Saturday, 20th December 2014

Gold Still Glitters

Posted on 17. Apr, 2014 by in Spring 2014

Gold Still Glitters


Gold can make pawnbrokers a lot of money when it’s going for top dollar. But it isn’t necessarily a tragedy when prices slide, say both consultants and successful pawnbrokers.

“When the price of metals started dropping, a lot of pawnbrokers started wringing their hands and gnashing their teeth,” says Steve Krupnik, president of Cloud Ten pawnbroking consultants and a former long-time pawnbroker.

“It was almost silly to me.”

Both Krupnik and Jerry Whitehead, CEO of Pawnshop Consulting Group, point out positive sides to the decline in gold prices — not least the return of many pawn businesses to a concentration on core metrics.

“We preach core business metrics, being very aggressive with loan balances,” Whitehead says firmly. Pawnbrokers needs to pay attention to the basics, he says, adding that during the gold boom many pawnbrokers strayed away from the pawn business.

Similarly, Krupnik tells his clients that the gold business can always be there and always be profitable: The key is to treat it as simply another of your key metrics.

Krupnik recalls his past experience with the gold cycle, when he was running a pawn business. “During the last metals boom, I made a lot of money when it went up. I made more when it went down,” he says.

The key is to keep marketing, but change its focus, Krupnik says. “People will act to prevent loss.” Advertise that they should sell their gold before the price drops further, he advises.

Less Competition

Both consultants agree that pawnbrokers are benefitting from the disappearance of the fly-by-night operators.

“Most pawnbrokers operating in the United States are still dealing in metals — it’s 30 percent to 60 percent of their overall loan business,” Whitehead points out. In contrast, “Gold buyers are packing up and going away.”

“Pawnbrokers should be jumping for joy because all their competitors are going out of business,” Krunik says. “All those ‘We Buy Gold’ stores — gone. All those hotel gold buyers — gone.”

Tim Birkle, who owns four Vista Pawn outlets in Idaho, says the fly-by-nights are gone from his areas. “One guy is still here, who was here before,” Birkle says. “The smaller places pretty much closed up.” Besides the slump in prices, Brikle says that crackdowns by the authorities helped: The fly-by-nights didn’t like having to follow the same regulations pawnbrokers face.

Keeping gold in perspective regardless of price has paid off for Birkle. While he admits that the volume is down from a year-and-a-half ago, Birkle still takes quite a bit of gold in.

“We still have our foot on the metal in marketing,” he says.

That approach is echoed by industry leader David Schoeneman, owner of Shane’s The Pawn Shop in Chicago Heights, Ill. “We advertise aggressively and consistently on TV,” he says. “It’s less now than a year ago, but people come.”

Keeping Customers

Birkle emphases that he doesn’t confuse making a quick buck on gold with losing a lot more by alienating long-time customers.

Yes, says Birkle, if gold takes a real dip, he might have some conversations with casual pawners. “But if someone has been bringing in the same chain every month for a couple of years, I’m just going to give them the same money as I always did.”

That’s Krupnik’s advice, too. “Just because gold drops, don’t adjust your loan price with regular customers,” he says.

“That regular customer has no idea what that bracelet would melt for,” Krupnik points out. “If the customer has picked up the bracelet 15 times, there’s no reason she won’t pick it up the sixteenth time.

Shouldn’t You Dress for Success in the Pawnshop?

Posted on 17. Apr, 2014 by in Spring 2014

Shouldn’t You Dress for Success in the Pawnshop?


Mark Twain is credited with saying, “Clothes make the man. Naked people have little or no influence on society.”

A simple translation may mean society cannot judge someone on what they already have naturally (generally speaking, all men are created equal).

But someone’s taste in clothes may determine our opinion as to the class he/she may be part of in society based on the quality, expense, fit and taste of their clothing when wearing it. (This must explain all of those counterfeit handbags.)

I’m not advocating we should all show up for work naked, in tailored designer tuxedos or evening dresses. However, cut-off jeans and a torn T-shirt may not be quite appropriate either.

Then again, there is another colloquialism about putting lipstick on a pig which is beyond the scope of this article.

Some of us need to find a happy medium for our store, our location, our customers and our individual personality. And for all others, there is the company uniform.

u·ni·form (yo?on??fôrm )
1. A distinctive outfit intended to identify those who wear it as members of a specific group.
2. One set of such an outfit.
tr.v. u·ni·formed, u·ni·form·ing, u·ni·forms
1. To make (something) uniform.
2. To provide or dress with a uniform.


What? You don’t have a company uniform? Well, maybe that is what you need to get to the next level.

Further, if you watch any of the pawnshop “reality” TV shows, you’ll note that all the employees seem to be wearing a store logo shirt. Yes, this does help separate the employees from the customers for easy identification (I admit, I’ve had this problem in some pawnshop visits) and evokes some degree of professionalism. Although I think there may be a fair amount of mimicking going on here (“Imitation is the most sincere form of flattery”), hey, if it seems to work for those TV pawnshops, shouldn’t we attempt it ourselves?

But even the term “uniform” may be misleading because employees are not always fully uniform in appearance and may not always wear attire provided by their employer. But they are always representing the employer in their attire.

Employees all wearing black shirts and khaki pants, for example, may appear conspicuous and thus represent the employer even though their attire is uniform only in color, not in its features.

Then again, a distinctive shirt with the business’s name or logo helps the employees stand out among others within the business and creates a more professional appearance.

Public Events

When I attend a pawnbroker convention, trade show, meeting or seminar, I notice many of the attendees wearing apparel with their pawnshop’s name on it.

Typically they are wearing a polo-style shirt, but sometimes a dressier button-down shirt. I often see store jackets and hats, too.

I went out to dinner last week and the guy sitting in the booth behind me was wearing a polo-style shirt which had Bob’s Pawnshop emblazoned across the left breast.

I would assume that everyone who sees him after he leaves work knows where he works — a good advertising bonus for the pawnshop owner. (Provided the employee behaves in public and doesn’t drink too much —this restaurant also served alcohol.)

Looking Professional

Recently, a salesman from a nationally known billboard company stopped in to see me (and probably everyone else up and down the street). He had a deal just for me! A billboard down the street had just become available. (It seems that lately, everyone has ways for me to spend my money.)

I listened. I received a copy of the proposal and told him to let me take a look at the billboard and I’d get back with him. We talked for a while and seemed to get along quite well. He was actually from Columbus and traveled to Dayton and other surrounding communities selling billboard space.

I checked out the billboard location on the way home that night. It had one major issue – it was on the wrong side of the street. If it was seen, it would only be by those going away from my store, not toward it.

I wear a long-sleeved dress shirt and tie to work, six days a week, all year round. (My wife buys them, I just have to wear them.) So what does this have to do with anything? Just keep reading.

A week later, the billboard salesman stopped back in. He was wearing a long-sleeved dress shirt and tie. On his first visit, he was wearing a polo-style shirt (without his company’s logo).

He told me when he went home that night after our first visit, he told his wife about meeting me, our conversations and of my appearance vs. his. She said to him, well, maybe if you want to do business with people wearing shirts and ties, you should wear something similar, which he seemed to agree with.

Now, long-sleeved dress shirts and ties might not be for everyone, and I’m not telling anyone how to dress. I have been to many pawnshops where the employees wear cut off shorts and wife beaters (men’s close fitting, ribbed, sleeveless white cotton undershirt most commonly used before T-shirts came into vogue as undergarments. It is named “wife beater” after Marlon Brando’s character, Stanley Kowalski, who wore one during much of the movie version of Tennessee Williams’ A Streetcar Named Desire. Stanley proved to be a sloppy, drunken, ill-tempered brute who beat his wife.)

Now if this is the image you want to portray to your customers there is probably no reason to read any further. But I hope most pawnbrokers who read this magazine and the articles within are trying to better themselves and their business image.

It’s Not Size That Matters

Whether you are a two-man operation or employ 100 or more, the way your customers see you or your employees can make a difference in the way they think and feel the business is operated.

If you are going to be assuming a position of authority, you need to look the part. No matter if it is a uniform look, a store shirt, or a shirt and tie, appearance does matter.

How would you feel if you went to a new doctor’s office and the doctor entered the room looking like he just changed his own car’s engine oil?

If you didn’t know the guy, you might be having second thoughts about being there (I, at least, hope he washed his hands). Although he might get a pass if he was wearing a funny-looking golf outfit and your appointment was just before noon on Wednesday.

By the same thought process, if you took your car in for new brakes and the mechanic was wearing a clean lab coat and had a fresh manicure, you might wonder if he even knew where the brakes were located.

OK, so maybe a shirt and tie isn’t for you, it’s just too uppity for your demeanor and your customers are more laid back. You want to relate to them more on a one-on-one basis.

Then a store shirt may be the right item to convey this message and still let your customers know you belong to the organization whose name in on the front of the building.

Store shirts and/or a uniform dress code also help you control the appearance of all the other employees.

Team Image

The goal is to set a professional image to go with your business. I have read that when employees dress in attire which reflects they are part of a team, they tend to act accordingly.

I performed an informal survey of the local pawnshops (I asked my pawn detective) and found that in about 50 percent of the shops, employees wore a company shirt.

Be it long sleeved, short sleeved, button down or polo (definitely no T-shirts), we’re trying to create an image here, that of a class act. During certain times of the year, a jersey might be a unique touch of style if done in good taste and worn during a season, series, and tournament or bowl game. (Note: The jersey should have your store name on it, not a pro team. No need to start a controversy with customers who may favor a different team.)

If your employees work five or six days a week, you should probably furnish them with at least three or four shirts. The shirts should be replaced once a year so they continue to look fresh.

If you offer seasonal shirts (summer and winter/short sleeve and long sleeve), your number will increase. In bulk, you can purchase embroidered shirts relatively inexpensively. You may also want to consider heavier weight shirts or sweatshirts. Sorry, in my opinion hoodies are a definite no-no.

Pawnshop Can’t Sue for Interpretation of Ordinance

Posted on 17. Apr, 2014 by in Spring 2014

Pawnshop Can’t Sue for Interpretation of Ordinance


There is an old saying that ignorance of the law is no excuse. Yet laws, regulations, and ordinances can be written in such a way that more than one interpretation can be reached.

When such a difference cannot be resolved informally, it would seem logical that the courts should be the place to go to for a decision on what the ordinance really means.

Recently, a pawnbroker sued a city seeking a judicial declaration for its position in a disagreement with the city over the interpretation of one of its ordinances.

A company operated a pawnshop in Dallas County, Texas, for many years. In 2003, it began to offer short-term and long-term loans under a similar business name.

In 2012, the City of Dallas told the pawnshop that its loan services business constituted an “Alternative Financial Establishment” under Dallas City Code section 51A 4.207 and that it must comply with the provisions of that section.

That section defined an alternative financial establishment as a car title loan business, check cashing business, or money transfer business. An alternative financial establishment, however, did not include an establishment that provided financial services that were accessory to another main use.

The pawnshop disagreed with the city’s interpretation of the section and informally attempted, but failed, to persuade the city that its loan business was not an alternative financial establishment.

The pawnshop then filed a lawsuit seeking a judicial declaration that its loan services business was not an alternative financial establishment, or, alternatively, that the business was accessory to its “main pawnshop use.”

The city filed a “plea to the jurisdiction” partly based on governmental immunity. A plea to the jurisdiction basically challenges the authority of a court to hear a matter or case.

The pawnshop amended its petition and alleged that the Uniform Declaratory Judgments Act waived the city’s immunity because the “suit seeks the determination of the question of whether the ‘accessory use’ provisions of the Dallas City Code should be construed to encompass the offering of short-term and long-term loans to the customers of a pawnshop, incidental to the operation of the pawnshop.”

The city amended its plea to the jurisdiction to assert that the UDJA did not waive its governmental immunity for a suit against the city for the construction or interpretation of an ordinance and that the pawnshop had not challenged the validity of the ordinance.

In response, the pawnshop alleged that the waiver of immunity applies to suits involving statutory interpretation as well as invalidation.

After a hearing, the trial court denied the city’s amended plea, and an interlocutory or interim appeal was made to the Texas Court of Appeals.

Standard of Review

The Appeals Court first noted that governmental immunity from lawsuits defeats a trial court’s subject matter jurisdiction or the right of the court to hear the matter and is properly asserted in a plea to the jurisdiction.

Whether a trial court has the right to hear the case, said the Appeals Court, was a question of law, which the court would review from a fresh point of view.

When a plea to the jurisdiction challenges the formal written claims, the Appeals Court must determine if the party making the claims has alleged facts that positively demonstrate the court’s authority to hear the case.

A plaintiff bears the burden to allege facts that positively demonstrate the trial court’s authority to hear the matter. The Appeals Court said it construes the allegations in the claims liberally in favor of the plaintiff and looks to the party’s intent.

On one hand, if the claims don’t contain sufficient facts to positively demonstrate jurisdiction or the authority to hear and decide a case, but might be cured by amendment, the issue is one of claims sufficiency and the court should allow the plaintiff an opportunity to amend.

On the other hand, if the claims positively rule out the existence of the court jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiff an opportunity to amend its claims.

Applicable Law

Sovereign immunity deprives a trial court of the right to hear the matter for lawsuits in which the state or certain governmental units have been sued unless the state consents to the suit. Municipalities are political subdivisions of the state and entitled to governmental immunity unless it has been waived. The waiver of governmental immunity must be in clear and unambiguous language.

The issue in this appeal, said the court, was whether the UDJA waived the city’s governmental immunity. The city argued there was no waiver for declaratory judgment actions seeking only to construe the meaning of a statute. It argued that because the pawnshop sought only a construction or interpretation of the city ordinance and did not seek to invalidate the section, governmental immunity barred the lawsuit.