of what is the best of what old school practices still work and what is new, fresh and works in this day in age in this ever-changing climate and industry. You need a Pawnshop Business Development team to help you succeed! For more information on how we can help you be more successful you can contact us, call us directly at 952-582-4669, (in Florida call 727-580-5876) or begin with our free Pawn Health Check online.
