On today’s episode of Pawn Leaders, we speak to Jerry Whitehead. He is a 2nd generation Pawnbroker with over 45 years of experience in the industry. He was one of the founding principles of Uncle Joe’s Pawn, a family owned 12 store chain that was sold to Cash America in 1992. Jerry was the CEO of Dark Holidays in Austin, Texas. He grew that chain to more than 50 stores and sold that chain in 1997 to Cash America as well. He served as a director on several industry boards, including the National Pawnbrokers Association. He’s also a leading mergers and acquisitions specialist who has bought and sold more than 250 stores in his career. Jerry started the Pawnshop Consulting Group in early 2000 and today has serviced hundreds of clients in more than 40 countries around the world and all across the USA.
[03:16] At 8 years old, Jerry’s father asked him to volunteer at the pawnshop, where he worked 40 to 50 hours per week.
[05:19] The first set of stores were sold to Cash America? “In mid-1992 Cash America approached us and made us one hell of a cash offer and we ended up selling out to Cash America”
[08:52] How did you get word around about your consulting business? Bob Moulton described his frustration when going into his pawn stores and that he had little motivation and it was here that Jerry took him on as his first client.
[09:20] He was able to guide Bob Moulton, who now has increased his store count by 11.
[09:39] “The business really began by word of mouth, all the years I served on the NPA board, lots of great contacts, lots of great friends and family in the industry. In the beginning it literally was word of mouth. I was speaking in all the trade shows and getting a lot of visibility from the trade shows”
[10:38] “If people told me 15 years ago I’d be doing gigs in Cambodia and New Zealand, I never would have fathomed that”
[12:26] What is one thing that you think pawnbrokers are still doing wrong? “Unfortunately many independent pawnbrokers, operating not only in the United States, are still overvaluing their inventory”
[13:05] “Technology is a way of life and so there’s so much information that’s available today and when I go into stores I’m amazed at Pawnbrokers, because you know why they price this stuff to the moon. What are you thinking?”
[14:03] Why do you think some pawnbrokers are unable to turnover inventory quickly? “I think most mom and pop pawnbrokers have a sense of joy when they look around on their shelves and think about all the net worth they’ve got sitting around on”
[14:16] “There’s two types of people in this business. There’s retailers and there’s collectors. You need to figure out which side of the equation you’re on”
[15:23] What’s another mistake you see pawnbrokers making? “Number two is a general lack of understanding of the financial metrics or what I call the KPIs (Key Performance Indicators). Most brokers really have no clue”
[16:51] What are the most important metrics? “Loan yields obviously number one, because whenever I have an outstanding loans, I need to know what my annual return is on that loan balance and how do I compare with other peers in similar markets?”
[17:40] The inventory yield is also very important, as it looks at the combination of inventory turns and margins
[18:06] Looking at the net profit percentage return on revenues is another important metric, as well as the return on assets
[20:44] What would you say is the third thing pawnbrokers are doing wrong? “I’m still shocked today to see as many stores as I do that are in such utter disarray”
[22:52] People become numb to their environment, and therefore don’t see the need to change their image
[23:36] “I have just found that stores that are bright, clean and friendly, with smiling, friendly, happy people in there, that want to do business with you, do better than the other guys do”
[24:39] What are some of the things pawnbrokers need to do to become successful? “Leaders lead…when you’ve got strong leadership at the helm who is constantly grazing the road for something new or something different or seeking more from their personnel or their operations, constantly trying to improve, and constantly trying to do things differently, they tend to set themselves aside”
[28:18] “9 out of 10 times when you get the right players in your operation, those operations will grow and grow and grow”
[29:57] “Those that come in with baggage all the time or negative energy, they can certainly pull down the positive energy that exists in that environment”
[32:21] Goal setting is a big part of what Jerry does as a Consultant
[35:30] In the event that a pawnbroker is thinking of selling their store, how do they improve their store? “Oftentimes we can enhance the value of the business model just by doing some corrections in the operations over a period of time to improve the KPIS”
[36:34] Entering into an agreement with a pawn business, and helping them enhance their financial metrics will ultimately enhance the value of the business.
[38:59] “About 50 percent of the clients that have approached me to sell are still operating and they’re operating with more integrity. They’re happier”
[39:28] Make contact with Jerry Whitehead by visiting his website Pawnshop Consulting Group as well as on the Pawn Leaders podcast community on Facebook.