Lessons From a Pawn Star
From vintage Coca-Cola machines and antique toilets to souped-up muscle cars and a pirate peg leg, pawnshop broker Rick Harrison, has bought and sold just about everything. The co-owner of the tri-generational, Las Vegas pawnshop, which is the focus of The History Channel series Pawn Stars, took a moment with Inc. reporter Josh Spiro to discuss how to keep customers coming back, maintaining steady cash flow, and problem solving in a family-run business. He also reveals how the television series, which begins season three on Monday, June 7th, at 10 p.m. EST, has changed the way he runs his business.
What are the advantages and disadvantages of running a family-owned business?
I say this all the time. The best part of my business is working with my family, and the worst part of my business is working with my family. When I get upset with something my father or my son does, then my wife or my mother is calling me up [asking] ‘Why are you being an ass?’ I’m going, ‘Mom, I want it to run a certain way and for some reason Dad thinks he’s not supposed to listen to me.’ That’s one of the problems: business life inevitably comes home with you. The upside is I get to be around my son; I get to be around my dad; and they are people I can definitely trust.
What’s your role in the family dynamic?
I basically run the shop. Back when I was younger my dad did but now he’s getting elderly. He's fine with me running the whole thing. He has realized it's a lot bigger business these days than it used to be. He is happy to hand it over to the next generaton. Now, I’m a mediator [between him and my son]; I’m a little bit of everything. I literally hear my name yelled 500 times a day.
When you’re shelling out big money for things like cars or other expensive items, how do you make sure you keep your cash flow regular?
One of the things you don’t see on the show is that I buy and sell jewelry. It’s basically a guys’ show and The History Channel doesn’t think jewelry is really going to appeal to the guys. But it’s a very lucrative business. I also own other businesses that they don’t mention on the show, so my cash flow is good. I keep the pawnshop cash with the pawnshop and I would never risk cash flow to buy something very large. Never throw all your money on one number. We usually keep like $150,000 on hand [in case of big purchases.] Anything larger than that you’re gonna have to take a damn check.
Why was the shop initially set up in Las Vegas?
Back in ’81, my Dad went broke in San Diego. He was in real estate but he’d always bought and sold gold. I was 16 at the time and he said, ‘You know what, let’s go to Vegas and try it there.’ That’s the way Vegas has always been, it’s always been that second chance town.
So we moved there and he started up a little secondhand store. In ‘87 I found a flaw in the city code that said I could get a pawn license. There’s a moratorium in Las Vegas on pawn licenses; you can’t just go out and apply to the city and get one. You have to actually buy one off somebody and they can go for as much as $2 million. We had a secondhand store but we wanted a pawnshop because that’s where the money is at.
In 1955 the city council and the good old boys passed a law saying that they would issue one more pawn license when the city population reached 250,000. At the time there was only 25,000 people living in Vegas. In 1987 I started calling the city once a week to check the population. In April 1988 they said it was now 250,000. I went to the city to get a license and was the first one there.
What part of running a business still gives you the most trouble?
Half the time it’s keeping up with all the new laws. It’s really hard keeping up with every new city ordinance, state law, and federal law. I mean it drives me goddamn crazy sometimes. Like the new healthcare bill, I’m sure that’s going to turn into a nightmare.
Do you have a lot of repeat customers? What keeps them coming back?
I have a lot of repeat retail customers. I have guys that search swap meets and yard sales and then bring that stuff to me so I can resell it. I think the best thing to keep your customers coming back is to be honest with them and always be fair. If you haven’t noticed already, I’m a real talker. It’s best to just explain everything to them, keep everything transparent so they know what the playing field is.
How has doing the show changed the way you run your business?
It’s insanity. It’s working out for me but I’m a lot busier. I have to do the filming. I still have to run the pawnshop. I’ve still got to have a family life. It’s just one more burden on top of everything else, but I’m dealing with it. Business is up a good 50 percent [because of the show]. I mean it’s not astronomical but it is up.
It’s also hurt my business in some ways. I mean it's really difficult for me to go to the front of my store and conduct business like I used to because all these tourists come here wanting to take pictures with me. So I’m not as hands on as I was before and a lot more mistakes are being made [because of that].
What's your advice to other family-run businesses on keeping the peace?
There’s a lot of ground rules that have got to be set before you start and everyone’s got to agree to them. If one person’s putting in a lot more work than the other person and that one person wants more money because of it, that could cause problems in a family-run business. And the way I look at something like that is I tell everybody, ‘Hey, this is like a corporation. You all own stock in it. Just because the guy who is on an assembly line at Ford owns stock in the company doesn’t mean he can’t get fired.'