Lessons from a Pawn Shop

I listened to an interview with Rick Harrison, the owner of Gold & Silver Pawn Shop in Las Vegas, which is featured on History Channel’s “Pawn Stars.” I have not seen the show, and have never pawned anything myself.  I wanted to learn more about the business, out of curiosity. I think it’s valuable to hear about different industries in order to learn more about supply and demand, and different practices. I ended up hearing a really insightful piece that challenged my preconceptions about the pawning industry. I also learned some lessons about business that can be helpful to you, as well.

I was first surprised by the demeanor and outlook that Mr. Harrison has. He is a large man, with a shaved head, and an imposing figure. Each picture I have seen of him features a smile, a disarming quality that belies the interpretation of his chosen profession. I thought this was very interesting because I, like many people, assume that pawn shops are nefarious in nature. I always subscribed to the idea that criminals and other types used the pawn shop as a get rich quick opportunity. I was impressed by some of the stories that Rick shared, displaying his character and business practices. It was refreshing to witness a stereotype being challenged.

He strongly believes in the value and need for a business such as his. “Up until the 1950’s, pawn shops were the #1 form of consumer credit in the U.S.,” according to Harrison, meaning that the normal person who could not get a bank account could get a loan from a pawn shop. His industry is heavily regulated, where the information his customers are required to submit goes to the Office of Homeland Security as part of the Patriot Act. He also takes pride in operating within the rules, and being able to be fair and honest with his customers. One of his main points that he addressed is that it is in his best interest to be a good person as well as a good businessman.

You won’t get a good price if your product is in bad shape. In the interview, reporter Dave Davies played an excerpt from the show where a person tried to pawn an antique coffee grinder. Harrison looked at it for all of a minute, and declined. It was in awful shape. The person insisted that he could get top dollar for it. Harrison stood firm. The man eventually took the owner’s offer of $200. Harrison then spent about $500 to repair and clean up the piece and then sold it for more than twice that amount.  

If your product is of low quality, or presented in a way that is less than stellar, you will not likely see a lot of return on your investment. It is important to have an attractive product and that it is presented in an attractive, professional way. This goes for your website, as well. Make sure that your landing page features the products you are promoting. Your ad copy should be clear and concise, and contain the keywords that you are bidding on for your PPC campaign in order to improve your presence in search results. For research purposes, take a look at what major companies do with their websites. They attract customers not just by name recognition, but by the easy navigation of their site, and the content quality on their pages. You can incorporate these fundamentals into your work as well.

Word of mouth is vital. One anecdote that absolutely floored me was about a rare broach, brought in by an older woman who got more than she expected. Unaware of its value, she asked for $2000. Rick looked at the piece, saw its true value, and felt it was best to be honest. He gave her $15,000! His philosophy goes by 6 degrees of separation. If she were to find out the value of the piece, she would tell everyone she knows that he had ripped her off, and to never go that pawnshop. 6 people tell 6 more, until everyone in the world would know to avoid his business.  She would go on and tell everyone she knows for the rest of her life. The power of word of mouth is measurable, by looking at how your business grows or shrinks.

This is even more prevalent through today’s social media. Sites like Yelp and Twitter have given the general public the platform to express their views, and to create campaigns of support or protest against whomever they please. Negative word of mouth can kill your business, so use best practices to conduct your growth.

Good business is being a good person. On a more positive note, the woman with the broach will be telling everyone she knows about this business and how helpful and honest they were. He has created positive personal advertising with this situation. When you satisfy a person’s needs, and are honest in your dealings, you can create a line of potential new customers. You are here to build a business, and that is done by integrating with the community. In Harrison’s case, he has dealt with everything from the homeless to billionaires, and deals with each with the same care. Harrison works to create repeat customers, no matter what the background.

As an internet advertiser, you can reflect these tenets by using relevant keywords, running a secure and professional website, and promoting a niche that satisfies a need. Even though you may not be running a brick-and-mortar business, the changing marketplace still demands solid business practices. I was pleasantly surprised to learn about an industry that is literally thousands of years old. I was really surprised by the insight provided, and reminded me of the simple things: do the right thing, know your product, and work to develop relationships. For information on this interview, visit National Public Radio at http://www.npr.org/2011/06/09/137033690/pawn-star-rick-harrison-on-his-deals-and-steals.