National Pawnbroker Winter 2015 by National Pawnbrokers Association

Official Publication of the National Pawnbrokers Association

WINTER 2015

2015 LEGISLATIVE CONFERENCE: Intersecting with Capitol Hill p.10

Getting the Best Deal for Your Business p.34

Whatâ&#x20AC;&#x2122;s New at Pawn Expo 2015 p.30

Get the Competitive Edge with CPP p.24

1 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

MESSAGE FROM THE PRESIDENT

Opportunity Knocks

Ben Levinson NPA President

THIS ISSUE INCLUDES a new column called “Young Pawnbrokers to Watch”. Just 20-plus years ago, I was considered a young pawnbroker. As I read Kathleen Barbee’s story, I remembered again why I chose this profession. It was because of the opportunity. As a pawnbroker, I have been able to own my own business. No bosses or corporate culture, no glass ceilings or restrictive company rules, just the opportunity to make my own decisions each day and run my operation as I see fit. Through hard work and perseverance, my pawnbroker career has allowed me to earn a good living. That’s an opportunity not available to everyone in the world. Ask any immigrant how he feels about our enterprise system and you will most likely hear that America is, indeed, “the Land of Opportunity.” Each day in a pawn store can be deeply fulfilling. When you make a loan to help a customer pay his monthly rent or a young family struggling to pay a doctor bill, you know you have made a difference. Every day, you have the opportunity to touch someone’s life. So, no matter whether you are young or old, I challenge each of you to get more involved with the NPA. Take advantage of the opportunities your membership provides you. Recruit a member, attend the Legislative Conference, serve on a committee, register for Pawn Expo, become a mentor. You’ll attain greater success in the process. And remember to enjoy this opportunity you have been given - to be a pawnbroker.

“Opportunities are never lost; someone will take the one you miss.”

—Author Unknown

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 1

Table of Contents The first five (5) first-time register attendees who will receive a one-night complimentary hotel stay.

Your voice is needed in Washington, DC!

NPA LEGISLATIVE CONFERENCE APRIL 29, 2015 | HAMILTON CROWNE PLAZA HOTEL The upcoming annual NPA Legislative Conference in Washington, DC, gives you access to key congressional members who need to know about the pawn industry. The conference focuses on timely federal issues that have an impact on America’s pawnbrokers. As an attendee, you will help advance NPA’s message to your elected officials. WHY SHOULD I ATTEND? > Network with like-minded pawnbrokers who share a passion for advocacy. > Learn about pending pawn issues from Cliff Andrews, NPA Lobbyist. > Meet with Members of Congress and their staff for personal discussions about pawn.

WHAT SHOULD I EXPECT? NPA will make appointments on Capitol Hill for all attendees with support materials and talking points provided. A breakfast and briefing will be held at the hotel on Wednesday, April 29, before attendees meet with their representatives. A debriefing and

dinner will conclude the conference that evening.

SCHEDULE April 28 Travel day to Washington, DC

April 29 Legislative Conference and debriefing dinner

April 30 Travel day from Washington, DC There is no registration fee for the Legislative Conference, but you are responsible for your own travel expenses. Special hotel rates are available to attendees.

“It was a great opportunity to get face to face with the people we elected and talk to them about our industry. I felt like I helped bring to light the concerns that the NPA and I have about legislation that was being brought forth, and had a good response from my Senators and Representatives.” —Jeff Knight,

HOTEL INFORMATION | Hamilton Crowne Plaza 1001 14th St NW | Washington, DC 20005 | (202) 682-0111 Room Rate: $279/night

Bayou Pawn, Zachary, LA

COVER STORY

WINTER 2015 30

Share your story with Members of Congress at the 2015 Legislative Conference Page 10

For questions, please contact Matthew Church at Matthew@NationalPawnbrokers.org or the NPA office at (817) 337-8830.

HIGHLIGHTS Certified Pawn Professional Spelling Out the Details Page 24 What’s New at Pawn Expo 2015

Contributors for this issue of National Pawnbroker Doug Davis Numismatic Crime Information Center Dillon Fontaine Marshall & Sterling Insurance Tony Gallo Sapphire Protection

Page 30

Mergers & Acquisitions: How to Get the Best Deal Page 34

Kevin Geraci Mathur Media Group

IN THIS ISSUE

John Kellogg Kellogg and Kellogg, P.C.

Message from the President 1 Message from the Executive Director 4 Government Relations Update 6 Book Corner 11 Compliance Reduce Risks to Increase Profit 29 Community Involvement FBL 2015 Scholarships 41 Member Spotlight Sunbelt Jewelry & Loan 12 Young Pawnbroker to Watch Kathleen Barbee 17 Vendor Spotlight Burrell Printing 19 Membership Anti-Money Laundering Course 54

Member News Where There’s Smoke 36 New NPA Members 48 5 Reasons to Shop 50 State Association News 52 Business Sense Don’t Be a Victim 9 Money Makers: Top 3 Marketing Ideas for 2015 14 A Grading Dilemma 18 Put It in Writing 20 DIY Public Relations 23 Creating an Experience 26 Tax Tips 43 Calendar of Events 58 Index of Advertisers 59 Pawnder This 60

Rudy Klancnik Steve Krupnik Cloud Ten Inc Eric Mor Abe Mor Diamond Cutters & Co Emmett Murphy 3CLiCk Media Herb Schottland Store Design and Fixturing Steve Stallcup Stallcup Group

National Pawnbroker is the official publication of the National Pawnbrokers Association (NPA), and is published quarterly. No part of this publication may be reproduced without the written consent of Dana Meinecke, NPA Executive Director. Sale or distribution of any or all of the contents of this magazine is prohibited. All rights reserved. For more information on advertising or to obtain additional copies of National Pawnbroker call (817) 337-8830 or send an email to Margie@NationalPawnbrokers.org. For membership information, email Helen@NationalPawnbrokers.org. EDITOR’S NOTE: This publication is designed to provide accurate and authoritative information on the subject matter covered. It is provided and disseminated with the understanding that the publisher is not engaged in rendering legal or other professional services. If legal advice is required, the services of a competent professional should be sought. © 2007-15 National Pawnbrokers Association: PO Box 508, Keller, TX 76244 • (817) 337-8830 •NationalPawnbrokers.org EDITOR: Margie Swoyer, Director of Communications & Marketing, Margie@NationalPawnbrokers.org DESIGNER: Kim Baker

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MESSAGE FROM THE EXECUTIVE DIRECTOR

Stepping Up to (Raise) the Bar 2014 WAS A YEAR OF RE-EVALUATION AND PLANNING for new changes at the NPA. 2015 is the year to implement those changes and get our Strategic Plan rolling. It’s time to raise the bar for a smarter, stronger, and more relevant NPA. Start off the year right by registering to attend the 2015 Legislative Conference held April 29 in Washington, DC. Each year, this conference provides valuable insight to our members as well as for the congressional members they meet with. Join us and share your story with those who need Dana Meinecke, to hear it the most. NPA Executive It may be six months away, but we are in full planning mode for Pawn Expo 2015. Read about Director the new educational sessions, engaging speakers, and fun events we have planned for you on pages 30-33. The earlybird registration discount ends May 22, so make your reservations now to attend. As a result of the NPA Strategic Plan’s focus on education, a new Certified Pawn Professional (CPP) program has been created. Completion of the program will give you that special distinction for the competitive edge. Read more about the course, covered topics, and the exam process on page 24. Another date you don’t want to miss is the April 24 application deadline for the Future Business Leaders (FBL) scholarships. Education costs are continuing to rise and these scholarships help pave the way for our up-and-coming business leaders. Nominate someone from your community or make a donation. See page 41 for more details. We want to extend a huge thank you to all our new and renewing members who have diligently sent in their membership forms and pawn licenses. Please take time to welcome the new members into our pawn family. You are what make the association such a great organization. This magazine, National Pawnbroker, is one of your best resources for timely information about the pawn industry and making your business a success. Our goal is to make each issue better than the last one. In that light, we are adding some new columns this month that we hope you will find interesting as well as entertaining. • Learn about Kathleen Barbee’s rise to success as a leader in the pawn industry in Young Pawnbroker to Watch (page 17). • Read about The Dream Manager’s company turnaround in Book Corner (page 11). • Revisit Las Vegas all over again in Rudy Klancnik’s Pawnder This commentary (page 60). If you have suggestions for other topics you would like to read about, send an email to our editor, Margie Swoyer, at Margie@NationalPawnbrokers.org. If you have questions or concerns about your membership or the association, please contact me or the staff at NPA. We are here to serve you!

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NPA STAFF

Dana Meinecke Executive Director Dana@NationalPawnbrokers.org Helen Moore Director of Membership Helen@NationalPawnbrokers.org Lindsay Wilson Director of Meetings and Events Lindsay@NationalPawnbrokers.org Margie Swoyer Director of Communications and Marketing Margie@NationalPawnbrokers.org Matthew Church Government Relations Administrator Matthew@NationalPawnbrokers.org

Terri Congleton Administrative Assistant Terri@NationalPawnbrokers.org

MAILING ADDRESS: PO Box 508, Keller, TX 76244 PHYSICAL ADDRESS: 891 Keller Pkwy, Ste 220 Keller, TX 76248 Phone: (817) 337-8830 Fax: (817) 337-8875 NationalPawnbrokers.org

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GOVERNMENT RELATIONS

Preserve, Protect, and Defend TAKING CHARGE OF OUR OWN DESTINY

THE MID-TERM ELECTIONS have come and gone bringing a new makeup of Congress moving forward in 2015-16. Republicans increased their number of seats in the House and now have the majority in the Senate. With Republicans in control of both the House and Senate, it will be interesting to see how the President and Congress will collaborate to move forward. The NPA will continue to work with both political parties in Washington to ensure the pawn industry’s story is told and our interests are protected. I’m speaking of independent pawnbrokers specifically, not the large, multi-store public operations. On the surface, it appears those companies are working to distance themselves from their online and payday operations by returning their focus to the traditional pawn business that got them started. Therefore, it is just as important as ever to make the presence of the independent, traditional pawnbroker known. Although the Federal Charter proposal has temporarily been on the back burner, we can be certain the large public companies will once again turn up the heat and continue to push for the passage of this legislation that favors them. It is imperative

that we have all hands on deck to convince Congress of the importance of maintaining a level playing field for small businesses. It is the same old story—Wall Street versus Main Street. There is no better opportunity for independent pawnbrokers to tell our story than at the upcoming NPA Legislative Conference on April 29. Held each year in the nation’s capital, this event provides NPA members with an unprecedented opportunity to visit the offices of their elected officials to discuss important pawn issues. With so many new faces in Congress, it is imperative we meet our new representatives and touch base with those returning Members to bring them up to speed about the pawn industry. This year’s Legislative Conference once again promises to be one of the most critical meetings for NPA’s independent pawnbroker members in quite some time. See page 10 for more details on how to register and where to stay. The NPA is committed to helping first-time attendees be part of the conference. The association is offering one night’s free hotel room to the first five, first-time attendees who register for the conference saving the attendee over $280.

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Tim Collier NPA GRC Chair

ALWAYS VIGILANT The NPA Government Relations Committee (GRC) has been working on a host of issues with the most pressing recently being the revisit of the Department of Defense rule governing interest rates for lending to active duty military. The NPA submitted extensive comments in support of maintaining our traditional pawn transaction exemption from the rule that we secured in 2007. The outcome remains unknown, but we are making every effort on your behalf. With the help of the NPA GRC, many state pawn associations are constantly monitoring privacy issues and onerous regulations that threaten our industry’s reputation and mere existence. We are also seeing attempts by the title lending industry to gain entry into states where they are either banned or not profitable to operate by inserting language into existing traditional pawn statutes. As you know, title lending is a completely different

product and requires its own regulations separate from those governing traditional pawn transactions. We must all keep a close eye on any attempt by other industries and outside interests to modify our state pawn laws. If you become aware of any such movement, please contact the NPA office immediately with that information. OUR MESSAGE We are not like other lending products! Pawn is a nonrecourse, collateral based

transaction. We must educate local, state, and federal officials about the valuable role we play for the unbanked and underbanked American consumers in need of short term, small dollar loans. With so much negative publicity and attention focused on ‘predatory lending’, it is more important than ever to differentiate the traditional pawn industry. It must be made clear that we are a safety net lender for consumers in need of shortterm cash loans that are not otherwise available to them.

WHAT CAN YOU DO? The number one thing that you can do to protect our industry is to attend the Legislative Conference in April. If you’ve never participated in this event before, know that we will assist you and provide everything necessary to ensure that you enjoy a memorable and exciting learning experience. Sign up today and join your fellow pawnbrokers in telling our story once again!

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 7

8 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

BUSINESS SENSE

Don’t Be a Victim DEVELOPING A TACTICAL MINDSET FOR PAWNBROKERS By Doug Davis Founder/President, Numismatic Crime Information Center NUMISMATIC CRIME continues to escalate. The chance of a pawnbroker becoming a victim is very real in today’s society since not everyone is a law abiding citizen. There are individuals and organized groups who have no regard for your life, your family’s life, or your possessions. For this reason, it’s necessary for pawnbrokers to develop a “tactical mindset” to reduce the chances of becoming a numismatic crime victim.

A tactical mindset is being constantly aware of your surroundings, eliminating tunnel vision and complacency, and always being alert to potential danger. It means you train and practice certain tactics that will ensure survival for you and your loved ones in a dangerous situation. The intentions and behavior of other people we come into contact with are not easily predictable. Therefore, we must learn to read body language, listen to verbal cues, and understand sensory perceived motives and intentions. Do you know who is around you when withdrawing money from an ATM machine? Do you look for suspicious vehicles following you after leaving your residence or business? Do you allow persons to get into your personal space? Do you text while walking? Do you walk down the street in a confident purposeful manner that says, “I am not a victim”? Being alert and non-complacent allows you to identify or anticipate an incident before it

happens and provides an opportunity to act in a swift manner that will increase your survival odds in a dangerous situation. Having a tactical mindset is reviewing your surroundings before getting out of your vehicle when parking in open lots or garages. It’s varying your daily routine and travel routes. It’s keeping your valuables in sight while traveling. It’s remembering to set all alarms and lock all doors. It’s sitting with your back to the wall when eating at a restaurant. It’s locating the exits signs in buildings. It’s scanning your surroundings at all times. Personal safety countermeasures require thought and action. Always have a plan in mind wherever you go. Visualize dangerous situations you might find yourself in and visualize your responses to those situations. Practice situational awareness and avoidance; know your escape routes; maintain physical boundaries, and use verbal diffusion when appropriate. Your mindset, your attitude, and your tactics are crucial elements in stopping an attack. By staying aware of your surroundings, you remove the element of surprise from an enemy or the unknown. The pawnbroker who develops and practices a tactical mindset is one step ahead of a numismatic predator. Be prepared for the unthinkable as though it were the inevitable. Maintain a state of heightened awareness to eliminate complacency and reduce your chances of becoming a crime victim. Think safety, security, and survival in all aspects of your life. Your development of a tactical mindset means you refuse to be a victim. Sign up for free e-mail crime alerts at numismaticcrimes.org for current information on crimes targeting the numismatic community. The Numismatic Crime Information Center is a 501(c)(3) non-profit corporation whose mission is to serve as a national and international resource for collectors, dealers, and law enforcement in the education, prevention, and investigation of crimes involving coins, paper money, tokens, medals, and related numismatic items.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 9

The first ime five (5) first-t gister re ho w s attendee e-night will receive a on complimentary hotel stay.

Your voice is needed in Washington, DC!

> Network with like-minded pawnbrokers who share a passion for advocacy.

dinner will conclude the conference that evening.

SCHEDULE

> Learn about pending pawn issues from Cliff Andrews, NPA Lobbyist.

April 28

> Meet with Members of Congress and their staff for personal discussions about pawn.

April 29

WHAT SHOULD I EXPECT?

NPA will make appointments on Capitol Hill for all attendees with support materials and talking points provided. A breakfast and briefing will be held at the hotel on Wednesday, April 29, before attendees meet with their representatives. A debriefing and

Travel day to Washington, DC Legislative Conference and debriefing dinner

“ It was a great opportunity to get face to face with the people we elected and talk to them about our industry. I felt like I helped bring to light the concerns that the NPA and I have about legislation that was being brought forth, and had a good response from my Senators and Representatives.” — Jeff Knight,

HOTEL INFORMATION | Hamilton Crowne Plaza 1001 14th St NW | Washington, DC 20005 | (202) 682-0111 Room Rate: $279/night

Bayou Pawn, Zachary, LA

For questions, please contact Matthew Church at Matthew@NationalPawnbrokers.org or the NPA office at (817) 337-8830.

BOOK CORNER

A JANITORIAL COMPANY has a problem. Employees are consistently late, absent, or quit after three months. The management team is at a loss as to why this is happening, but they chalk it up to the nature of the business since few people want to be a janitor. However, by learning more about the lives of their employees and hearing about their dreams for the future, they find ways to help them reach their goals. This, in turn, significantly reduces the turnover and absenteeism problem making for a more profitable company and happier employees. The book is based on JANCOA, a contract cleaning company, headquartered in Cincinnati, Ohio. The company is run by CEO, Mary Miller, who, along with her husband, Tony Miller, learns the secret to employee satisfaction is not necessarily a bigger paycheck, but the fulfillment of personal dreams. They created the Dream Manager program which identifies what employees want most for

their future and then help the employees set up the necessary steps to reach those goals. Author Matthew Kelly explores the connection between our personal dreams and the way we engage at work. Through collaboration, companies can achieve their corporate objectives, and employees can achieve their personal dreams at the same time.

The Dream Manager by Matthew Kelly

“ Most employees feel like they are being used. But if you can genuinely convince them that you have their best interests at heart, then you will reverse that belief, and in the process, create a spirit of teamwork and loyalty rarely unleashed in the corporate world.” — The Dream Manager, by Matthew Kelly

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PAWNBROKER SPOTLIGHT

Sunny Days Ahead SUNBELT JEWELRY & LOAN

NATIONAL PAWNBROKER MAGAZINE met Anthony Vanegas, Executive Director of Sunbelt Pawn, in 2011 when he joined the NPA. Since then, he and his staff have been regular attendees at Pawn Expo. NATIONAL PAWNBROKER (NP): Tell us about your background. How long have you been a pawnbroker and how did you get started? ANTHONY VANEGAS (AV): I have been a pawnbroker for 21 years. I accompanied my pastor into a local pawnshop in Irving, Texas, looking for musical instruments for our church. I translated for my pastor as he did not speak English, and the owner of the pawnshop, Bill Browning, offered me a job. NP: How long have your stores been in business? AV: I have been a first-generation pawnshop owner since February 2006. NP: Where are you located? AV: We have three stores in north Houston and will be opening a new store in Irving, Texas, after the first of the year. NP: How do you keep on top of all the business decisions you have to make every day? AV: I make it a point to be apprised of what is currently affecting our industry. I make an effort to nurture relationships with other owners and actively participate in our state and national associations. I have also built a strong knowledgeable team to assist in making decisions. NP: What do you think the biggest hurdles will be for the pawn industry in the next few years? AV: I believe the drop in gold prices and the amount of gold taken out of the rotation from the spike in gold buyers has challenged us to focus on general merchandise.

12 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

Top Right: Sunbelt Pawn in Houston, Texas. Bottom: Anthony and Nena Vanegas are open for business at Sunbelt Pawn.

NP: How do you get customers into your store? AV: Customer referrals. At the end of our transactions, we always ask our customers to tell their friends about us. We feel that if we treat our customers with respect, they will be happy to tell their friends about us. NP: What is the most unique item ever pawned at your store? AV: An antique CASSENS & PLATH marine Sextant in the original case. NP: What was the hardest thing you had to learn as a new pawnbroker? AV: The hardest thing would be that people feel that there is no need for our industry. NP: What is your favorite thing about being a pawnbroker? AV: I find great satisfaction in being able to help customers meet whatever need they might have financially. NP: Why are you a member of NPA? AV: Being a member has given us an opportunity to meet many wonderful people in our industry. There are so many talented pawnbrokers to gain insight and knowledge from.

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WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 13

BUSINESS SENSE

Money Makers 3 LOW-COST MARKETING IDEAS TO BOOST SALES

INDUSTRY EXPERT, Steve Krupnik, shares his thoughts on marketing programs you can initiate now to make 2015 a successful year for your business. Listed below are the top three marketing ideas I’ve used in my pawn stores and now provide to my pawn store coaching clients. I picked these three because they are all low cost, high return on investment marketing strategies. If you choose to do all three of them, you will likely experience the strongest business year you’ve ever had.

automation of your pawnshop marketing campaigns. A CRM program will allow you to deliver unmatched customer service, increase sales, and market to the right customer at the right time all on auto-pilot. There are many affordable, effective, and simple to use CRM programs available for small businesses. They will free up more of your time and automate all of the marketing systems and campaigns you choose to do in your pawn store. Most importantly, they track results.

IMPLEMENT CRM CRM is an acronym for “customer relationship management” and is the

RECIPROCAL REFERRAL RELATIONSHIPS This is a very simple marketing system that’s affordable,

14 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

Steve Krupnik Cloud Ten Inc.

effective, and shows a very high return on investment. It’s partnering with a local, noncompeting small business and promoting each other’s business. A quick example is one I did with a small business owner who had the best independent pizzeria in my market area. I knew the gentleman because he was a shopper in my pawn stores. We decided to give a reciprocal referral relationship a trial in our businesses and designed two coupons. His coupon offer was “Buy one pizza and get the second one at 50% off”. The coupons were handed out in my pawn store as a reward to everyone redeeming a pledge, purchasing an item, or selling an item. My customers loved them and used them frequently. My coupon offer was 20% off any single retail purchase in my pawn store. These coupons were taped to the top of every pizza box that left his restaurant. His customers loved them.

Which small noncompeting businesses can you partner with for a reciprocal referral relationship in your market area? If you do more than one, make each coupon offer unique. This will help you track what is working and what is not. OUT OF CATEGORY MARKETING This marketing idea produces amazing results if your pawn store has a strong internet presence. It presents pawn loans as a product to prospects who’ve never considered getting one. You pick a category of people who may benefit by learning more about the pawn

loan process, and then market to them. As an example, let’s choose “credit and debt counseling”. Have your webmaster build a special landing page for your website explaining how pawn loans work for people who are seeking credit and debt counseling. This special landing page is the heart of your out-ofcategory marketing. Once the landing page is live, you write an interesting pay-per-click (PPC) ad and purchase a local PPC campaign for the page. Your PPC ad comes up any time someone in your market area is searching for credit and debt counseling.

When they click it, the special landing page offers pawn loans as an interesting alternative to these services. Try one, two, or all three of these ideas to boost your sales. Stephen Krupnik, a pawnbroker for 30 years, is the creator of the Pawn Shop Performer™ and the Pawn Shop Advisor™ coaching programs. He teaches, coaches, and consults with pawn store owners and employees on how to attract greater success and systemized profits, and ultimately live the life they desire and deserve. For more information and free tips on how to further your career in the pawnbroking industry, please visit his websites at PawnShopPerformer.com and PawnShopAdvisor.com.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 15

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YOUNG PAWNBROKER TO WATCH

Kathleen Barbee:

BUSINESS DEVELOPMENT MANAGER, LOMBARD FINANCIAL SERVICES, L.P.

ALTHOUGH KATHLEEN BARBEE has issue of National Pawnbroker, entitled “Achieving only been in the pawn business for four years, Customer Loyalty”. She was also a speaker she has already made quite an impact on the at Pawn Expo 2013 presenting a seminar on industry. When she was hired by Kevin Prochaska, “Delivering Excellent Customer Service at the President of Lombard Financial Services, she was Pawn Counter”. Her well-received message put tasked with creating a formal employee training her in the spotlight and she was asked to serve on program for the company’s 13 pawn stores. What NPA’s Board of Directors in 2014. began as a store-by-store, self-paced program Regarding the industry’s future, Kathleen states, has now evolved into a week-long “As pawnbrokers, we have the orientation class that includes ongoing pursuit of educating the “ I have found hands-on exercises in a controlled general public and our governing environment. officials. The most important thing that it’s not She also formalized all processes we can do as an industry is to necessarily and procedures into a Standard change the common misperceptions Operating Procedures Manual. and to continue educating our the specific The company’s standard practices friends, local authorities, and accomplishments family, are continually audited to increase elected representatives on the ways efficiencies and provide consistency we support our local communities.” a person has throughout the organization. Kathleen earned a business achieved during As the Business Development management degree from Texas Manager, Kathleen oversees the Wesleyan University and says, “I their career, daily operations of the business that am truly fortunate to be surrounded but the conflicts by very intelligent and experienced includes creating and executing company policies, recruiting individuals. These individuals have he or she employees, developing educational well established careers in their experiences programs for team members, respective businesses and have been and ensuring compliance with able to see a potential in me that that propels governmental regulations.The I didn’t always know was there. I them forward.” employee onboarding program have found that it is not necessarily lasts for a total of six months with the specific accomplishments a scheduled feedback and oversight. “Cultivating person has achieved during their career, but the engaged leaders is our primary goal,” says conflicts that he or she experiences that propels Kathleen. “We are constantly recruiting additional them forward.” talent to aid in our growth strategy.” No doubt we will be hearing a lot more from In addition to her full-time position, Kathleen Kathleen Barbee as she climbs the ladder to found time to publish an article in the Spring 2013 pawn success.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 17

BUSINESS SENSE

A Grading Dilemma UNDERSTANDING THE EGL CONTROVERSY

NATIONAL JEWELER REPORTED on 12/16/14 that class-action lawsuits will be filed against EGL International and some prominent, largescale retailers early next year. The accusation will be that EGL International systematically over-graded diamonds, and then retailers, with full knowledge of this practice, sold the diamonds to the end consumer. Since the controversy, the question has been raised, “Is there a definitive grading standard in the diamond industry, and is it ethically necessary for professionals who sell to abide closely to this standard?” The answer from the public and lawmakers has been a resounding, “Yes!” For diamond experts in the trade, Gemological Institute of America (GIA) has always been the industry standard. All experts in the trade buy according to strict GIA standards. However, when it comes time to sell, the diamond seems always to improve. Diamonds below I color, SI2 by GIA standards tend to be sent to other labs for more generous grading. EGL-USA and International Gemological Institute (IGI)

are generally found to grade one to two grades lower on color and a half grade lower on clarity than GIA. When it comes to SI clarities, they can be even more liberal. EGL International labs can be four to five grades or more off from GIA standards. The industry is moving toward increased transparency which should be invited. This will affect every professional involved in the buying and selling of diamonds. We must be vigilant to recognize the true industry standard of GIA, learn to grade by that standard, and disclose this quality of grading to whomever we are selling to, regardless of the accompanying report. We’ve learned that customers do not want “I SI2” or better because they are experienced professionals who have done extensive lab research. Rather, the consumer wants a beautiful diamond, and color/clarity/cut grades have taught them a sort of quantification. We need to further educate the public regarding what makes a diamond beautiful. A nice I1 can be more desirable than an SI2, and a J color better than an H if the material of the stone is crisp and ultra transparent facing up

18 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

Eric Mor Owner, Abe Mor Diamond Cutters & Co Eric, Lisa, and Alon Mor are the owners of Abe Mor Diamond Cutters & Co, a New York based, 50-year-old diamond cutter and wholesaler started by their father, Abe. With over 35 years in the diamond industry, Eric’s specific expertise is in diamond grading and evaluation. For more information, visit AbeMor.com or send an email to Eric@AbeMor.com.

white, and with superior brilliance. Beauty and value are not directly correlated to higher color and higher clarity necessarily. There are too many value factors to enumerate. It’s an art and a science to convey them responsibly and accurately to the buying public.

INDUSTRY PARTNER SPOTLIGHT

Prints Charming

BURRELL PRINTING HELPS PAWNBROKERS STAY COMPLIANT

BURRELL PRINTING is one of the original members of the NPA having joined the association in 1986. Mark Bolles, President of Burrell Printing, also served on the NPA Board at one time. We sat down with him to discuss how the economy has affected the printing business.

NATIONAL PAWNBROKER (NP): How long have you been in business? How did you get started? MARK BOLLES (MB): Burrell Printing is a family-owned and operated full-service printer founded in 1960 by Ross Cearley. Starting in the mid-60’s, Ross turned Burrell’s focus to serving the Texas pawn industry. Over the years, we have expanded, and now service pawnbrokers in all 50 states. NP: Tell us about your company. MB: We have one location in Pflugerville, Texas, with a staff of 24 full-time employees. We offer all types of printing services, from carbonless and laser sheet pawn forms to cards, flyers, and customized promotional items. NP: What new trends are you seeing in the printing industry? MB: The biggest trend we have seen this year is that pawnbrokers are upgrading their pawn management software. When they upgrade, many pawnbrokers are moving from carbonless forms to

preprinted laser sheet forms. This move is reducing their overall forms cost. Still trending from last year is the opening of new pawn shops. Even with the drop in gold price, we are still seeing a large number of new pawn shops. NP: How can your products and services help our pawnbroker members? MB: The main benefits we bring to independent pawnbrokers are predesigned pawn forms. We work with both federal and state regulatory agencies to develop compliant pawn forms. We also partner with most all pawn management software companies in the development of pawn forms that work smoothly with their software. NP: How do you keep on top of all the business decisions you have to make every day? MB: By staying in touch with the needs of our clients. As their needs change, we change. An example is the move toward laser sheet pawn forms. Since the advent of laser sheet forms, we have added two new presses dedicated to this product. NP: Why are you a member of NPA? MB: We understand how federal regulations can help, or more likely, harm the pawn industry. The industry has to have a voice

Mark Bolles President, Burrell Printing

“ The industry has to have a voice in Washington and a strong NPA is a must. We support the NPA because we want to protect the industry that provides us with our livelihood.” in Washington and a strong NPA is a must. We support the NPA because we want to protect the industry that provides us with our livelihood. NP: What is your vision for your company for the next five years? MB: For many years, the printing industry has been consolidating. Many companies have closed. Because of the strength of the pawn industry, we have experienced overall growth. In addition, we are working to expand the services we offer to include full color printing and mailing services. NP: What is the best way for our members to contact you or to learn more about your company? MB: Simply give me a call at (800) 531-5234 or email me at mbolles@burrellprinting.com. You can also visit our website at Burrellprinting.com.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 19

BUSINESS SENSE

Put It in Writing CREATING A POLICY AND PROCEDURE MANUAL FOR YOUR BUSINESS DO YOU HAVE A WRITTEN POLICY TO ADDRESS ANY OF THESE SCENARIOS? • Your manager decides to come in to your store alone early on a Sunday morning to catch up on some paperwork. He is approached as he enters the store and forced to empty the safe of all the cash. • You find out that a trusted employee has taken home a lawnmower, Xbox, and a pair of diamond earrings without getting approval from anyone. She said she was borrowing them and planned to put them back next week. • A person grabs a gold chain from your employee and runs out the door. Your employee pulls out his handgun and shoots at the person running away. The bullet misses and strikes an innocent person in the parking lot. As a business owner, it’s very important to have written policies and procedures to grow and protect your business. If you take a look at any successful business, you will see they all have a “road map for success”. This road map was developed over time by identifying and correcting business mistakes. Although this road map is understood by the owners or senior members of management, it’s very important

that it be communicated to all employees as well. Without a clear understanding by each employee of what is expected, it will be very difficult to successfully manage and grow your business. A comprehensive policy and procedure manual should clearly detail your rules, your regulations, and procedures on how things should be done. This written document will clarify employees’ expectations about your business polices, and communicate standards of action and behavior. Your manual can also protect your company from possible legal action and exposure to acts not condoned by the owner. It gives your employees the information needed to support management and to do their jobs. Your policy manual should be divided into sections covering at least the following areas: 1. Company standards 2. Working conditions 3. Work expectations 4. Wages and benefits 5. Performance reviews 6. Termination Policy 7. Administration It should be as detailed as possible, so it can be used as a training manual for new employees as well as a resource manual for existing employees.

20 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

Tony Gallo Senior Director, Sapphire Protection Tony Gallo is the Senior Director of Sapphire Protection with over 30 years in the loss prevention, audit, safety, and risk/ emergency management fields. Contact Tony at tonyrgallo@gmail.com and follow him on Twitter at @SapphireProtect.

Include items such as loaning guidelines, merchandise sales, gold and diamond testing, firearms usage, merchandise borrowing, etc. If you have never written a policy or procedure manual, you may want to get professional help from a consultant who is knowledgeable about best industry practices and specializes in writing policy and procedure manuals. A well-planned and maintained policy and procedure manual will greatly facilitate the growth of your business. This manual is always a wise investment in your future and should be used as a foundation on which to build and grow your business. Be safe and be profitable.

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BUSINESS SENSE

DIY Public Relations GETTING THE WORD OUT ABOUT YOUR BUSINESS MEDIA INTEREST in the pawn industry is at an all-time high. Journalists, reporters, and researchers are continually seeking information about pawn customer demographics, competitive gold pricing, or how pawn loans work. Public relations, commonly referred to as PR, can connect you with these reporters to get your pawn store in the news. HOW PR WORKS PR is different from advertising, and it delivers different results. It’s an activity that builds awareness of your business with the public. When you advertise, you pay for ad promotion. In PR, the article that features your business is not paid for. This kind of publicity is more valuable than paid advertising and often more cost effective. DRAFTING A PRESS RELEASE Journalists, television news reporters, editors, and online news bloggers are busy people. They often don’t have the time or resources to find new stories, tips, or information sources for their next article. Press releases can generate ideas for them. A press release is a written statement directed to members of the media that is designed to pique their interest in a specific announcement. This announcement can be a news item, event, new product or service, or an accomplishment. Press releases are a powerful

tool for pawn stores and knowing what to announce and how to write an effective press release takes time and experience. • Write about something newsworthy. • Include statistics, financial information, and numerical facts. • Compose the press release like a reporter would. If it looks and feels like a real article, reporters will see a story that has already written itself.

Emmett Murphy 3CLiCk Media

US” page of a news organization’s website. If you are able to send an email, include only text in the email. Do not attach an image, press release, or document to the email.

PRESS RELEASE DISTRIBUTION Send the press release to as many people as possible in each organization who may be interested in your announcement. For example, if you are submitting to a newspaper, send it to editors in multiple sections such as lifestyle, news tips, local business, financial, and local community.

Contact Forms Most news organizations do not provide email addresses of their staff, but they may allow you to submit a press release story idea by using a contact form on their website.

WAYS TO DISTRIBUTE YOUR PRESS RELEASE Personal Contacts If you have any friends or relatives who are in the media, ask them to pass along your press release.

Public Relations Consultant Hire a public relations consultant to help with the press outreach. It may prove to be a worthwhile investment as a successful PR campaign can provide a great deal of “free” advertising for your business.

Advertising Representatives If you pay for advertising in local newspapers, television commercials, billboards, advertising agencies, or yellow pages, ask them for help getting your press release distributed. Email You may be able to find email addresses of news editors or journalists on the “CONTACT

Fax If you can find a fax number for a news organization, use it.

Customers Your customers can be very helpful in getting the message out. Print several copies of the announcement to give to customers in your store. You can also include the announcement on your Facebook page, in email newsletters, and on your website.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 23

MEMBERSHIP

Certified Pawn Professional Designation SPELLING OUT THE CPP DETAILS

IN THE FALL 2014 ISSUE OF National Pawnbroker, we shared how professional designations can materially enhance the competitive advantages of those who earn a professional designation. Designations can set them apart from their competitors while also earning a higher level of trust from their customers—something that is particularly important and timely as competition in the pawn industry continues to heat up. Many business owners have also discovered that encouraging their employees to pursue professional designations, like CPP, boosts morale, reduces turnover, and enhances an employee’s selfconfidence. In other words, it’s a smart investment in your business’ most valuable asset – your staff. Once completed, your employees will have the knowledge to be more productive and more effective team players in your business. The Certified Pawn Professional (CPP) learning program is not intended as an orientation for those who are new to the pawn business. Its purpose is to provide those who have been engaged in the pawn business for three years or more with a more advanced learning program that is designed to substantially enrich their knowledge. So substantially, in fact, that doing so will earn them the right to add the designation “CPP” behind their names. HOW THE PROGRAM WAS CREATED It is anticipated that most students will take two or three years to complete the program, even though NPA plans to ultimately offer all programs several times each year. In addition to offering programs at Pawn Expo, NPA plans to conduct learning programs around the nation making it more convenient for more members to participate.

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TOPICS COVERED Initially, the CPP learning programs will include six sections each lasting one day in duration. Participants must complete five in order to receive the CPP designation. Topics include: • Store Operations • Marketing, Public Relations, and Communication • Product Knowledge • Federal Regulations • Security, Risk, and Crisis Management • Human Resources A dedicated group of NPA members have been working hard to design and create each of the six CPP learning programs. Each member of the CPP Task Force has given considerable thought to the scope of the program’s entire content. This constitutes what is known as the body of knowledge and includes an impressive spectrum of subject matter. If it’s not everything you need to know about operating a pawn business, it’s pretty darn close. As the CPP program evolves and matures, changes and additions to the course content will be made. Each of the six learning programs will be reviewed regularly and updated to include new content, such as new laws or regulations that may need to be incorporated into the curriculum. A key

A key objective of NPA is to keep CPP completely up-to-date and always highly relevant. It’s intended to become the singular and preferred resource for all pawn professionals. objective of NPA is to keep CPP completely upto-date and always highly relevant. It’s intended to become the singular and preferred resource for all pawn professionals. EXAM PROCESS At the conclusion of each learning day, those students who wish to pursue the CPP designation will take a one-hour written examination consisting of 40 forced choice questions. Forced choice questions are similar to multiple-choice questions but may have more than one correct answer or no correct answers. It is a way to ensure that students truly understand the course content. Those who answer 30 of the 40 questions will pass the examination. Those who do not pass the examination may retake the test within 90 days. Students who do not feel confident to take

the examination immediately following the class will be given up to 90 days in which to sit for the examination. Once an individual has attended five of the six programs and passed the examinations for each, he/ she will have earned the right to use the Certified Pawn Professional (CPP) designation. A new feature of the NPA Annual Meeting will include the graduation ceremonies for each class of new CPPs. RECERTIFICATION Those who have earned the CPP designation will be required to recertify every three years in order to maintain their designation. This continuing education requirement ensures that all CPPs, like the program itself, stay up-to-date. Recertification credit can be earned in a number of ways including, but not limited to: 1) taking another CPP Learning Program 2) teaching a CPP Learning Program 3) participating in industry activities, such as serving in a leadership role on an NPA committee. While NPA’s CPP professional designation is currently under development, one thing is already certain: NPA members are about to enjoy a new, dynamic, and very valuable membership benefit.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 25

BUSINESS SENSE

Creating an Experience DESIGNED INTERIORS TO INCREASE PROFITS By Herb Schottland WE LIVE IN a much more sophisticated age than in the past. Consumers are more knowledgeable than ever about products and the stores they visit. Pawn stores are certainly no exception. The old-fashioned, cluttered, poorly-lit hock shops of years gone by simply won’t do the job any more. Customers are demanding more. REVIEW YOUR STORE Take a look at your store and be brutally honest. Is it attractive? Is it inviting? Does it flow? Is it well lit? Does it show off your products to their best advantage?

Would you feel comfortable shopping in it? If not, maybe it’s time to seriously consider an upgrade. If you do, you’ll join many other pawn store owners who have realized that investing money in your store will ultimately have you coming out ahead as you draw in more business. HIRE A PROFESSIONAL To achieve the best results when upgrading your store, a professional store designer can start the process. You are an expert in running your pawn store. A store planner is an expert

Herb Schottland President, Store Design and Fixturing Herb Schottland is the President of Store Design and Fixturing. His family has more than 65 years of experience designing store interiors across the nation. The firm provides project management and interior design services. Contact Herb at herb@storedesignandfixturing. com or visit the website at storedesignandfixturing.com.

in designing a successful, inviting store that helps you increase traffic. These are two entirely different areas of expertise. Two distinct factors to consider before making any changes are:

Jewelry displays at National Jewelry & Pawn in Durham, NC

1. CUSTOMER BASE Are you getting the customers who are likely to be interested in the merchandise you offer? Would you like to attract a higher level of customer into your store without

“ Create a natural flow of traffic that gently leads customers around all your merchandise to pique their interest.” (Continues on page 39)

26 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

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WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 27

28 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

BUSINESS SENSE

Reduce Risk to Increase Profit PAWNBROKER SAFETY PROGRAMS AND YOUR BOTTOM LINE ACCORDING TO THE Occupational Safety and Health Administration (OSHA), workplaces that establish safety and health management systems can reduce their injury and illness costs by 20 to 40 percent. Safe environments also improve employee morale which positively impacts productivity and service. When it comes to the costs associated with safety, consider the following statistics from OSHA: • U.S. employers pay almost $1 billion per week for direct workers’ compensation costs alone, which comes straight out of company profits. • Injuries and illnesses increase workers’ compensation and retraining costs. • Lost productivity from injuries and illnesses costs companies roughly $63 billion each year. As many pawnbrokers may be aware, OSHA has made their presence known within the industry by fining operations

for safety violations. In today’s environment, these safety-related costs can be the difference between reporting a profit or a loss. If it is important for your organization to measure safety as it relates to profitability, more accurate tracking should be done. THE VALUE OF SAFETY OSHA studies indicate that for every $1 invested in effective safety programs, you can save $4 to $6 as illnesses, injuries, and fatalities decline. With a good safety program in place, your costs will naturally decrease. It is important to determine what costs to measure to establish benchmarks, which can then be used to demonstrate the value of safety over time. Also keep in mind that your total cost of safety is just one part of managing your total cost of risk. When safety is managed and monitored, it can also help drive down your total cost of risk. Considering the statistics, safety experts believe that there is direct correlation between safety and a company’s profit. Establishing a strong safety, health, and environmental program protects both your workers and your bottom line.

Dillon Fontaine Commercial Lines Coverage Specialist, Marshall & Sterling Dillon Fontaine is a Commercial Lines Coverage Specialist (CLCS) with Marshall & Sterling, one of the nation’s largest independent insurance agencies. Dillon specializes in insurance for pawnbrokers, check cashers, and other unique businesses. Contact Dillon at dfontaine@marshallsterling.com or (845) 454-0800, ext 5550.

When it comes to your shop’s safety program, defining your goal helps you determine what costs to track and how complex your tracking system should be.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 29

Raising the Bar

JULY 7-9, 2015

THE MIRAGE | LAS VEGAS What is Pawn Expo?

po.com PawnEx

INNOVATION

TRENDS

EDUCATION

Pawn Expo is the only national convention and trade show for the pawn industry. Attendees learn new ways to strengthen their businesses, connect with fellow pawnbrokers, and do business at the trade show featuring over 120 different companies. Leave energized and equipped with the latest industry knowledge.

Why Should I Attend? STRENGTHEN YOUR NETWORK Connect with the best and brightest in your field, and remember, they want to connect with you too. Your most important resource could be the person sitting next to you.

ENHANCE YOUR KNOWLEDGE Take advantage of all the education sessions, from keynote speakers to peer roundtables, product knowledge sessions, ask the expert opportunities, and much more. You’ll gain knowledge to help you make your business better.

Questions? (888) 808-7296 • PawnExpo.com 30 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

STAY CURRENT WITH TRENDS

Get up-to-date on the latest industry news, see what new products are entering the market, and find the newest tools available to help you in your business.

Pawn Expo Highlights Networking Reception Welcome Reception Annual Membership Meeting Closing Reception

SUCCESS

NETWORKING

Ask the Expert Sessions

Opening Session Keynote Pawnbroker Peer Roundtables Trade Show Awards Luncheon Pawnbroker Networking Lunch

Diamond District

Make money at Pawn Expo. Bring your diamonds to sell in the privacy of the secure Diamond District trading room. Here you can negotiate the best deal with any vendor you choose. No appointments required.

What’s New in 2015? Certified Pawn Professional Courses The Ritz-Carlton Leadership Center Education Sessions Young Professionals Event

GET INSPIRED With so much passion and energy for the pawn industry in one place, you can’t help but be inspired by everyone around you. Whether it’s hearing lessons learned, being introduced to a new idea, or fueling your passion for pawn, you’ll gain something valuable.

BE YOUR BEST SELF Relax, be yourself, and take the time to get to know the other attendees at the convention. Most importantly, let them get to know you. You never know, your next business partner or mentor could be just a handshake away.

Hands-On Product Knowledge Sessions Pawnbroker Networking Luncheon

Questions? 808-7296 • PawnExpo.com WINTER 2015 (888) PAWNBROKERS ASSOCIATION | 31 | NATIONAL

Education Sessions OPENING SESSION: Keynote Speaker Ron White Triple Your Memory and Triple Your Business

Ask the Expert Sessions

Ron White, two time national memory champion and the world’s foremost memory expert and trainer, headlines this event. He has memorized the names of 200 people in 15 minutes even more times than he can remember, and audiences have marveled at his ability to memorize a 60-digit number in less than 90 seconds. In his presentation, Ron will teach guests to triple their memory, build confidence by giving speeches without notes, build relationships by recalling names and faces, and learn anything faster and easier by retaining more. He’ll do all this in a humorous, empowering, and engaging way!

Funding Retirement

Motivating Employees

Customer Service

Pawnbroker Peer Roundtables

Data Security and PCI Compliance

Expanding Your Business Government Relations

Schedule of Events MONDAY, JULY 6

TUESDAY, JULY 7

WEDNESDAY, JULY 8

THURSDAY, JULY 9

8:30 am – 4:00 pm CPP Courses – Additional Registration Required

8:00 am – 8:45 am Annual Membership Meeting and Breakfast

8:00 am – 11:15 am Education Sessions

1:30 pm – 6:30 pm Diamond District

9:00 am – 10:15 am Opening Session

11:30 am – 12:30 pm Pawnbroker Networking Lunch

9:00 am – 10:00 am Trade Show Continental Breakfast

5:30 pm – 7:00 pm Networking Reception

9:30 am – 5:30 pm Diamond District

12:30 pm – 5:30 pm Trade Show

1:15 pm – 4:30 pm Education Sessions

10:30 am – 12:30 pm Education Sessions

4:00 pm – 5:30 pm Trade Show Reception

12:45 pm – 2:00 pm Awards Luncheon

6:00 pm – 9:00 pm NPA PAC Event – Additional Ticket Required

1:15 pm – 4:00 pm Pawnbroker Peer Roundtables

2:15 pm – 4:30 pm Education Sessions 6:30 pm – 8:30 pm Welcome Reception Questions? (888) 808-7296 • PawnExpo.com

9:00 am – 1:00 pm Trade Show

5:30 pm – 7:00 pm Closing Reception * Schedule is subject to change

MOTIVATING EMPLOYEES

Presented by The Ritz-Carlton Leadership Center This session will help ignite and sustain employees’ passion for service excellence by showing: The meaning of an employee’s function vs. purpose A very effective way of cascading an organization’s strategic plan The importance of the alignment between emotional intelligence and the strategic plan

CUSTOMER SERVICE REENERGIZED

Presented by The Ritz-Carlton Leadership Center

The program examines how every employee in your organization is important to its success. You will learn: How your personal power impacts the brand The importance and impact of workplace etiquette How to transfer what you’ve learned into a personal action plan

OSHA

Product Knowledge Digital Currency

E-Commerce

Hotel Information

Disaster Preparedness

A full list of education sessions and speakers is available at PawnExpo.com

Sponsors

THE MIRAGE HOTEL AND CASINO, LAS VEGAS

Pawn Expo 2015 Room Rate $109 per night, plus applicable taxes and resort fee of $22 per night. Visit PawnExpo.com to make online reservations, or reserve via phone by contacting Group Reservations at (800) 627-6667. Mention NPA/Pawn Expo 2015 to receive the group rate.

PMS 282

PMS 1255

The group rate is available through June 11, 2015, based on availability.

GEIB REFINING CORP

Questions? (888) 808-7296 • PawnExpo.com

BUSINESS SENSE

Mergers & Acquisitions: How to Get the Best Deal

KNOW YOUR BUYER BETTER THAN YOU KNOW YOURSELF By Steve Stallcup PAWN BUSINESS SELLERS typically engage in one of two scenarios. In one scenario, the seller calls a potential buyer and asks the buyer to put a value on their business (usually as a result of receiving a buyer’s generic flyer in the mail). In the other scenario, the seller responds to a call from a salesperson whose number one goal is to get the seller to put a value on their pawn business before the seller knows its true value. Both scenarios are problematic because they result in the seller making the same costly mistakes: not marketing their business to all potential buyers at the same time and agreeing on a too-low purchase price. WHY DO PAWN STORE OWNERS MAKE THESE MISTAKES? For one thing, most pawn business professionals simply don’t have easy access to the data they need to come up with a proper valuation. For another, it’s very time-consuming for any business owner to

Steve Stallcup CEO and Founder, Stallcup Group

come up with a marketing plan and proper business valuation when day-to-day operations have to take precedence over valuation homework. Valuation homework includes developing the following six items: 1. FINANCIAL PRO FORMA Your financial pro forma is a financial statement based on your business’s hard financial data, the facts of your operation, and forecasts based on what your business is currently doing and the buyer’s earning potential. To develop a pro forma that you can present to potential buyers, you need to compile historical data on your business as well as comparative data on similar shops and the buyers of similar shops. Your pro forma should answer these key questions: a) How efficiently have I been operating my business when I compare it to other pawn businesses in my market and across my state? b) What are my financial metrics? • How do I compare with similar shops in terms of yield on loans and yield on inventory, turn ratio, and gross profit margin? • What are my default and renewal rates? • What is my loan balance size and product stratification? • What is my normalized operating expense to net revenue ratio? (Continues on page 56)

34 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 35

BUSINESS SENSE

Where There’s Smoke… SURVIVING A STORE FIRE

Johnson Brothers fire in Mansfield, OH

IT SEEMED LIKE ANY OTHER NORMAL DAY. Eric and Rhonda Johnson, of Johnson Brothers Jewelry & Loan, in Mansfield, OH, were closing up their pawn store at the end of the work day on August 12, 2013, when they smelled smoke. After checking the kitchen area, they discovered the phone lines were dead, which was odd. Eric checked the rest of the store and found the source of the smoke—a fire had started in the basement. The alarm system had failed to go off and the fire raged out of control. Over 50 firefighters

36 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

worked to put out the blaze, but the damage was extensive – two store fronts, three basements, and the law office next door. Luckily, only two customer items were destroyed (a motorcycle and a lawnmower). The source of the fire was later determined to be a faulty dehumidifier, a common piece of equipment found in many pawn stores. The Johnsons began the long and tedious cleanup process. All merchandise had to be cleaned and retagged because what didn’t burn had smoke damage. With no electricity, heat, or water, work was slow.

“ Hopefully, no pawnbroker will have to experience the fire disasters these members had to endure.” Many customers had heard about the fire was on fire. A motion detector had picked up via Facebook and other social media outlets. movement and alerted the police, who then A mailing was also sent out notifying customers discovered the fire. While no official cause has who hadn’t heard about it. Most were been declared, it was determined that it started in understanding when they heard what happened a light fixture in the ceiling. to their merchandise. Everything in the store was damaged or Rhonda Johnson’s best advice from the destroyed with the exception of the jewelry. The experience is, “Have a plan of action in case of an worst problems were the smoke and the PVC. emergency. Write down important information, Melted PVC, which turned to rust, covered much such as account and phone numbers for your of the merchandise. Greg and his team began bank, professional licenses, security company, and cleaning immediately, which saved a lot of it. An your safe company. Then store them in a locked ozone generator helped remove the smell. box or safe.” She also recommends you: • Have the utilities turned off. TIPS TO SAVE MERCHANDISE IN A FIRE • Transfer the phone. 1) Shut every door every night. It will help slow • Set up a change of address at the US down the advancement of the fire. Post Office. • Document all conversations with your insurance providers. The Johnsons were lucky in that they were able to move into a temporary location just three doors down from their original site. They re-opened fairly quickly, but the new site was much smaller – only 2000 square feet. While they did have insurance, they are still working on a settlement and are hoping to be back in their original store in the spring of this year. Less than a year later, on July 18, 2014, another NPA member, Greg Engstrom, experienced that same gut-wrenching feeling when he learned his AmeriPawn store in Michigan City, IN, Fire devastation at AmeriPawn in Michigan CIty, IN

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 37

BUSINESS SENSE

Laptops stored in pizza boxes were saved.

“ Have a plan of action in case of an emergency. Write down important information, such as account and phone numbers for your bank, professional licenses, security company, and your safe company. Then store them in a locked box or safe.” 38 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

2) Store laptops in pizza boxes, not plastic cases. In several instances, the fire didn’t destroy the merchandise, but the melted plastic did. 3) When possible, store merchandise in metal containers. Some of the merchandise was saved because it had been stored in steel lockers. 4) A safe, no matter how old it is, will protect its contents. 5) Keep a well-documented inventory on an on-going basis. Greg also kept his employees and customers well informed. Employees were given written instructions on what to tell customers about their merchandise and how to document their time spent on fire-related items. They also sent a letter to customers with answers to their most common questions. He found Cliff Zlotnick’s “Restoration Explorations” article* very helpful. Hopefully, no pawnbroker will have to experience the fire disasters these members had to endure. But, like a good scout, it’s always best to be prepared with your own disaster plan. If you’re not sure where to start with a plan, contact your insurance provider, and be sure to check your coverage while you’re at it. *This article can be found in the Members Only area of the NPA website, NationalPawnbrokers.org, under Industry Resources.

(From page 26)

Creating an Experience losing your existing clientele? People who normally wouldn’t patronize a pawn store might think differently about one that exudes an upgraded presence. This leads to factor #2. 2. PRODUCT MIX No store in America has a more varied product mix than a pawn store. Some carry guns; some don’t. Some carry more hard goods than others do. Many pawn stores are increasing their inventory of jewelry. Does this make sense for your store? These are important things to consider when designing your remodel. A good store designer can design an inviting

store, but you need to do your homework too. No one knows the demographics of your area as well as you do. By building a close partnership between you and your store designer, you can achieve the most targeted results to address your particular type of business and customer. IMPROVE THE TRAFFIC FLOW A pawn store has a lot of impulse purchase items. Create a natural flow of traffic that gently leads customers around all your merchandise to pique their interest. Checkout, wrapping, and pawn functions should be located at the rear of the store. This will lead customers who are

using those functions through as much of your merchandise as possible. Jewelry requires a more elegant presentation than many other types of merchandise. If possible, jewelry should be separated from hard goods, in an area of its own. Jewelry also requires different lighting. If you want to sell engagement and wedding rings, you’ll need cases where people can sit and examine their options. There is much to consider when remodeling a store and a good planner can help. Maybe the time for you to move to the next level is now. Look for part two of this three part series in the spring issue.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 39

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COMMUNITY INVOLVEMENT

Free Money for Education $1000 FBL SCHOLARSHIPS AVAILABLE NOW DO YOU KNOW a child, customer, employee, or other individual who needs help to further their education? The Future Business Leaders (FBL) scholarship fund was established by the NPA in 2003 and has awarded over $125,000 to deserving students. These scholarships allow NPA members to invest in our country’s future by helping deserving students pursue higher education. The students benefit from the financial assistance as well as from the academic recognition of being a scholarship recipient.

If you would like to sponsor a student, download the guidelines and application form from the NPA website (found under the Community Relations tab). Scholarship winners are based on academic performance, community leadership, and written essay submissions. The deadline for applications is April 24, 2015. If you don’t have a student to sponsor, but want to contribute to the scholarship fund, send your check to NPA, PO Box 508, Keller, TX, 76244. There is a student out there who will be very grateful.

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BUSINESS SENSE

Tax Tips PREPARING YOUR TAX RETURN By John Kellogg TAX TIME IS UPON US and your business tax preparer, most likely a certified public accountant (CPA), is busy working on business and individual tax returns. You have probably visited with your preparer about your taxes and conducted planning meetings throughout the year. As many items are the same from year to year, your CPA needs your financial statements so they can get your return filed by March 16, 2015, or extendable to September 15, 2015. Below are some items to consider. Each year some items are indexed for inflation and adjusted annually. Some of the more common limits for businesses to be aware of are: • For 401(k) deferrals, you are allowed to withhold $18,000 in 2015, up from $17,500 in 2014. You can also withhold catch-up contributions of $6,000 in 2015, up from $5,500 from 2014 for those over 50 years of age. • Standard mileage rate for business miles is $.56 for 2014. The rate for 2015 is set at $.575 per business mile. • Per diem rates for overnight travel after 9/30/14 is either $259 or $172 depending on high cost areas or not. REPAIR REGULATIONS Effective January 1, 2014,

businesses can choose to apply retroactively to 2012 and 2013 to determine whether they can deduct costs as repairs and maintenance, or capitalize costs and depreciate them over a period of years. These regulations provide favorable options. They

act provided an extension of tax breaks and incentives that were in existence prior to 2014. Some say many of the tax breaks cannot possibly be effective in encouraging businesses to do anything because they are almost entirely

expand the de minimis safe harbor that cost $5,000 or less per item or invoice, and are deductible in accordance with the company’s financial statements for which a written policy is in place. Otherwise, the limit is $500. A statement must be included in the taxpayer’s return for the year elected that specifies a dollar amount for financial statement treatment.

retroactive. The tax breaks actually expired at the end of 2013 and this bill extends them through 2014. These tax provisions are supposedly justified as incentives for companies to do things Congress thinks are desirable, like investing in equipment or research, but that justification makes no sense when tax breaks are provided to businesses for things they have done in the past. As business owners and managers, you would like to have the benefit of the tax breaks and think they should be permanent.

BUSINESS EXTENDERS The Tax Increase Prevention Act was signed by the President on December 16, 2014. That

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 43

The following provisions are extenders that primarily deal with business investment in equipment. Section 179 Section 179 has allowed businesses to expense up to $500,000 with a $2,000,000 phase out in capital investment rather than depreciating them over 5 to 15 years. Without the bill’s approval, the limit would have been $25,000, with a $200,000 phase out. Also included are: • Eligibility to immediately expense off-the-shelf computer software • Eligibility of restaurant property and qualified retail improvement property under 15 year MACRS depreciation. Bonus Depreciation Bonus Depreciation, or 50 percent expensing, allows businesses to deduct 50 percent of their cost in new equipment placed in service in 2014. You can elect out of bonus depreciation and spread those deductions over future years that may help match loan payment with tax benefits. Research and development tax credit This tax credit may be claimed for increases in

STATE PAWN FACTS

ILLINOIS NUMBER OF PAWN LICENSES

298

Arlington Heights (Illinois Pawnbrokers Association)

AVERAGE LOAN VALUE

Springfield (capital)

140

NUMBER OF PAWN STORE EMPLOYEES

982

THE YEAR THE WORLD’S FIRST SKYSCRAPER WAS BUILT IN CHICAGO

1885

TOTAL AMOUNT OF LOANS

$167,206,447 SOURCE: 2013 ILLINOIS ANNUAL PAWN DISCLOSURE REPORT

44 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

business-related qualified research expenditures over average expenditures made in the four preceding years. Depreciation for Sport Utility Vehicles (SUV’s) If you’re interested to know how your business can get a $46,000 deduction on a $60,000 investment for a 100% business owned and utilized SUV, call your CPA. EMPLOYEES AND PAYROLL Don’t forget about the Affordable Care Act, especially if you have more than 50 employees. There are many phase-in dates, and employers will have phase-in requirements from 2014 to 2016. Failure to file 1099s for subcontractors and other non-employees can lead to substantial penalties. If the independent subcontractor has not supplied an EIN, backup withholding should be implemented. The wage base for social security is $118,800 for 2015. John Kellogg, CPA, is a partner at Kellogg and Kellogg, P.C. located in Fort Worth, TX.

MEMBER NEWS

Janis Feazelle THE NPA was saddened to learn of the death of Janis Feazelle, longtime member of the NPA, who passed away January 14, 2015. Janis was the owner and operator of First Lugoff Pawn & Loan Shop in Lugoff, SC, and had been a member of the NPA since 1990. She served on the NPA Board of Directors from 2000 to 2011 and was named NPA Pawnbroker of the Year in 2001. Janis was one of the featured members in “The Women of Pawn” article published in the November 2010 issue of National Pawnbroker. She also served as President of the South Carolina Pawnbrokers’ Association for over 20 years. The NPA appreciates the many years of service Janis gave to the pawn industry and the association. Her welcoming smile and friendly nature will be missed by all. Janis is survived by her husband, Ronnie, two daughters, one son, and three grandchildren.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 45

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MEMBER NEWS

National Pawnbrokers Association New Members OCTOBER 1 THROUGH JANUARY 1, 2015 PAWNBROKERS ALABAMA

Super Pawn Center Enterprise Capital Pawn Shop, Inc Millbrook

ARIZONA

Mo Money Pawn Shop Phoenix

FLORIDA

A-One Pawnbroker, Inc Pompano Beach

INDIANA

Royal Pawn Inc Aurora

KANSAS

A-OK PawnShop Wichita

LOUISIANA

CC’s Pawn Superstore Lake Charles

MARYLAND

NEW YORK

Warwick Trading Company Newport News

S.Y.U. Pawn of NY Corp New York City

Yorktown Pawn Yorktown

NORTH CAROLINA

APPRENTICE PAWNBROKERS

Momentum Pawn Charlotte (2) Pawn Outlet Henderson

OKLAHOMA

Angela Krachunis Edmonds, WA

INTERNATIONAL PAWNBROKERS

Rogers County Pawn Claremore

Bellavance Comptant Rimouski, Quebec Canada

OREGON

Dewey & Howe Woodbridge, Ontario Canada

Silver Lining Jewelry Portland

TENNESSEE

Moneymax Ltd Ohrid, Macedonia

Trenton Pawn & Sales Trenton

INDUSTRY PARTNERS

TEXAS

Brilliance Credit, LLC Troy, MI

Amigo Pawn & Jewelry Harlingen

Crazy Louie’s Pawn Shop Salisbury

Money Mart Pawn Pearland

MISSOURI

Money Mart Pawn Houston

Tanks Pawn Campbell

VIRGINIA

Gold Rush Jewelers Ellenville

Money Mart Pawn San Antonio

48 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

Human Resources Management Inc. Germantown, TN The Pawn Group Littleton, CO

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 49

MEMBER NEWS

5 Reasons to Shop

A-OK ENTERPRISES DEBUTS NEW STORE CONCEPT BRUCE HARRIS, Founder and CEO of A-OK Enterprises, LLC, in Wichita, Kansas, has been in the pawn business since 1984 and owns four pawn stores in the Wichita area. When the opportunity to expand came along, Bruce had a vision of what his new store was going to be like – a pawn store that would seamlessly offer consumers a multitude of diversified services all under one roof. In November 2014, Bruce brought his vision to life with the opening of his 34,000 square foot A-OK Super Center at New Leaf Plaza in Wichita. He wanted to create an environment that would match up with what mainstream retailers offer. His new A-OK Super Center facility was designed specifically to accommodate multiple departments with an open layout allowing consumers easy access to the various services. “We believe this Super Center is an innovative approach to what a pawn store looks like and the services that it offers. It’ll change the consumer’s perception of the pawn industry and how they buy from us and borrow money,” Bruce says. The new A-OK Super Center offers consumers five diversified services including A-OK Pawn and Retail, financial and check cashing services, One-Day Jewelry and Repair, Cricket cell phones, and a new lease-to-own concept called Better Living. Bruce believes that pawnbrokers everywhere can profit even more by offering their customers diversified services in one location. “It allows a pawnbroker to not be overly dependent on just

50 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

Top: A customer learns about A-OK’s services at the Grand Opening. Left: Joe Genovese, Seth Gold, and Bruce Harris want YOU to visit the A-OK Super Center in Wichita, KS.

one service for their profits,” he explained. He thinks that by upgrading their facilities and offering services like cell phones and phone plans, pawnbrokers are more likely to appeal to a newer set of consumers who previously would not have considered shopping at a pawn store. From the feedback he has gotten so far, Bruce thinks he has succeeded in changing consumers’ perceptions. “We have people walk in here who cannot believe we are a pawn shop,” he said. “We know it’s going to take people some time to fully understand what all we offer, but once they do, they will come to appreciate all the services that are readily available to them in one place.” Bruce plans to update his other four pawn stores to bring them in line with the “super center” concept by the end of 2015. Then, it may be time for him to take his concept to some other markets.

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WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 51

STATE NEWS

State Association Updates WHAT’S GOING ON ACROSS THE COUNTRY ALABAMA

Manera Saloom-Branstetter, President Alabama Pawnbrokers Association manera@best-pawn.com AS WE WELCOME THE NEW YEAR, the Alabama pawnbrokers are looking forward to the Dixie Educational Conference and Trade Show. This year, the convention will be at the Peabody Hotel in Memphis, TN. The conference will be held April 17-19, 2015, and registration is already open. We are very excited to have the following speakers joining us this year: Todd Kleinert, White Canyon Software, discussing the proper procedures for buying and selling computers and cell phones; G. Kent Mangelson, CFP, sharing top secrets to save you money on lawsuits and taxes; and David Siminski, United Precious Metals Refining, explaining how to better understand the final results of your payments on scrap. In addition to the excellent speakers, the Dixie Conference always has a wonderful variety of vendors exhibiting exciting products. Whether you need to sell diamonds or gold, find a new software provider, find new vendors, or place orders with your existing vendors, you can do it all on the exhibition showroom floor. Make sure to join the fun and excitement of the silent and live auction. It’s always an entertaining show! Register directly on the website at dixieconvention.com/register or contact Rosemary Hipps at larrysjp@comcast.net. Make your reservations now!

ARKANSAS

Tim Collier, President Arkansas Pawnbrokers Association hogtim@windstream.net Here in Arkansas we are getting excited about the upcoming Dixie Educational Conference and Trade Show. One of the presentations I am looking forward to most is a self-defense seminar by Patriot

52 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

Close Combat Consultants, Inc. The group will give exhibitions on how to use the weaknesses of the human body to your advantage, how to keep your weapons and take them away from others, and how to contain an individual. The hands-on instruction can be used in everyday situations at the store, while traveling to the bank, etc. In addition to the Dixie, the annual meeting of the Arkansas Pawnbrokers Association (APA) is set for the weekend of September 25 – 27, 2015. The meeting will be held at the historic Arlington Hotel in downtown Hot Springs. Activities include seminars as well as a trade show with vendors. There will be time set aside Saturday afternoon for sightseeing or visiting Oaklawn Park Gaming. Saturday evening will offer a reception and dinner with the meeting continuing until noon on Sunday. For information, contact the APA office at (800) 497-4548. Hope to see you all in Memphis in April and Hot Springs in September.

ILLINOIS

Kelly J Swisher, President Illinois Pawnbrokers Association Arlingtonloan@sbcglobal.net By now you should have received your Illinois Pawnbrokers Association (IPA) membership renewal. If you have not done so, please submit your application and dues. In mid-December, I met with our lobbyist to discuss the upcoming legislative session in Springfield. We went over several changes we would like to see in the pawnbroker regulation act and they will be discussed at our next association meeting. The next meeting will be held March 8 at the I Hotel and Conference Center located at 1900 S 1st St, Champaign, IL, 61820. Brunch starts at 11:00 a.m. with the meeting immediately following at 12:00 p.m. As always, I encourage every pawnbroker (member or not) to take part in the IPA meetings. It is with a heavy heart that I share the news that Joseph Z. Schoeneman, the father of David Schoeneman, our past president, passed away

12/17/14. Please join me in extending your thoughts and prayers to David, Carmencita, and the entire Schoeneman family.

INDIANA

Greg Engstrom, President Indiana Pawnbrokers Association gregengstrom@hotmail.com The Indiana Pawnbrokers Association (IPA) has been very busy with education and will be offering the following education programs in 2015: • 24th annual Midwest Pawn Convention, May 15-17, 2015, Chicago IL, midwestpawnconvention.org • 2nd annual Indiana Pawn Forum, Indianapolis, IN, Summer 2015 Dates to be determined; open to all Indiana pawnbrokers • 3rd annual Pawnbroker Boot Camp 101, Indianapolis, IN, Summer 2015 Dates to be determined; open to all pawnbrokers, pawnbrokerbootcamp.com On the legislative front, the IPA is constantly working on and supporting legislation that will be positive for our industry. Our current priority is to make every effort to allow hand guns to be taken in pawn. We addressed this years ago, but there was no interest by lawmakers. We believe the current legislators will see how pawning hand guns not only keeps the streets safer, but provides assurances that guns are in the proper hands.

NORTH CAROLINA

Bob Moulton, Chairman of the Board North Carolina Pawnbrokers Association moultonbob@yahoo.com The North Carolina Pawnbrokers Association was invited to a meeting of the North Carolina Criminal Justice Information Network (CJIN) meeting in November. Presentations were made by the Maryland State Police about the Regional Automated Property Information Database (RAPID) and by the Douglasville, GA Police Department’s Secondhand Ordinance. I was very pleased that both of these presentations prominently stated that most of the stolen merchandise was not going to pawnbrokers, but to the multitude of traditional and non-traditional secondhand dealers. One of the officers made the

statement that there was a 6 to 1 ratio of secondhand dealers to pawnbrokers. Both of these programs were using Business Watch International (BWI) to collect and facilitate the data into a database ran by NCIS which is part of the U.S. Navy. We are very concerned with some of the compliance provisions, especially of the Douglasville, GA program, which includes fingerprinting the seller, photographing the seller and items, and charging a per transaction fee for BWI. From our preliminary review of their statistics, they seem to be solving no more cases than presently are being solved here in NC under our current system. We applaud that law enforcement is serious about making the secondhand dealers report. However, we are concerned that once legislation is drafted, a lot of these dealers, such as jewelers, coin dealers, corporate buyers (Walmart, Best Buy, Gamestop), and others, will lobby to get themselves exempted because they are not a “pawnshop”, or that compliance is too onerous and that it accounts for “less than 10% of their business.” This would leave the pawnbrokers, who are pretty much the only ones reporting now, to be the only ones reporting in the future. However, they would also have the costly and burdensome extra requirements and fees with no increase in solving property crimes.

OHIO

Lou Tansky, President Ohio Pawnbrokers Association lou@unclebenspawnshop.com Let me begin by expressing our deepest sorrow on the passing of our longtime friend, member, and supporter, James “Bucky” Tincher of Ted’s Pawn in Norwood, OH, who passed away November 20, 2014. Join me in expressing our deepest condolences to the Tincher family. Now that the rush is behind us, we must set our sights on other current or future pressing issues. Most notably is legislation expected to be introduced into the State legislature by a public pawn company from Texas. As we know, many attempts have been made in the past to drastically change the Ohio Pawnbrokers Act, so it is difficult for independent pawn operators to conduct business in the state of Ohio. Your Ohio Pawnbrokers Association has fought, and will continue to fight, all efforts to harm our members by this group. (Continues on page 58)

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 53

Pawnshop Software Made Easy

MEMBERSHIP

Anti-Money Laundering Course NEW E-LEARNING OPPORTUNITY FROM NPA

THE NPA HAS ASSESSED the rapidly changing legal, regulatory, legislative, and social environments in which members of the pawn industry manage their businesses today. Using a variety of analytics, the consensus is that the NPA must focus significant energy on three key initiatives, one of which is education. Additionally, ongoing education is required by law and must be properly documented. A new member benefit designed to assist in reaching that goal is a new e-learning course, “Anti Money Laundering for Pawnbrokers and Dealers in

Precious Metals”. The course content, which will be available in February, will include, but not be limited to: • Requirements of Dealers in Precious Metals • When to file an 8300 • OFAC requirements facing pawnbrokers and dealers in precious metals This course will be about one hour in length and is designed to meet all employee levels. New content will be updated annually and/or as regulations change. The course is being created in partnership with Innova Learning and Robert Frimet, CAMS.

54 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

Innova Learning is a leading provider of e-learning solutions for the financial services industry. Mr. Frimet has extensive knowledge on this subject matter, providing compliance related services to the industry for a decade. The price of the course is $36.95 per person for NPA members; $99.95 for nonmembers. Participants will receive a certificate upon completion. The course will provide pawn store owners with a high quality, reasonably priced educational opportunity for themselves and their employees. Look for more information coming soon!

Midwest Pawnbrokerâ&#x20AC;&#x2122;s Conference & Convention May 16-18, 2014 Booth - 30 JCK Exhibition 2014 June 1-4, 2014 Booth - B4446

JIS Miami Beach Show October 11-14, 2014 Booth - 1317 California Pawnbrokers Association (CAPA) WINTER 2015 2014 | NATIONAL PAWNBROKERS ASSOCIATION | 55 October 24-26,

BUSINESS SENSE (From page 34)

Mergers and Acquisitions Buyers approach acquisitions as investments, so make sure you include their operating metrics in your pro forma to show that you have a solid understanding of their future cash flow potential. 2. LEASE ANALYSIS Always negotiate your lease or leases. Many sellers make the mistake of agreeing to the lease the buyer brings them without requesting modifications that would better serve them. 3. DEMOGRAPHIC STUDIES Create a demographic analysis of competitors that have customer densities and profiles that are similar to your own. This analysis should reveal how you’re performing relative to your competitors, as well as help you determine market share availability; that is, the saturation of pawn providers in your area and the quality of those providers. Keep in mind that if your business is underperforming and overpriced, strategic buyers may opt to compete with you by placing a de novo store near you rather than buy you out. 4. NON-COMPETE AGREEMENTS You should always negotiate non-competition terms. You may think that you don’t need to care too much about the non-compete agreement your buyer presents, but negotiating non-competition terms is important, even if you never intend to open another pawn shop. Why? It’s a point of leverage. You may be able to point to the non-competition terms and get something else that you want, such as a concession on a lease agreement or some other benefit that ultimately adds to your purchase price. Whatever you do, do not tell the buyer that you will never want back into the pawn business. 5. ASKING PRICE Buyers commonly try to use multiples of loan balances, inventory, EBITDA, and revenue to establish an offer, but not all stores are equal—nor are all state regulations. Don’t get stuck playing the multiples game. If you do, you will most certainly leave money on the table. Instead, use benchmarks

56 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

based on thousands of comparable pawn shop transactions to develop hard financial metrics to help determine your asking price. If you’re confident in the reasons behind your asking price when you go into negotiations and can point to hard data that backs up your claims, you’ll be able to do less negotiating and more dictating; in other words, you’ll be able to sit back and let the numbers speak for themselves. Another big plus? The sales cycle will move more quickly than it would if you didn’t present an accurate asking price based on factual data. 6. FINAL TRANSACTION DEADLINE It is incredibly important to determine your transaction deadline before you market your pawn business. You don’t want the sales process to drag on and on, and you want to be able to make plans for your future that aren’t contingent on buyers’ timelines. Contact all qualified, potential buyers at the same time in order to ensure that your timeline sticks. By performing the same calculations your buyers are performing, in some cases, you could potentially get twice what you originally hoped to gain out of the sale of your pawn business. Just identifying barriers to entry in your area or municipality alone can help you raise your asking price appropriately by significant margins. The key to getting the most out of the sale of your pawn business is knowing what your buyer’s revenue potential would be once the buyer takes over your business. Armed with all of this knowledge and preparation, you’ll get what you deserve out of the sale of the business you have worked so hard to build. Steve Stallcup has been the CEO and founder of Stallcup Group, a nationally recognized exit strategy consulting firm, headquartered in Keller, TX, since 2009. His company focuses on pawn business merger and acquisition activity. Since founding the company, Stallcup Group has transacted over $160 million of merger and acquisition business solely in the pawn industry. To learn more about the Stallcup Group and get a free Acquisition Checklist, visit www.stallcupgroup.com/checklist.html or call (817) 479-3880.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 57

CALENDAR OF EVENTS

4/2015

2015 DIXIE CONFERENCE & TRADE SHOW

APRIL 18-19 The Peabody Memphis Memphis, TN Contact Kevin Macdonald at Kevin@MomentumPawn.com

5/2015

2015 MIDWEST PAWN CONVENTION

MAY 15-17 Chicago Hilton/ Indian Lakes Resort Bloomington, IL Contact Ron Stempkowski at 1ila@comcast.net midwestpawnconvention.org

NPA LEGISLATIVE CONFERENCE

APRIL 29 Hamilton Crowne Plaza Washington, DC Contact Matthew Church at Matthew@NationalPawnbrokers.org

7/2015

PAWN EXPO 2015

JULY 7-9 The Mirage Hotel & Casino Las Vegas, NV Contact Lindsay Wilson at PawnExpo@ NationalPawnbrokers.org PawnExpo.com

10/2015

JCK LAS VEGAS

MAY 29-JUN 1 Mandalay Bay Resort & Casino Las Vegas, NV lasvegas.jckonline.com

CALIFORNIA PAWNBROKERS ASSOCIATION (CAPA)

OCTOBER 23-25 The Westin Long Beach Long Beach, CA Contact Kim Andosca at kandosca@amgroup.us californiapawnbrokers.org

STATE NEWS (From page 53)

State Association Updates As we have discussed many times in the past, the best way to fight for your business is to reach out to your elected officials. The 131st General Assembly of the Ohio House of Representatives and Senate includes many new faces. Reach out and talk with these new legislators as well as your re-elected representatives. We must educate our legislators to help them understand the nature of our industry. Call and invite them into your shop, meet them at local “town hall” meetings, write them letters, or stop in and visit their district offices. This is part of your duty in helping your business and that of your fellow pawnbrokers. We are in the final planning stages of our latest continuing education seminars. Our next seminar is tentatively scheduled for the end of February 2015 in Columbus, OH. Watch your email and mailbox for upcoming notices and information.

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SOUTH CAROLINA

Janis W Feazelle, President South Carolina Pawnbrokers’ Association (SCPA) started 2015 with the launch of our website, scpawnbrokers.com. This will enable us to maintain a closer relationship with current and potential members detailing our mission, goals, legislative efforts, and more. Non-members can join online or download a hard copy application to mail in. The 2015 legislative session opened with the House version of our legislative change introduced in 2014. This will once again be watched and monitored to get the best benefit without further redundant restrictions by the regulatory department. All members will be kept informed of the process. Your support is greatly appreciated. Be a part of the change.

Index of Advertisers ADVERTISER Page

ADVERTISER Page

Aaria (248) 961-0506 AariaDiamonds.com

Sanghavi Diamonds (800) 234-1787 NITIN40059@gmail.com

ABC Diamond Buyer (586) 354-7274 ABCDiamondBuyer.com

International Gemological Institute IGIonline.com

Bluestone Trading Back Cover (888) 800-BLUE (2583) Bluestone-Trading.com The Buyers (562) 945-7276 TheBuyers.com

CompuPawn (866) 545-9868 CompuPawn.com

Dillon Gage (888) 436-3489 DillonGage.com

Garfield Refining (800) 523-0968 GarfieldRefining.com

Garrett Metal Detectors (800) 527-4011 Garrett.com

Gemological Institute of America 15 (800) 421-7250 GIA.edu Hoover & Strong 42 (800) 759-9997 HooverandStrong.com

Inside Front Cover

North American Metals (800) 773-1626 NorthAmericanMetals.com

Stallcup Group (817) 479-3880 StallcupGroup.com

Padmavati Exports (212) 869-0544 PadmavatiExportsinc.com

Steven Galapo Diamonds (212) 221-3000 GalapoDiamonds.com

Palak Diam (213) 228-0077 PalakDiamond.com

Stuller (800) 877-7777 Stuller.com

Pawnshop Academy (210) 787-2536 PawnShopAcademy.com

The Trendz (866) 337-7464 TheTrendz.biz

Pawnshop Consulting Group (954) 540-3697 PawnshopConsultingGroup.com

United Exports (305) 707-7937 UnitedExportsNA.com

United Precious Metal Refining (800) 999-3463 UnitedPMR.com

Rapaport Auctions (212) 354-9800 RapaportAuctions.com

Rapaport Jewelry Sales (212) 354-9800 RapaportAuctions.com

RMF Consulting Group (866) 204-7209 CheckConsultants.com

White Pine Trading (646) 666-7588 WhitePineDiamonds.com

Rolland Safe (800) 225-2984 RSlc.net

Worldwide Diamond (213) 622-2191 WWDiamond.com

Wexler Insurance Inside Back Cover Agency (800) 432-1853 WexlerInsurance.com 22

The NPA does not specifically endorse any entity including but not limited to exhibitors and advertisers; makes no representations, warranties, or guarantees; and assumes no responsibility for the products or services provided by these entities. The NPA expressly disclaims all liability for damages of any kind arising from the use or the performance of the products or services provided by these entities.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 59

PAWNDER THIS

What Happens in Vegas… By Rudy Klancnik

IT TOOK MORE THAN 24 hours but I finally found him. I knew he was here. This was his town after all. Yes, Elvis is alive and well on Las Vegas Boulevard near the MGM Grand. And he’s alive and well on Las Vegas Boulevard near Caesar’s Palace. And near Luxor, Mandalay Bay, and Monte Carlo. Of course, like mall Santas and Kim Kardashian’s butt, these aren’t the real deal. They’re Elvis Presley impersonators. In fact, there’s an awesome Asian Elvis on Las Vegas Boulevard just outside Bellagio. I hadn’t been to Vegas in more than 10 years but, as they say, the more things change, the more they stay the same. Here are the highlights (I remember): • There are 10 times as many hotels than the last time I was here. Can’t imagine how any of these places make money considering each of them has one million hotel rooms. Then I watch little old ladies chain smoking while playing nickel slots, and it dawns on me exactly how this place was built. • Star Wars characters actually outnumber Elvis impersonators. I saw two Chewbaccas, four Storm Troopers, a pair of Darth Vaders and one Boba Fett. Weirdly, no Jabba the Hut. • The next time someone says, “Let’s just walk to the neighboring hotel”, take a cab. The buildings are so

60 | NATIONAL PAWNBROKERS ASSOCIATION | WINTER 2015

big they deserve their own zip codes. • The economic slump is officially over. If Vegas isn’t a leading indicator for a good economy, I don’t know what is a better one. Watching folks spend $15 on a hot dog, $300 on a hotel room, and flop hundred dollar bills on the tables like they’re playing with Monopoly money must mean someone out there is working for a living. • Watching someone drink a beer before I’ve had my morning coffee and bagel is always unsettling. I get that the casinos don’t have clocks or windows, but surely a Bud Light before 10 am is a sign of a problem. • I’m just not that good at math. That’s never on display more than when I’m sitting at a blackjack table trying to quickly count my cards as the rest of the table sits impatiently staring at me. Then you toss an ace into the equation—either 11 or 1—and having to think about two numbers usually causes my main frame to overheat. • 6 hours is the maximum any person should stay in Vegas. Stay a minute more than that and you start smoking, consider moving into a back room at the Tropicana, and drink beer before 10 am on a Tuesday. Since my trip was three full days, I’m writing this from just outside the buffet at the Trop. Please send money.

WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 1

We rock, because here in Cleveland we take buying modern and vintage jewelry and diamonds seriously. Very seriously. You roll, because no matter where you’re located you’re treated to great prices, free shipping and same day wire payments. Start Rock & Rolling today by visiting us online or calling us at 888 800-BLUE (2583).

888 800-BLUE (2583) • www.bluestone-trading.com • webinfo@bluestone-trading.com WINTER 2015 | NATIONAL PAWNBROKERS ASSOCIATION | 1