Sam Reading, the owner of Idaho Pawn and Gold, has two pawn shops located off Fairview Ave. in Boise, Idaho, and off Caldwell Blvd. Nampa, Idaho. He sought to purchase another pawn shop and came across Benny’s Pawn Shop.
Benny's Pawn Shop - A Jewel In the Pawn Shop Industry
Terry, a native Idahoan, decided to open a pawn shop 32 years ago in 1988 after working for his father in the window insulation business. He began his journey in a location in downtown Meridian, Idaho, a few blocks up the street from the current store location.
Terry’s story is a story of a passionate, hard-working man who built the pawn shop business from the characteristics he learned from a long line of Idaho natives. Learning as a child the value of fortitude, he and his son not only survived a robbery shooting, he demonstrated his resiliency by not closing his shop after the event but instead setting the event aside. He continued to provide a financial option for the community through pawn services.
Idahoans are seen as fearless, having creative duct tape engineering solutions and loyalty beyond measure; Terry is an honorable man who believes in honesty and straightforward deals. He can problem solve any challenge and works with customers to get them what they need without cutting corners or jeopardizing the business’ bottom line.
Some pawn shops are started and then transition to a new owner, and others are built from the ground up. With the purchase of Benny’s Pawn Shop, Sam can work with Terry and take the qualities of the pawn shop built by Terry and launch a new business under the business name Idaho Pawn and Gold while resting on the solid foundation established by the old pawn shop Benny’s.
No Bell's and Whistles - Benny's Pawn Shop A Successful Business
Terry managed his pawnshop business without all the “bells and whistles of computers, pawn shop point of sales systems, and state-of-the-art non-destructive X-ray fluorescence spectroscopy machine (XRF tester).
He kept his accounting and documentation notes on yellow pads and used a calculator to perform all of the operations on the cost of goods, taxes, and interest rates, and conducted scratch tests for testing precious metals. There is no doubt he knew how to start a pawn shop and learned along the way how to sell guns, buy and sell precious metals, fill his shelves for retail sales, and write collateral loans.
Terry knows the ends and outs of his small business and stands out among many pawn shops his loyal customers.
Benny's Pawn Shop Now Idaho Pawn and Gold
Sam, will bring in a pawn shop operating system, testing devices like the XRF tester to know the elemental composition of all precious metal brought into the store, authentication services like Entrupy for luxury purses, and continue to write collateral loans.
Having his federal firearms license, the pawn shop will continue to sell and write collateral loans on firearms and carry firearm-related accessories like bullets, straps, and mags. The pawn shop will buy, sell, and loan name-brand tools, electronics, computers, musical instruments, fine jewelry, gold, gold bullion, diamonds, and luxury purses.
Sam has some plans to give Benny’s Pawn Shop a facelift with some new interior upgrades to complement his plan to expand the pawn shop’s inventory to include a luxury retail jewelry area with high-end watches like Rolex, gold, gold coins, silver, and other precious metals.
Starting a pawn shop or taking an old pawn shop over, isn’t for the faint of heart.
Tips and Tricks to Help When You Open A Pawn Shop
Legal Business Entity:
All states require a pawn shop to register as a legal business entity. You can choose to be the sole proprietorship, be in a partnership, LLC (limited liability company), or cooperation. Each one of these has their own advantages and disadvantages so do your research. An accountant may be able to help.
Business Bank Account:
As a business owner, you will need a business bank account. This will also help if you need a business loans in the future because you have an established financial relationship.
Local regulations govern how pawn shops are run and what interest rates you can charge on collateral loans. Know these regulations.
General Liability Insurance:
You will need to purchase workers compensation if you have to hire employees and general liability insurance.
Hiring employees begins on the first day of acquisition. As a pawn shop owner you may be able to hire the previous employees or may want to consider hiring new people.
Computer System and Marketing Plan:
Take some time to research a computer system that will support your point of sales system, marketing plan, and accounting programs. A market plan is based on market research. Understanding the pawn industry, target market population, and marketing tools like Pawn Leads can help you save time while reaching potential customers.
Take the time to spend time with the previous owner and learn all you can learn. Previous owners have a ton of information that helps transition previous customers to your business. They have the foundation information about important business metrics you will need to comply with, how operating systems work, and simple things like the security system, how to use the cash register, and answer the phone. Making sure your business plan includes a transition period with the previous owner helps answer any questions that may come up after the sale is complete. Nothing is worse than realizing you don’t know how to work the business credit card machine or that you need a new one while you are checking a new customer out.
Before taking over the business, ensure that all the retail items are inventoried, the pawn loan balance, and the customer loans are inventoried along with the collateral items.
Did you ask where the shut off valves are for the gas, electric, and water?
National Trade Associations
As a pawn shop owner you may want to look into joining the National Pawnbrokers Association or a similar local group. The groups are supportive and have utils of information. The pawnbroking industry is now professionally organized with state and national trade associations, and these are valuable resources for information and how-tos for the inexperienced pawn shop owner.
Licensing, Sales Tax Permit
Some states require that you have a secondhand dealer license. This license protects you and gains the trust of your customers. Other licenses you may need are a pawnbrokers license, precious metal dealer license, sales tax permit, and a pawn shop license. A pawn shop license varies by the state and city regulations where the shop is located. Applications may require a background check, fingerprints, and financial records from your financial institutions.
Business Structure and Business Plan
As a pawnshop owner, you want to have a business structure and plan, including a business outline of what you want to accomplish now and in three months. A business plan will include short and long-term goals and business ideas you have for the future. Part of the plan includes the costs, so you have enough money to put everything in place and succeed.
Develop a Relationship With Local Authorities
The local law enforcement, local police department, and county officials can help with pawn shop theft, recovering stolen items, and supporting the shop when things go wrong. Invite the local police department into your shop and establish a relationship with them so they can work with you effectively if the need arises.
Building Loyal Customers after Starting Up or Purchasing an Old Pawn Shop - It's About Customer Loyalty
Terry did an amazing job taking a business idea and building a successful pawn shop business at Benny’s Pawn Shop. Now that Sam owns the business and has changed the name to Idaho Pawn and Gold, he has his work cut out for him to build the pawn loans and retail side of the shop.
He will need to make sure that customer are walking into his store instead of a competitor. With changes in ownership a few customers will leave and go elsewhere. Sam’s goal is to not only retain the existing customers but build a new customer base based on market research and understanding the target market.
Sam has zeroed in on making sure he builds customer loyalty to build his collateral loan balance and retail sales. Sam as the owner of the new pawn shop and Pawn Leads, a market solutions customer, understand that he has to implement a customer loyalty program that engages customers, encourages customers to participate in his business with lead magnets, and send out reasons why they should frequent his shop through opt-in programs, emails, and discounts.
A customer who is loyal with most likely engage in repeat business with a store or business. This is because the customer was satisfied with the interaction they experienced at the business, the value of the goods and services was worth experiencing again, and the process to get what they needed was easy.
Sam focuses on each customer’s experience, including in-store, on the phone, via mobile app, or online. The Pawn Leads marketing solution will help with this in the new store.
A happy customer translates to more collateral loans, collection of interest payments, more money spent in the store or in the online store, bigger profits and cash flow, and word-of-mouth referrals.
Because loyal customers know what to expect, loyal customers will spend more. They see your business as a brand. Sam understands the efforts made by Terry to turn his customers into loyal customers, and Sam will now have to find ways to help build their confidence in Idaho Pawn and Gold and him as an owner.
Sam knows it is five times easier to retain a customer than to acquire a new one. Sam and his team plan on providing existing customers a superior experience so they will continue to do business with Idaho Pawn and Gold.
New Pawn Shops Will Experience a Test of Trust
People are leary of new businesses, which is true for pawn shops. Sam understands that he won’t get a customers best items the first time they visit Idaho Pawn and Gold. The customer will be concerned about their personal finances and if the pawn shop is a place they can shop or get a collateral loan from without having to worry about fraud, outrageous interest rates, or dishonest appraisals. Sam and his team plan to build trust and provide a safe and comfortable place to shop. He will consider discounts and how to offer incentives to keep existing customers coming back.
One way Sam plans to build loyalty is by utilizing automation tools, and technology like Pawn Leads. He will set up automatic responses, and text message follow up asking for customer input and if their needs were met. This will give customers a way to give feedback to the new shop.
He will ask for honest reviews and input to improve what he offers.
He will send out text blasts, opt in programs, niche items, and emails to help customers keep connected. He may decide to employ some loyal customer programs or VIP benefits for customers on their customer loans if they have been a long term customer and keep coming in.
Sam Understands Everyone Has a Niche
Customers don’t want to receive a bunch of text messages that are irrelevant or of no interest to them. Sam knows this. He has a marketing plan that includes sending text messages and emails to customers based on their information. Gathering critical information will help him understand which messages are relevant and helpful to his customer base.
For example, as he builds the luxury line of gold and diamond jewelry, he will send text messages to customers who want to buy or sell gold and diamonds. If he has some customers who are concerned about their personal finances, he may send one time discounts for larger loans or loans paid for in a shorter amount of time. Remember, collateral loans are not personal loans. Pawn loans loan against the value of the collateral provided, and the pawn shop holds the collateral until the loan is paid in full. There are no credit checks or employment information gathered at the time of the loan, and customers can leave with cash in hand the same day they bring in their valuable collateral.
The best lists of customers to pull are dollars spent on retail sales, retail transaction count, dollars received on loan, loan transaction count, dollars received from buys, and buy transaction count. With these lists, you can send messages to retail customers about your loan guarantee program.
You can also target existing loan customers, thanking them and asking if they need any additional help. It is critical to stay top of mind with your customers so that when they need a loan, they do no search and simply drive to your store.
Admiration for an Honorable, Hardworking Man, A Man With A Vision, A Successful Pawn Shop Owner, A Man Willing to Help Start A Pawn Shop Called Idaho Pawn and Gold From the Foundation of Benny's Pawn Shop
I interviewed both Sam and Terry about the change in ownership of the pawn shop. Like most pawn shops, the store was filled with things for sale and a safe full of items held safely as collateral until the various customer loan balances were paid off. I asked what a successful pawn shop requires, and Terry said honesty and the ability to say no if no is suitable for the customer and the business and say yes if the inverse is the correct answer.
Sam owns and operates two other pawn shops that he started from the ground up. He said this was a little different because he had respect for how successful the pawn shop business was for Terry and how he managed all of the intricate processes with an adding machine, yellow pad, and a pen and paper. He said, “I couldn’t do it.” Not new to the pawn business, Sam smiled as he shared his business ideas for the pawn shop and how technology would take the shop further. Terry was kind and respectful when he offered that the new technology wasn’t for him and at the point he is in his life. He said the new generation of pawnbrokers is better equipped to master the new systems.
I asked him how pawn items and customers have changed, and he said that things today aren’t valued like they were during the previous years. It’s easier for customers to part with items because they don’t seem to have an intrinsic value. He said there isn’t a market for antiques or older items like before.
I watched Sam and Terry add up the value of the various items Terry had written on a yellow pad. Sam used the older ten-key adding machine and said, “Just show me how I keep messing it up.” Terry smiled. With kindness and years of wisdom, he showed Sam the ins and outs of simplicity.
It was a wonderful moment to see new business ideas and old ones merge towards success in the future. I could not help but think Terry has built a legacy.