Alan Smith might not have been able to foresee it, but when he acquired his first Cash Converters store in Boksburg, he was laying the foundation of what would become a small empire.
Alan was first introduced to the network by a friend. Although his previous work experience had been in food – he had owned a bakery – he says that he has always been a trader at heart. “Even when I was at school, I used to love buying and selling things, from eggs to Scooby doo wire,” he says. It’s the potential to earn money that gets him excited. “This is the only business that I know of where you are able to dictate your own costs. Plus, you never know what you’re going to buy next in your store.”
He therefore agreed with his father’s suggestion that he purchase a store. Head office had recommended a site on the East Rand, and so it was that Alan opened his first shop in the East Rand Value Mall in 1999. Although it was a new site, Alan said that building it up was relatively easy. With his passion for auctions and trading, he already had many contacts who proved useful when it came to sourcing stock. His father’s input was also invaluable. “He had a background in retail, and believed strongly in the power of customer service. He quickly became my mentor.” Within three to six months, the store had broken even – and, one year later, Alan was ready to expand his network.
“Establishing the second store was much easier, as I’d learned a lot the first time around. I was able to design the store in a way that helped me avoid the stumbling blocks I’d previously come up against. I also realised that I needed more cabinets for high value goods, because placing these on the shelves contributes to shrinkage,” he says. Added to this, the issues of stock and location – two major issues for franchisees – were easily addressed. For instance, Alan was able to use items from his first shop to stock his second. Meanwhile, when it came to finding the right site, he says that there were a number of new locations opening up. He selected Krugersdorp’s Key West Shopping Centre for his new store.
Because they targeted very different markets, Alan found the experience of running his Krugersdorp shop was entirely dissimilar to his Boksburg branch. Dealing with various types of buyers and sellers helped to hone his insights and trading skills.
Two and a half years later, Alan was once more ready to grow. This time, he set up a store in the Alberton City Shopping Centre. “By now, getting the shop up and running was easy. I had two stores to source stock from.” Nonetheless, the store itself proved “challenging”. “Our buy shop was located in an underground parking lot, so we had to make sure it was brightly lit. This often deterred people who would have preferred a more discreet setting.”
He decided to sell the shop four years later. Around the same time, he closed his Krugersdorp branch as the landlord had decided he wanted to use the space in other ways – and so, Alan was back to having just one store. But not for long.
When the Centurion store, located in the South Lake Shopping Centre, became available for purchase in 2006, Alan didn’t think twice. Although it had previously been the number one store in the group, it was struggling operationally and selling for a good price. Alan was confident that he could re-establish it as a top performer. “I had my doubts once – two months after I bought the store, I phoned Richard Mukheibir, the CEO of Cash Converters, and asked if he thought I had done the right thing. His answer was yes; he advised me to stick it out.”
Alan did just that, although he took steps to correct the challenges that were still dogging the store. For instance, the staff that had worked under the previous owner had stayed on, and were repeating their old mistakes. At one point, Alan was functioning with just three salespeople on the floor, while he managed the till. However, by concentrating on customer service, implementing more efficient procedures and stocking the store correctly, he was able to double turnover within three months.
With both stores running smoothly, Alan decided it was time to grow again. Thus, in 2009, he opened a Cash Converters branch in Kempton Park, located in the Festival Mall.
“At the time, I never used to drive cars – just bakkies. I promised myself that I would buy a brand new car when the Kempton Park store broke even,” Alan remembers. Three months after opening, he was behind the wheel of a BMW X6 and now a Mercedes SL500.
Again, he says that he found the secret to success lay in stocking the store correctly. But there’s more to it than that. “When people ask for advice about opening a store, I ask two questions: How much cash do you have, and how much stock do you have?”
Staff are also key. Here, again, is an area where Alan has benefited from owning multiple stores, as he is able to use his existing shops as training grounds for employees from newly acquired branches. But, while training is of course critical, staffing correctly begins with choosing people who are motivated and enjoy their work. Taking care of them is the final piece of the puzzle: Alan believes in paying his staff well so that they are not tempted to leave.
By 2010, Alan’s network was entrenched. His next step was to add to it with the acquisition of the Balfour branch. Although he says that this store has presented more teething problems than his other shops, he’s managed to push it into the Cash Converters Top Ten – in fact, each of his stores features in this ranking.
Menlyn Retail Park is the site of Alan’s most recent investment, opened in 2013. “By now, setting up the stores has become easy,” he comments. His vast experience has enabled him to identify stores that are under-performing and buy them at a good price, then set them back on track with very little hassle. Instinct often plays a significant role in helping him choose his sites.
Menlyn got off to a good start: thanks to the other stores and my current manager and staff, Alan was able to present customers with R1 million worth of stock on opening day. As a result, it was already showing growth in its second month of operations.
Although Alan says that he’s currently looking to consolidate his network, it won’t be long before he looks for the next opportunity.
Alan’s top tips
- Be honest and ethical.
- Choose your stock carefully.
- Get the right staff and managers in place, and treat them well.
- Be tenacious. If something does not work initially but you think it has potential don’t give up
- Make sure you are working for an ethical group that shares your vision and celebrates your growth.