Have chance to buy 1/3 of pawn shop

[Extra Innings]

The biz not having debt is always good but not necessary. Did they need to take a high interst loan to get started? Maybe they just are sick of paying interest or this is their way of trying to get you to join in. In all honesty though a biz that has more in true assets than debt really does not carry any debt. Most investors would be willing to get involved in an operation with a 2.5:1 asset to debt ratio. The only real question is are the assets REALLY worth 20k.

Yeah first question is where is the debt coming from.

This whole thing sounds like a cluster fuk of epic proportions. Kid knows little about the finances of the business aside from what his "buddy" told him and he's ready to dump 8k in. Not to mention the seedy nature of pawn shops to begin with....-200 he gets fukked in this deal.

Probably an 8k gambling debt....

[Extra Innings]

Extra Innings idea of burning the joint down if shit goes south is pretty solid advice as well imo.

Get a 100k insurance and bust it out

[borednaz]

Look, I will set you straight right out the gate. Any pawn shop that has to rely almost solely on Ebay is doomed from the start. Ebay plus paypal rape you solid in fees horribly cutting into you profit margins. So unless your planning on taking these people worst than Rick on PawnStars your going to be living off thin profits.

50 hours a week just tagging & managing inventory on ebay? It just all adds up to mismanagement of time & probably funds if this is how they run it. Another point I'd like to make is if they are in DEBT now then they are buying items with DEBT. Which means even if your 8k makes them solvent on say a Interest bearing loan, they are still everyday acquiring new debt to remain able to purchase items.

Your not clearing their debt, it's basically like them going to dinner & stiffing you with the bill promising in return that you get to eat with them everytime they go out.

[jkilla990]

Sounds like a good business, pawn shops are recession proof so its a good business

[helicopter23]

Yeah first question is where is the debt coming from.

This whole thing sounds like a cluster fuk of epic proportions. Kid knows little about the finances of the business aside from what his "buddy" told him and he's ready to dump 8k in. Not to mention the seedy nature of pawn shops to begin with....-200 he gets fukked in this deal.

Yont get ******. He need to net $300 per day

[helicopter23]

Probably an 8k gambling debt....

Ebay and paypal take about 15-18%.. If they closed up tommorrow and sold everything they would have 15k after all ebay fees.

[helicopter23]

I will be posting company buys, sells, and metal buys in 30 mins since they opened.

[BettingGeek]

This shop is been opened 6 weeks and they have not "payed themselves" yet. For 50 hours a week I hope to get $500 a week. I have no job skills although was an excellent worker at two jobs working in manufacturing (didn't get hired full time because it was through temp agencies). Also no jobs in this area.

My buddy is gonna take most of the 8k and make business debt free. He says this is a huge deal to be debt free and have 20k in assets. This kid that fixes electronics has a small ebay company where he nets about $20 a day, not doing it in last week couple weeks because he has no time.

$20k in assets and $8k in debt
Total value of the business is only $12k? and you are buying in for $8k ...

[helicopter23]

$20k in assets and $8k in debt
Total value of the business is only $12k? and you are buying in for $8k ...

Thought it was a little high myself. What is the ratio, what should I be paying then???

[helicopter23]

Also they have not advertised yet. The "big" local pennysaver has a circulation of 20k, and they have not put anything yet in there.

[Extra Innings]

$20k in assets and $8k in debt
Total value of the business is only $12k? and you are buying in for $8k ...

[Extra Innings]

Id say 51% @ 8k

[excel]

Get a 100k insurance and bust it out

[BettingGeek]

Thought it was a little high myself. What is the ratio, what should I be paying then???

Half, 4k

[helicopter23]

Company Records June 1st - June 25 (Business opened May 1st, not putting those records on here)


Buys $7K (In reality should be able to sell for $13k which includes ebay fees

Sales $6500

ebay sales don't know ( I know they have about $1500 in stuff as buy it now)

Gold/silver buys $1300 will sell to refinerary for $1700 for $400 net.

[BettingGeek]

Half, 4k

That's the dream case scenario they let you buy in with $4k

In reality, since they have established the business with income, in order to buy in, you have to pay what calls "premium price"
Which is about 25-35% of $4k ~ $1k - $1.3k

So, your looking at a $5.3k buy in. Max you should put out is $5.5k to buy-in. Anything more than that, you can say bye-bye.

[BettingGeek]

Company Records June 1st - June 25 (Business opened May 1st, not putting those records on here)


Buys $7K (In reality should be able to sell for $13k which includes ebay fees

Sales $6500

ebay sales don't know ( I know they have about $1500 in stuff as buy it now)

Gold/silver buys $1300 will sell to refinerary for $1700 for $400 net.

after overheads, merely break even?

[Extra Innings]

That's the dream case scenario they let you buy in with $4k

In reality, since they have established the business with income, in order to buy in, you have to pay what calls "premium price"
Which is about 25-35% of $4k ~ $1k - $1.3k

So, your looking at a $5.3k buy in. Max you should put out is $5.5k to buy-in. Anything more than that, you can say bye-bye.

[helicopter23]

you re not going to make much money selling FROM THE STORE, since it is, as you said a low income drug infested area, but yoy stantto make great profit if you sell stauff on EBAY, as you said...Just be careful, what you buy...Stick to gold, jewelery, muzikal instruments, higher end electronics, PC, cameras, phones, and expensive tools...DO NOT BUY ANYTHING ELSE!!!!, Or you'll have hard time selling he stuff back...You also have to become a scrupulous owner, paying 10-15% of the resale value of stuff, since you going to be waiting on average 2+months to get the turnaround on your money...

Another thing....$8,000 should buy you a majority stake in this business, since you probably not going to see the return on the merch(you said $20,000?) Movies, and little stuff is a hassle to try and get rid...I would not count that crap as anything towards a value of the business...You also have to account rent, bills, taxes, shipping, salaries, and cash for purchasing power,,,I would bring in a lawyer and demand 60% of the profits if u invest your $8,000, JMO, BOL

***** UPDATE ******

My buddy is selling the "bones" of his pawnshop (display cases, shelving, etc..) for $800 at the end of this month. His partner turned out to be not that good of a repair technician, very lazy, unproductive, not motivated, and basically started stealing as of late. They were doing well in July and August, netting close to 15k for those two months. Now like I said the wheels fell off. GOOD THING I DIDN"T INVEST.

[McBa1n]

Pawn broking is a TOUGH ass business.
What you see on pawnstars or hardcore pawn is not how difficult it is. You can take in bullshit product all day, but can you sell it? If you can't, you'll have dickloads of crap no one wants. 8k seems rather cheap to buy into, but I'd take a hard look at my partners and also, the shop. Also, if you're buying in, you also have to consider your share. They are in financial trouble. If that takes them out of debt, then what's to say they can't gain more debt fast? Also, because you're being an investor/partner, should you put your money in, shouldn't your share be higher if they're gettin broke? Just saying. F friendship. Can you buy shit for nothing and get paid off of it? It's ******* tough when you don't have good product to move in your shop and worse yet, a town of 8k people.

I'd say if you'd be listing crap on ebay, then I'd tell whoever to F off. They are looking for coin in a sinking business. If I was coming in with that type of cash to a shop that clearly isn't moving anything out the door, then they're looking for someone to F.

Personally, I'd tell um to f off, unless you gained control of 50.1% of the business.
They're going to go broke. You don't ask an intern to buy into a company. To me, this sounds like a HORRIBLE investment. If you can't have full control with your share, since they're clearly bleeding cash, then you get control or they can f off. That's how I'd play it. I'd also not sign anything without a lawyer. To be fair, the gentleman's handshake has become a thing of the past awhile back.

Pawn-broking can bring in some serious cash, but in such a small town? I question that. You have to do a dickload of legwork on ebay, which means you can't buy an asset at 40% and make a reasonable profit. You'd have to take in a TON of crap with a HIGH inventory to pull that off and make some bux.

Personally, if your share isn't that much coin to you, I'd do it under terms of 50.1%, if not, let them lose hard. That's just bad business to buy into a sinking ship. It's a brutal business. A town of 8k is nowhere near what you need to be profitable with 3 'partners'. It's just a losing proposition, especially without marketing, regardless if you have an in-house fix-it man. You'll never do the volume to get paid, IMO. In fact, if your town was 80k, I'd still be suspect.

Friends/business mean jack shite, man. Let um sink, IMO. I'd never do that kind of shop in that small of an area, unless I was selling dope or crack.
----------------
Just read the whole thread - good non-play, sir. Good non-play

[priskilla22]

If you do, sell the stuff you get on Ebay too.

[McBa1n]

***** UPDATE ******

My buddy is selling the "bones" of his pawnshop (display cases, shelving, etc..) for $800 at the end of this month. His partner turned out to be not that good of a repair technician, very lazy, unproductive, not motivated, and basically started stealing as of late. They were doing well in July and August, netting close to 15k for those two months. Now like I said the wheels fell off. GOOD THING I DIDN"T INVEST.

Yeah, good thing I read the thread (cough).
Well done, man.
Business+friends never mix, unless you can pay your friend or they can pay you. If they are 'in trouble', there's really nothing you can do.
Well done, sir.

[neverstoppers23]

this depends on a wide range of variables. IMO, partnerships always seem bound to fail, and end in legal battles. As others have said I would hire a lawyer, maybe a managerial cost accountant to go over the books, to give you an idea of how well they have to succeed.

[lolguy999]

ok so you're paying 8k for a place that has 20k in assets. Do the math, your buddies each paid 10k for 1/3 in average let's say, and you're getting in for 8... well 50 hours does sound a lil numb but hey your choice bro we don't know the specifics but BOL to whichever road you choose..