How to Operate a Pawnshop in the Post-Pandemic World
It's been 2 years since the pandemic hit and things have changed dramatically. The world is a different place now, and businesses have to adapt to survive. For pawnbrokers, this means making some big changes.
In this blog post, we'll discuss how to operate a pawnshop in the post-pandemic world. We'll talk about the challenges you're likely to face and how to overcome them. We'll also provide some tips on leadership and pivot strategies that can help you stay ahead of the competition.
LEADERSHIP AND TEAM CULTURE
We had a Mastermind call with Dr. Sabrina Starling in February. During the call, she talked about how to hire the best talents or A-players and what is it that A-players want? Considered this question before: what do those people who will work for me want?
The first thing to consider is leadership and culture. What does the culture look like? Do they love coming to work? Are the bathrooms clean? Are the break rooms clean? What's your mission in your business? Are you giving back to your community somehow?
A-players want to know that they're going to be a part of something special. They want to feel like they're making a difference. And if you can't answer those questions in the affirmative, then you need to start thinking about changing your leadership and culture so that it will be more attractive to A-players.
Another important thing in this aspect is training. Are you training your team to lead? Are you training your management staff? Are you being trained in leadership so that you can handle every single situation that comes at you?
If you're just at the counter, you're missing out on a significant chance to develop a strong culture and excellent leadership teams so that you may go on vacation, relax, and expand your business.
MARKETING
In post-pandemic times, pawnbrokers must pivot. There are different strategies that can be used in order to stay afloat and grow the business. In a time when people may be hesitant to leave their homes, it is important for pawnshops to find creative ways to bring customers in. Some of these methods may include marketing themselves on social media platforms or through other online avenues, as well as using traditional advertising techniques such as print advertisements.
Two years ago, during the Pawn Leaders 100 (PL100), my friend Mike Ganino talked about stories and how important that is. Telling the story of your store and what it does above and beyond just making loans and selling merchandise.
It is also important for pawnbrokers to remember who their target market is post-pandemic. While it is still important to service everyone, there are some groups that should be focused on more than others.
For example, those who may have lost their jobs or had their hours reduced may be in need of quick cash, and pawnshops can offer them short-term loans at a higher interest rate. Seniors are another group that should be targeted post-pandemic, as they are often seen as being more vulnerable and less likely to take out high-interest loans from other sources.
SALES
This is not going to be well-received, but the fact is that you benefited from having a lot of people come into your store without having to do much marketing because they had money to spend and you had items that they wanted or needed. It was a simple supply and demand.
However, as more goods are produced and businesses like Amazon, BestBuy, and Walmart start buying and reselling used items, you no longer have an edge on the market.
So you got to learn marketing, how it works, what it looks like, what the metrics are, social media, SMS, email marketing, etc. But not just learn these, but DO marketing! You either do it or hire someone or a company like PawnLeads who can do it for you.
POST-PANDEMIC PAWN OPERATION
Gone are the days when you could just sit at the counter and wait for people to come in and sell you things. That isn't how it works anymore, at least not if you want to stay in business after the epidemic.
Let me be clear: people will receive loans. Yes! That is expected to increase dramatically. What if this happens? You won't be able to move your products, and you'll need serious cash!
So if you don't know how to market in order to move your products, you won't have the cash to make the pawns. You may also be required to seek financing, borrow from friends, or second mortgage your property instead of getting the cash directly from the business– which you can!
I was talking with a pawnbroker the other week and he said, "Yigal, my loan balance is coming."
And I said, "Great! What's the loan balance?"
He replied, "$300,000."
I asked him, "what's the biggest worry?"
"Oh, my cash flow!"
I asked him again, "how much inventory do you have?"
He told me, "$650,000"
And I was like, "my friend! You have enough cash to write double the amount of loans, what's going on? You gotta move the merchandise!"
That is why providing sales training to your staff is so important.
The next statements are going to piss some people off...
Many of you do not have a great sales team. Many pawnbrokers are able to sell because people needed the items that you had. Sales weren't happening because of good salesmanship.
What parts of your metrics do you need to start looking at?
- How many parts are sold per transaction? Is your team selling 1 per invoice or per sale? Are there add-ons?
- What's the average customer value of a sale? Can you increase it?
- How many people are walking into your store and converting into sales?
All these aspects: leadership, marketing, strategy, customer experience I covered in my book Pawn Profit Pillars so if you want to learn more, you can check the details at www.pawnprofitpillars.com
The pandemic has forced many businesses to pivot their operations and find new ways to stay afloat.
That is why you have to be proactive and bring people into your store now more than ever. You have to market your services and let people know what you do and how you can help them. You have to be the one reaching out and building relationships with people, because post-pandemic, that’s what it’s all about.
Yigal Adato
Yigal is a 3rd generation pawn broker, and is now a mentor, coach and educator with the pawnbroking industry.
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