Management practices are the key to avoiding pawnshop malpractices

MIMPSS jewelry assesing graduates from LGRS Pawnshop

I am just now returning from a trip to the provinces. I have been meeting with clients and doing training of assessors. I am always glad to get out into the field because that keeps me in close contact with the business from the view of the pawnshop operator. After finishing this trip I can say that once again the pawnshops are a flourishing business. I still see more room for growth and room for more entrants into the field.

Pawnshops can be a business where 25% of growth revenues flow to the bottom line. We are also in a period of higher unemployment where many unemployed have been cut-off from the traditional banking sector for loans and are now relying on pawnshops for loans.  It should be a very safe time to be a pawnshop owner.

However, field experience never fails to remind me that some pawnshop owners still do not completely understand their business. These owners are always well-intentioned people trying to run their business in a fair, efficient and legal manner. But what every pawnshop owner must realize is that pawnshops, despite the positive business atmosphere surrounding pawnshops, can – and do – fail.

Pawnshop owners must realize that pawnshops do not run themselves. They are also not like baking a cake – you cannot just buy a box of ingredients off the shelf and mix and bake them and get a successful pawnshop. Running a successful pawnshop takes hard work and management skills. The successful practices of prosperous pawnshops must be adopted and adapted at even the smallest of pawnshops.

Last April, I wrote a post called “Pawnshop Malpractices never stop…unless…” In it I said, “Pawnshops with multiple number of branches nationwide, in reality is very hard to control over the malpractices considering the connivances having between the employees. Temptation has been always there because daily transactions involve cash and jewelry.” My recent field experience bears this out to me again that however well-intentioned a pawnshop owner is a successful pawnshop is one that uses proper management techniques.

Employee connivances can take their toll on any pawnshop. They can cause an otherwise good business to fail. But it does not, and should not be that way. If pawnshops use proper management skills like inventory management in their business that will be a big step forward for the pawnshop owner.

Inappropriate gold and diamond jewelery appraisal skills is another area that can hurt a pawnshops bottom line. I have seen some very poor skills in the field. A big challenge in the upcoming years is to properly appraise the jewelery coming through their door and establish proper loan values. With ever rising precious metal prices, jewelery appraising skills of the staff will be critical. Pawnshops can not afford appraisal mistakes and must also be capable of detecting fake gold and diamonds that will become more common as jewelry prices rise.

In my practice I stay close to the businesses in the field. I do not work out of an office in fancy surroundings for the reason that staying in the field keeps me in contact with the business in an up-front and personal way because the real work is in the day-to-day practices of the industry. Not in an air-conditioned office in the city.

That is why I believe that my consulting can be valuable to a pawnshop owner. When I come into a business for consulting purposes the first thing I do is conduct a needs assessment. The words needs and assessment are almost self-defining. A need is some deficiency or lack of something. To assess is to evaluate whether something is or is not present. Therefore a needs assessment evaluates what is lacking.

When I consult the first thing I do is to assess accounting practices, inventory management, security, inventory management, all aspects of jewelry assessment. And if I find management practices are lacking I will suggest solutions. My suggestions could include, for instance, computerization, inventory auditing to avoid employee connivance or raising the staff’s gold and diamond jewelry assessing skills.

Through my many years in the pawnshop industry I have been employed at every level of the industry. I have managed inventory, performed appraisals and approved transactions large and small. I am familiar with pawnshop regulation compliance, pawnshop security, pawnshop auctions (I am a certified as a pawnshop auctioneer by the BSP) and pawnshop accounting techniques. It is through this lifelong learning in the pawnshop industry that I am able to offer my services as a pawnshop consultant to those just beginning in the industry or to already established pawnshops.

If you are a pawnshop owner having trouble raising your profit margin in this very favorable time for pawnshops, that may be a sure sign that your management practices need improved. That is why I am in business. For the struggling pawnshop owner help is only a call away. Do not hesitate to contact me.

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