paydayloanindustryblog.com

It’s difficult, to say the least, when you attempt to enter multiple new markets at the same time.

We’re amazed at the number of entrepreneurs we hear from on a daily basis who want to learn how to run a payday loan business, a car title loan business, a check cashing store, a pawn shop, and even RAL’s (rapid tax refunds) all at the same time.

To industry outsiders, these businesses appear to be roughly the same. But to those of us actually in these industries this couldn’t be further from the truth.

Regarding payday loans , auto title loans , check cashing, pawn shops, gold buying and selling , installment lending, RAL’s, etc. you must deal with compliance issues, customer demographic differences, state/province legislation, licensing, employee training, point of sale materials, signage, software and more.

Consider this Press Release:

First Cash announces disposition of automotive operations
First Cash Financial Services, Inc. Monday announced that the operations of its Auto Master buy-here/pay-here automotive business unit have been assumed by Interstate Auto Group, Inc., a multi-state buy-here/pay-here operator doing business under the name CarHop. Terms were not disclosed.

As previously announced in September, First Cash decided to exit the buy-here/pay-here automotive business through the sale or liquidation of its Auto Master business unit. Under the terms of this agreement, CarHop purchased Auto Master’s automobile inventories, assumed leases at all existing dealership locations and hired a significant number of Auto Master’s personnel. In addition, CarHop will manage the collection of Auto Master’s outstanding portfolio of customer notes receivable under a fee-based agreement. CarHop is a privately-held buy-here/pay-here operator based in Minneapolis, Minnesota, which has been in business since 1996 and currently operates 24 auto sales locations in six states.

Rick Wessel, CEO of First Cash, said, “This transaction provides a timely and effective means for First Cash to exit the automotive business. We have liquidated our inventories for what we view to be a fair price and we expect to realize significant future cash flow from the collection of our existing notes receivable portfolio. The collection services aspect of the contract with CarHop provides a mechanism to collect on the existing portfolio of notes receivable and related finance charges through CarHop’s continued operation of the dealerships and collections operations. CarHop is an established industry operator with the ability to maximize the collections on this portfolio over the next 24 to 30 months.”

According to Wessel, “The cash flow and related tax benefits resulting from this transaction will support the continued expansion of First Cash’s pawn operations in Mexico and the U.S. and allow us to further reduce our outstanding debt. Looking ahead, our energy and resources will now be focused exclusively on our core pawn and short-term consumer lending businesses. These operations continue to be highly profitable, generate significant cash flow and provide opportunities for continued growth and profitability.”

Of course, the press release doesn’t reveal some of the internal problems First Cash experienced with their automotive operation. But suffice it to say, the obstacles outweighed the potential for profit in an extremely lucrative business!

The big guys face the same challenges the little guys face. It’s really tough to make money in all these businesses UNLESS you address them one at a time. Even having a team comprised of pros with significant experience in a niche . Even having pros on your team with significant experience is no guarantee of success. You still must train your employees to sell and support the product and educate your customers as well.

So… pick a niche, learn the ropes, understand and appreciate the startegies and tactics, get your systems in place, and only then dip your toe in the water.

Mike@PaydayLoanIndustry.com

As payday loan stores continue to search for additional revenue streams by adding products and services to expand their product offerings the buying and selling of gold, silver and platinum is becoming increasingly popular.

In an effort to not only increase profits but additionally to offer consumers a variety of services that will appeal to them payday loan companies are beginning to buy and sell scrap jewelry consisting of gold, silver and platinum.

Some payday loan operators are reporting $5000 to $10,000 and more in increased monthly net profits as a result of this service.

With the economy presenting severe challenges for consumers in the U.S.A, Canada, Mexico and more this new service makes a great deal of sense. Startup costs are very minimal. Training consists of a 30 minute Webinar and marketing materials in both English and Spanish are available at no cost.

For example, Cashland Financial Services began their new program, paying cash for people’s gold.
The program is a first for a company that typically deals with payday loans and check cashing services.

Cashland Supervisor Jill Cvetanovich said their Wapakoneta location was among the first Cashland stores to start the program; just in time for the holiday season.
“If a person brings us an old necklace they’ve had and it’s broken and you want extra cash for Christmas, bring it in,” Cvetanovich said.

Cvetanovich said the gold will be tested to determine its karat weight.
She said Cashland will purchase the gold based on the daily market value for the karat weight.

Since the program began last week in select stores, Cvetanovich said the company has already bought $13,000 in gold. The Wapakoneta branch has made several sales, but Cvetanovich said anticipates more as word of the program spreads.

“There’s been quite a bit of inquiries made and we’ve had a few pieces sold in the store,” Cvetanovich said. “Obviously we’d like to have a lot more business, but we’ve done pretty well so far.”
Cvetanovich said nearly all of the 140 Cashlands across Ohio, Indiana, Michigan and Kentucky are to offer the program by the end of the month.

Interestingly, the buying and selling of gold, silver and platinum can be added to virtually any business seeking new revenue streams and new services for their clients.

For additional information go to Gold into Loot.com

First Cash Financial Services Inc. indicated increased revenue streams from its pawn shop operations have resulted in a major uptick to its earnings expectations for 2008.

Headquartered in Arlington, Texas, First Cash Financial (NASDAQ: FCFS), which operates pawn, loan and check-cashing stores, has increased its 2008 earnings per share guidance to an estimated range of $1.24 to $1.26 per share from its previous range of $1.17 to $1.20 per share. The company ramped up its guidance by 35 percent. The majority of this revenue growth and projected profitability will occur in its pawn shop operations.

Obviously the current economy and 2009 projections are creating an increased demand for payday advances and pawn “instant cash” needs of customer of First Cash.

Year-to-date same-store revenue jumped 15 percent!

(See our last Payday Loan Newsletter at Payday Loan Industry.com for our expectations for 2009 payday advance and auto title lending increased expectations.)

Revenue from pawn shop operations alone made up 78 percent of the company’s total quarterly revenue, First Cash said. (Further inquiry should reveal scrap gold buying and selling profits were a good portion of this. See Gold into Loot.com for how to offer this revenue stream yourself.)

During the third quarter, First Cash posted a profit of $46 million, or $1.54 per diluted share, down from a profit of $10 million, or 32 cents per diluted share, during the same period last year. The company’s loss comes as it continues to holds its discontinued Auto Master automotive business unit, which it has offered for sale for several months.

A one-time charge of $52.6 million related to the discontinuation of the company’s auto loan business also was recorded in the most recent quarter, having an impact on the company’s final net earnings.

Once again payday loan fans, 2009 is going to be a year in which we will have significant opportunity to help the consumer deal with the screw ups on Wall Street!