“A fast nickel is better than a slow dime.” I’ve heard this over and over, as no doubt, have many of you. So tell me, why are so many pawnshops overflowing with inventory?
Do that many of us have the slow dime mentality with the hard goods for sale in our shops? We certainly don’t think that way with our jewelry, but seem to forget about everything else.
For those in need of an explanation, “a fast nickel is better than a slow dime” means that a smaller profit (with greater volume) can be better for business than a potentially larger profit (with less volume).
No one wants to make a slow dime. We all both want that dime and for it to come quickly. But what many of us do, is price our goods for sale in the slow dime price bracket.
What does this mean? With luck, you’ll eventually make that dime, but it will take you much longer. Your goods will sit and take up space and may become obsolete — then you’ll be lucky to even get a nickel.
On the other hand, the fast nickel will allow for a quicker turn of your inventory and more cash flow to come through your business to loan out or buy new inventory. This ultimately means more money in your pocket.
For example, would you rather earn $1,000 a month, or $500 a week? $500 a week is double the amount of money, even though it’s only half of the profit. It all has to do with volume.
Let’s face it, for the most part our investment in our inventory is at a considerable discount to the retail values of the same products. We can afford to price it slightly under market value and turn it quickly.
Yes, I know there are some exceptions, like gold and AR-style rifles. There is no reason to sell your gold for less than your refiner will give you without any work involved in refurbishing and selling it. And certain firearms are bringing nearly twice their MSRP at the moment.
Albert Einstein is rumored to have said, “The most powerful force in the universe is compound interest.” If you made a fast nickel (5 percent profit) every month for 10 years and reinvested that into your business, your initial dollar would have grown to $349. However, if you made a slow dime (10 percent profit) every other month, your initial dollar would have only grown to $304. Still a good return, but the fast nickel earns you 15 percent more over the time period.
A wise man once told me you make your money on the purchase/loan/ acquisition, not the sale. So you need to buy/loan/acquire right.
Of course, another wise man once told me you make your money on the finance charges and you should loan out as much as possible.
And yet another wise man once told me if you don’t buy it, you can’t make any money — a small profit is a lot more than no profit.
Sometimes it is hard to determine which wise man is the wisest.
But I think they would all agree that the faster you turn your cash over, the faster your business grows.
Tip No. 199
Over the years, I’ve touched on refurbishing your used jewelry to make it appear as close to new as possible. Better looking jewelry is easier to sell.
However, with the price of gold where it is, many pawnbrokers just take their forfeited jewelry and put it directly in their recycling container for a quick, easy and profitable return on investment (fast nickel vs. slow dime — I’ve heard that somewhere before).
I’m one of those pawnbrokers who still have jewelry for sale in his showcases. I don’t recycle (scrap) every forfeited jewelry pawn or OTC purchase. But if it is old or worn out, broken or ugly, damaged in any way, or maybe an odd size, chances are it’s going in the recycle bin.
My jewelry refurbishing arsenal includes a magnetic finisher, two tumblers, three ultrasonic cleaners, an ionic cleaner, a steam cleaner and a bench top polishing unit with a double shaft polishing motor and dust collector. Not to mention my fully equipped jeweler’s bench with Foredom flexible shaft machine and all those jeweler’s files and saws.
But today, we’re just concerned with the polishing machine and the dirt and dust it creates.
A few years back, I custom fit a large, rectangular plastic tub over my polishing machine with a 2-inch space in the back for a Shop Vac hose to come up through the table on which it sits.
The front is still open for access to the polishing machine’s polishing wheels, but the sides, top and back are loosely enclosed in a secondary container to allow for a vacuum to draw the air from the polishing machine’s exhaust fan and to also catch any dirt and dust which escaped into the room.
When we turn on the polishing machine, which has its own internal filter, we also turn on the (used) Shop Vac with dual filters.
This dedicated Shop Vac is also used to vacuum out the polishing machine and all around the polishing area, including the floor.
All dust, and I use this term very loosely (it really means polishing compounds and polishing wheel material), and debris which is removed from the polishing machine by the Shop Vac is then transferred to a 14-inch x 16-inch (10 gallon) fiber drum provided by a refiner.
We also throw in used polishing wheels, polishing machine filters, used golf gloves (Bonus Tip No. 4) and anything else that comes from the refurbishing area.
When the drum gets full, we call the refiner and they arrange for shipping of the drum to their facility.
Now I know the percentage of return on sweeps is a lot less than that of actual metal. It also takes longer for refining. But it is a necessary by-product of the actual work performed – refurbishing jewelry for sale to the public. I also know that I haven’t sent in a drum of polishing material for a while — it takes time to fill the drum. What I didn’t realize was how much this dirty material is worth.
Three weeks after I sent in my drum, I received a check for more than $13,000. So if you aren’t taking extra care to collect your dirt and dust from your cleaning and polishing station, you are literally throwing away money.
Bonus Tip No. 4
I would probably be safe in assuming that most of us have had to polish a piece of jewelry at one time or another. And we all know how difficult it can be at times to hold onto the item, especially if it starts to get a little warm. Not to mention how black your hands get.
Have you ever tried wearing golf gloves? Whether they are leather or nylon, red or blue, matching or not, they work very well for polishing jewelry.
If you have a full-line pawnshop (that means you take golf clubs in pawn), you should have an ample supply of used golf gloves coming from the golf bags of the sets of clubs that are forfeited.
If your shop doesn’t deal in golf clubs, ask friends for their old gloves or just go out and buy some. They are not very expensive and if you buy them, you can even make sure they fit.
Tip No. 200
I am really not a fan of All-in-One computers. I’m not a notebook or tablet lover either. I like a full size keyboard (so I can make big typing errors), a large monitor and a trackball instead of a mouse. But each of the above has its benefits.
In Tip No. 96, I recommended a desk/wall mount arm for computer monitors. Well, recently my mini HP desktop computer that sat in the right-hand corner of my desk, next to the wall, died and went into cyberspace. As an experiment, I replaced it with an AiO because I really could use that 4-inch x 14-inch foot print that my old HP took up all those years.
Now, being a pawnbroker, I typically use what I have, not what I need. (That means what has come out of pawn recently.) Sometimes that works out in my favor. I happened to have this very nice HP AiO that I had just restored. But this particular model wasn’t VESA compliant. VESA is short for Video Electronics Standards Association, a consortium of video adapter and monitor manufacturers whose goal is to standardize video protocols.
The VESA standard defines dimensions of a display’s four-hole attachment interface and the screws used to fit those holes. It also dictates the placement of the hole pattern on the back of the display. For attachment to VESA mounts, this invariably means the hole pattern should be centered on a display’s back (denoted in a VESA label with the letter “C” as in VESA FDMI MIS-D, 100, C).
Most sizes of VESA mount have four screw-holes arranged in a square on the mount; with matching tapped holes on the device, the horizontal and vertical distance between the screw centers was originally 100 mm. A 75 mm layout was defined for smaller displays. Later, variants were added for smaller and larger screens.
Of course, as many of you regular readers of my Tips column know, I have trouble leaving things alone. I often find I need to “improve” their functionality.
For the most part, the majority of AiO’s are not made to be mounted to a monitor arm – probably because most inexpensive arms won’t support their weight. I actually found a company that made a retrofitted mount to attach to my AiO in order to make it monitor arm mount-compatible. The only issue I had was the price — they wanted $150 for this mount — I’m not sure I even loaned $150 on this computer!
I also found another company (iversal.com) who sold a more reasonable VESA mount adapter kit for $50, just not for my model AiO.
So I thought if they could make one, so could I. I removed the base/stand from the back of the AiO and looked at the three recessed mounting holes. It didn’t look too difficult.
I went to the local home center in search of the elusive AiO mount. My first stop was in electrical. And there it was — I bought a 4-11/16 x 4-11/16 inch square metal electrical box cover. Next, I went to hardware to gather up a handful of assorted length metric screws, nuts and metal spacers.
Once I had all of my raw materials, I cut some paper to make a template, marked the electrical box cover with the three-hole pattern of the AiO’s base/stand mount, and started drilling.
Next I marked the four-hole VESA pattern (100 mm x 100 mm) on my electrical box cover and drilled some more.
The final step was to attach the electrical box cover, with screws and spacers, on the back of the AiO and then attach it to the arm’s monitor plate. My homemade AiO mount cost less than $5.
HP and others do make a few wall mount adapters for certain model AiOs. I believe the trend in future AiO design will be to make VESA mounts a standard feature.
Bonus Tip No. 1
I also added a wireless keyboard and mouse.
Tip No. 201
What does “tax included” really mean to your bottom line?
I consider the cost of every sale discount, i.e. ‘$97.50 – tax included’ to be 10 percent.
OK, so what does that mean? To me, it is 7 percent (Ohio state and county) sales tax and up to a 3 percent fee for accepting a credit card.
How do I get 3 percent for credit cards? Well, those rewards cards, business cards and American Express can easily cost you 3 percent or more in fees.
I also assume the worst case scenario, that everyone is going to pay with a credit card — and I’m usually correct. Even if it’s a debit card, the customer often wants me to run it as a credit card.
I know your credit card processor is getting its cut because it takes it out first and then gives you the difference. And I’m assuming you’re forwarding the state and local government their share of this sale.
So that $495 widget that you agree to sell for $450, tax included, actually only nets you about $405, which is almost a 20 percent discount.
OK, often we do what we have to in order to move some merchandise out the door (fast nickel vs. slow dime). But when you or one of your staff makes this sale, are you thinking $450 or $405? And that is before all the other expenses to make the sale are considered.
Sometimes you really need to think it through before you quote a discounted price. Especially on gold jewelry. If you’re not careful, you might be selling it for less than scrap. Most of us just aren’t charging that much over melt to be able to take off 20 percent.
Tip No. 202
I recently read some discussion on a computer network forum about something called the Knox Box. For those unfamiliar with it, the Knox Box is a secure box mounted to the outside of a business (or residence) in which the owner/tenant places a key (or keys) to his business for the local fire department. The discussion was started by a jewelry store owner who was being forced to install a Knox Box by his local fire department.
What? Leave your pawnshop keys in a box outside your door for everyone to see and access? “Ain’t no friggin’ way.”
Yeah, I know, it’s a very unsettling thought. However, more and more jurisdictions around the country are requiring this type of system.
If a fire department is forced to enter your business after hours, it may not be done with the most concern for your property. And they won’t know if it is a false alarm until after the damage is done.
This is the real reason for these boxes — to let emergency personnel in, without causing severe damage in an unknown situation (false alarm). If flames are coming through the roof, they don’t let a locked door get in the way.
Knox Box Program
If your local fire department does not participate in the national Knox Box program, it might in the near future. The Ohio Fire Code (and I’m sure many others) provides the local fire department the option to require a key box on the property of a business. This is to allow the fire department access after-hours to check on a fire alarm or sprinkler water-flow alarm without having to break in.
The Knox Box system is a secure key box that you purchase and place on your building at a location acceptable to the fire department. The local fire department is the only entity with a key to the box. If needed, they can enter your building to check on an alarm without causing damage.
There are Knox Box key boxes for residential occupancies also. The key to the box is secured at the local firehouse or in the fire engines and can only be accessed with a passcode which logs the time and name of the person who has opened it.
How the System Works
Knox Boxes are constructed of ¼”solid steel with a ¼” steel door, a reinforced locking mechanism and they are UL listed. The high security key is strictly controlled and is manufactured only by the Medeco factory under direction from an authorized fire official’s signature.
A property owner who wishes to join the system should contact the local fire inspector for information on how to acquire a Knox Box, as the property owner must purchase them directly from the company. Once installed near the entrance to your property, the department locks your building entrance key inside the box so that it is available for emergencies.
A few years ago, a local pawnbroker was up in arms because his township fire department was transitioning to the Knox Box system. There was not much he could do. Remember, this requirement doesn’t affect your alarm system as a backup for intrusion security.
Last year I acquired a pawnshop in an area where Knox Boxes were in use. Even though I had an alarm system, I too was not thrilled with the concept of my key sitting in a box outside my business. After having the locks rekeyed, I did the right thing and called the local fire department to come out and put the new key in the Knox Box.
Much to my surprise (not really), the key presently in the box was not the key to the building’s door. For that matter, the building had a door and a steel gate, each with their own respective key.
As I said once before, locked doors and a secure looking building may cause the police to turn away, but the fire department has their own attitude and usually the persuasiveness to show a door who’s boss.
When faced with this issue, you may try to get a variance from your local governing body, but if that fails, you may need to enhance your security system.
Ric Blum is a vice president of Ohio Loan Co. in Dayton. He has served as president of the Ohio Pawnbrokers Association, secretary/treasurer of the National Pawnbrokers Association and as a member of the board of directors and the board of governors of the National Pawnbrokers Association. Please feel free to e-mail your comments or tips that you would like to see included in this column to RicBlum@att.net or mail them to Ric Blum, Ohio Loan Co., 3028 Salem Ave., Dayton, OH 45406.
Cash America International, Inc. (NYSE: CSH) announced today that it has signed an asset purchase agreement for the acquisition of a 41-store chain of pawn lending locations that operate in the State of Texas primarily under the name Top Dollar Pawn and owned by TDP Superstores Corp.
Commenting on the acquisition, Daniel R. Feehan, President and Chief Executive Officer of Cash America said, “We are excited about this opportunity to further expand Cash America’s pawn lending business in the State of Texas. This group of 41 stores allows us to grow our presence in many of the key markets in Texas where licensing restrictions exist. We are thrilled to bring Top Dollar Pawn’s group of well established pawn locations and talented personnel into the Cash America team. ”
Top Dollar Pawn locations offer only pawn lending and related services. The business operates 15 stores in Houston, 13 stores in Dallas-Fort Worth, 5 stores in San Antonio and 8 additional locations in other central Texas markets. Top Dollar Pawn has been operating successfully since the mid 1990’s and had approximately $14.6 million in pawn loan balances as of December 31, 2012 (unaudited). Cash America operates 257 of its 828 U.S. lending locations in Texas, including 141 locations in common markets with Top Dollar Pawn.
Cash America estimates the aggregate purchase price of the Top Dollar Pawn acquisition to be approximately $102.5 million to be paid in cash, which may be adjusted based on the aggregate value of the pawn loan balance and the merchandise inventory balance held by seller at closing. The transaction is expected to be accretive to earnings following its closing, which should occur in the third quarter of 2013 and is subject to the satisfaction of customary closing conditions, including the completion of satisfactory due diligence, the termination or expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the receipt of other regulatory approvals.
USCIS will no longer accept previous versions of Form I-9
WASHINGTON—U.S. Citizenship and Immigration Services (USCIS) reminds employers that beginning today they must use the revised Form I-9, Employment Eligibility Verification (Revision 03/08/13)N for all new hires and reverifications. All employers are required to complete and retain a Form I-9 for each employee hired to work in the United States.
The revision date of the new Form I-9 is printed on the lower left corner of the form. Employers should not complete a new Form I-9 for existing employees, however, if a properly completed Form I-9 is already on file.
A Spanish version of Form I-9 (revision 03/08/13)N is available on the USCIS website for use in Puerto Rico only. Spanish-speaking employers and employees in the 50 states, Washington, D.C., and other U.S. territories may use the Spanish version for reference, but must complete and retain the English version of the form.
The revised forms are available online at www.uscis.gov/I-9. For more information, please call 888-464-4218. Representatives are available Monday through Friday, from 8 a.m. to 5 p.m. USCIS maintains a website, I-9 Central, to support Form I-9 users. USCIS has also scheduled free webinars to help employers learn about the new form.
To order forms, call USCIS toll-free at 1-800-870-3676. For free downloadable forms and information on USCIS programs, immigration laws, regulations, and procedures, please visitwww.uscis.gov. Follow us on Facebook, Twitter (@uscis), YouTube (/uscis) and the USCIS blogThe Beacon.
A duo of con men is selling common-date counterfeit silver dollars of excellent quality to pawnbrokers and others. So far as is known, the con operation has been limited to Massachusetts, but no one knows if and when the thieves, a Hispanic male and an African-American male, both probably in their early 20s, may move on.
According to the United States Residency Card he uses for identification, the Hispanic man is Juan Carlos Mendez. He has used the same name and ID in all cases; the card number is 095-637-431 (the last digit might possibly be a 7 rather than a 1). A residency card doesn’t include an address, but when asked for it he frequently uses the house number 224, varying the street and town names.
In March Edward Kalp, owner of Eldorado Pawn Shop in Haverhill, Mass., who has extensive experience with coins, purchased 102 silver dollars from the two men. The coins turned out to be counterfeits. Kalp says they are of excellent quality, and pawnbrokers should weigh each one and look for coins that are heavier than they should be. However, even if all the weights are correct, that’s no guarantee the coins are the real thing. Pawnbrokers should carefully compare each coin to the others of the same date. If they are phonies, you will see that all the wear is identical: The nicks and marks are the same. “Say, there’s the same scratch over the ear,” Kalp explains.
Except for four 1928 Peace Dollars all the coins were common dates. “I never thought someone would bother to counterfeit coins that sell for $10 to $15,” Kalp says. When he weighed several, the weights were correct. Kalp says he doesn’t perform destructive tests.
The coins had eight different dates, and all were from the Philadelphia Mint. There were five Morgan silver dollars among them.
The Hispanic man did most of the talking, Kalp says. “They had a good story. He said they did clean-ups. They found the silver dollars and first took them to a bank. The bank teller offered them $1 each. They figured they were worth more than that, so they brought them to me.” Kalp paid $1,200 for the coins.
The man also said that they had some stamps and some baseball cards they had accumulated during their work, and they would bring them in the next day.
After the men left, Kalp decided to take a closer look at the Peace Dollars, the only ones that might have any significant value. He wasn’t happy with what he saw. “They looked too much the same,” he says. Kalp weighed one and found it was heavier than it should have been. Slightly lighter might have been possible, but he knew that they couldn’t be heavier and be real.
Kalp called a friend who owns a coin shop and asked him to come by. He agreed that they looked too similar to each other. Kalp’s friend took the coins to a mutual friend who performed non-destructive tests. All the coins were phonies.
Kalp considered overnight whether to call the local authorities or the Treasury Department. He decided on the latter, but before he could make the call, he was contacted by a local detective. (Kalp sends the Haverhill police department daily emails of all his purchases, as well as later making more formal filings.) The detective said he’d been notified by someone in a different jurisdiction of sales of counterfeit silver dollars by a man named Juan Carlos Mendez.
Kalp and his partner were notified that a Treasury agent would be coming to their shop to investigate on April 16. With the horrific bombing at the Boston Marathon taking place the day before that, Kalp isn’t surprised that he has yet to be contacted by any agency.
Meanwhile, Kalp has checked the Internet and discovered that in October 2012 a shop in Webster, Mass., had purchased some of the counterfeits. The same ID was used as in Kalp’s store. In the article the investigating detective said he would put the word out to other pawn shops. However, Kalp has spoken to several other shops and no one was contacted.
Under the present circumstances in Massachusetts, Kalp is concerned about more than fellow pawnbrokers and other merchants being ripped off. “What is this money funding?” he wonders. “If the authorities had notified me I could have had the thief arrested on the spot. This information needs to get out so that these individuals can be brought to justice.”
By CHARLENE KOMAR STOREY
Think about the first magician to try to convince audiences he could saw his assistant in half. He may have known he had to do the trick to keep his fans from turning to other performers who might offer more excitement. He may have considered every possibility, perfected every move, and felt confident of a safe outcome that would please and thrill his audience. But he still may have been afraid to look in the box when he was through.
Pawnbrokers — along with financial institutions and other players in the credit and debit card game – find themselves in a similar position as they decide when to start accepting the EMV-compliant credit and debit cards that are the standard in Europe and other parts of the world. Rather than simply relying on an information-storing magnetic stripe, these cards include a microprocessor chip protected by various security measures. The cards are further protected by use of either a PIN or a signature.
The move to EMV cards must be made, both to retain customers and to benefit from the carrots that are being dangled by the card giants. But if the timing isn’t right, it may create a costly mess.
EMV, in a nutshell, is an open, industry-wide specification developed by Europay, MasterCard and Visa, owners of EMVCo — the first letters of each company make up the name — which supports smart card, terminal and processing interoperability. An EMV-compliant card has a microprocessor, or “chip,” embedded. Since the microchip is encrypted, it’s tough to counterfeit.
The rest of the world — especially European countries — have moved more rapidly to EMV for a number of reasons, prominently their use of offline processing. Today there are more than 1.5 billion EMV-compliant chip cards and 18.7 million point-of-sale devices in use worldwide.
In the United States, online processing of transactions meant there has been little interest in chip cards. That changed as fraudsters from all over the world, stymied in other countries, began to concentrate on the U.S.
Aite Group says card fraud cost the U.S. card payments industry approximately $8.6 billion in 2010. As financial institutions have seen many sources of income dry up, the cost of fraud became more difficult to absorb, and they looked for new solutions.
At the same time, demand for chip cards began to develop among international travelers. That may seem like a minor concern, but as long ago as 2008, the payment card industry lost out on nearly $4 billion in charge volume and $78.8 million in interchange fees from travelers who couldn’t use their U.S.-issued cards abroad, according to the Aite Group.
Not An Option
Whether fraud and member demand are major or minor concerns, embracing chip cards is no longer truly an option. That decision effectively was made for pawnbrokers and other merchants when Visa announced EMV timelines on Oct. 1, 2012.
Although the card giants use the term “roadmap,” as some merchants and financial institutions move toward EMV, it seems inevitable all others will, eventually, follow. The question is whether to act sooner or later. And if later, how much later?
The card giants are gently pushing the U.S. industry toward EMV. As of Oct. 1, 2012, Visa declared merchants exempt from payment card industry reporting if they process 75 percent of their Visa transactions on EMV-enabled terminals. It also issued other deadlines:
• By April 13, 2012, merchant acquirer processors (banks that provide card services to retailers) must certify for and accept Visa EMV chip contact and contactless transactions.
• By Oct. 1, 2015, liability for counterfeit POS fraud will shift to the party that didn’t enable a possible EMV transaction (automated fuel dispensers get an additional two years added to the deadline).
MasterCard, American Express and Discover quickly jumped on board with Visa.
There’s other moves that don’t directly affect merchants, but play an overall role. For instance, MasterCard, unlike Visa, also addressed ATMs: It set April 19, 2013, as the deadline for a liability shift for inter-regional ATM Maestro transactions at U.S.
ATMs. ATM acquirers — in ATM networks, the financial institution that dispenses the cash, collecting a transaction fee from the card-issuing bank — will assume counterfeit fraud-related liability if a non-U.S.-issued EMV card is used at a non-EMV-enabled ATM. This won’t apply to U.S.-issued cards accepted at U.S. ATMs.
October 2016 will see the liability shift applied to all MasterCard-branded products across all transactions initiated at U.S. ATMs.
With all this persuasion going on, why not jump right in? It’s not that simple.