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Buying a business: Newsagents

People like me, who have delivered the early morning papers to earn a few pennies while at school, have done so in sun, rail, hail, and snow. Wouldn’t it be great if one day you were able to expand on that idea and actually own and run your own Newsagents business?

Well, that’s certainly possible. The purchase of newsagents is one of the most popular businesses alongside buying post offices (check out our guide on how to buy a post office for a comparison). A large part of the reason for this is that we have never had as many revenue streams as we do today, whether it is newspapers, groceries, or the National Lottery.

How does it work?

Newspapers, magazines, lottery tickets, confectionery, and other necessities are purchased from newsagents by millions of people. As a result, newsagents and ‘corner shops’ have become something of an institution in Britain. Would your soldier’s life be different if you didn’t go out on a Sunday morning to pick up the Newsagents, a carton of milk, and some eggs? Often the center of small communities, newsagents are always nearby, open when you need them, and always open at all times.

Several factors such as these and others have created a great pull for the many thousands of newsagents that operate in Great Britain and Ireland. The National Federation of Retail Newsagents (NFRN) represents around 20,000 of these. The organization works with Parliament on a variety of issues and offers its members convalescence benefits, free workshops, and trade show entrances, legal fees, regular updates, and other services.

In addition to representing small independent newsagents, the NFRN is a very useful and well-established organization. The company is capable of dealing with large corporations, such as wholesalers of newspapers and magazines. The NFRN is trying to reform this practice of newsagents being tied to particular wholesalers and having little choice over the terms and conditions that they have to abide by. The cost of membership is only a few pounds per week, so you can have someone fight important battles for you.

As a newsagent, however, you are independent. In addition, you have to manage deliveries and orders, stock levels, wages, and rental agreements if you own a leasehold property, as well as advertise your products.

Owning a newsagent is a people and community-oriented business. In order to build and maintain a steady profit, one has to work hard. There are some shops that sell Newsagents and magazines, sweets, cigarettes, snacks, fresh produce, toiletries and bathroom products, lottery tickets, rail cards, and bus passes, as well as batteries and medical supplies. In addition, you can include a small post office and a convenience store in the building.

The hours you might have to work are a drawback. Our conversations with newsagents confirmed that this was a factor they all warned about. The day begins at dawn with newspaper deliveries and fresh produce deliveries, while customers can arrive between 5 am and late at night (depending on your opening hours).

What kind of person would benefit from this program?

Business owners, particularly those who run Newsagents as a couple, can suffer from unsociable hours, hard work, and the drive to make the business succeed. According to Charles Fleckney, the NFRN’s field operations manager, “being a newsagent is more than a job; it’s a way of life”. How can one become a newsagent?

According to Chris Barker from Sutherbies business agents in Yorkshire, a Newsagents work is never done. Then, it can quickly become a strain on new owners if they are not ready for it. It is necessary to start working at four or five a.m. and work all day until at least late afternoon. You will also have to have some business sense and be able to cope with all the pressures.”

Despite the long hours, don’t let them deter you. If you own Newsagents in a town or countryside, the amount of competition you face, whether the business requires a lot of improvement and promotion, as well as how much you wish to push sales, can all affect the rates.

According to Barker, the job is ideal for a family or even a couple as they can work together. While it depends on the size of the business, the children are often able to assist with paper rounds, for example. Many people who contact us looking to buy Newsagents are older people who may have worked in a shop before or who are considering running a hassle-free enterprise.”

Buying a business: Newsagents

Once everything is in place, the business becomes hassle-free. Having been a newsagent himself, Kevin Ball, director of Dowling Kerr business agents, believes that commitment and organization are essential to any successful newsagent. When you work behind a counter and wait for customers to arrive, it can test your patience and become a hard life in some cases. “Plus, if you don’t know how to organize your staff (13-year-old boys can be a pain at six in the morning) and understand the key aspects of the job, like newspaper delivery, then I would honestly suggest you don’t bother.”

Take the plunge before you make a decision

If you are serious about purchasing a business, you will need to tread carefully and consider all angles before signing a contract. You should ask yourself a series of questions to figure out what you are really trying to accomplish. Is this going to be your only source of income, or is it going to supplement another source? Are you considering this as an investment or career move? Do you have the time to devote to this endeavor? Likewise, if you have a family, how will you fit them into the picture? Are you going to live in or above the business?

Take this line of questioning to another level by considering the financial implications as well. Are the costs associated with this business affordable for you? Do you already have some money set aside to cover the business or some of it? Or do you plan on borrowing money from the bank or a financial institution? Take into account all the expenses associated with purchasing Newsagents. If you hit the jackpot, you might be able to find the perfect business. Nonetheless, you will probably need to put aside some extra money in case of an emergency, as the shop will almost certainly require repair services.

Business funding and putting aside cash for “just in case” are the most important aspects to take into consideration, argues Ball. It seems obvious, but it is not advisable to purchase a business that is struggling. It is important to feel confident about the amount of money in your bank account. In addition to the purchase price, you’ll need two weeks’ worth of sales to cover initial stock and working capital.”

Additionally, you will have to analyze and consider whether the business is viable, how much revenue it generates weekly, and in what condition it is being left. Request the history of the business in question for the past three years. Talk to your business transfer agent if you need assistance.

A good way to determine whether a newsagent is a quality one is to say to yourself they should always turn over at least £5000 each week. If they do less, they may have a hard time making ends meet.

A newsagent can make anywhere between £2,000 and £20,000 in turnover per week, but solid profits can often be hard to come by, as one newsagent told us. It is quite difficult to live on a turnover of £2,000 to £3,000 per week. Withholding VAT, wages, rent rates, and bills, you could be taking home as little as £250 per week.”

Another crucial decision in choosing a business is the type of property you wish to buy, either leasehold or freehold. As the name implies, a leasehold business is leased or rented from a landlord. A bank or lending institution will require that you provide approximately 50% of the asking price when arranging a loan or overdraft; however, a freehold property allows you to own the shop outright and only requires that you contribute 30%. Often, the bank manager at your local branch will be able to provide additional advice. If you are a member of the NFRN, you may also seek assistance from it.

There is no specific training required for becoming a newsagent. After you have taken the plunge, you are free to run, advertise, market, and negotiate new deals with suppliers. It is definitely a plus if you have retail experience and good business sense. As Fleckney states, “Any knowledge related to retail is good, but the best way to learn is from other newsagents. Spend a day or more with them and get a sense of what they do and how they operate. Try a few and look for the differences between them.”

Members of the NFRN can also take part in self-study training. All the basics are covered including merchandising, security, how to control stock levels, as well as finance, to name a few. The course conforms to an NVQ qualification and is available at a discounted rate to members.

What does it cost?

Various methods can be used to fund such an investment. Owners can bring their own money, apply for a loan, or even apply for a grant from a local business support agency. Newsagents prices differ from region to region, just as home prices do, if you want to buy or rent; rates can also differ if you want to rent. Rates can also differ depending on the size and profitability of the business.

In addition, you should budget for professional costs, such as solicitors or accountants who will conduct surveys and valuations. After this, you will have to cover your interest on your loan, initial overheads (telephone, gas, electricity, water), damaged and missing stock, wages, repairs on the building, advertising, and general living expenses, if you plan to live on the premises.

What is the maximum amount I can earn?

How much you earn depends on how much work you put into it and how many different sources of revenue you generate. Selling only newspapers, magazines, and sweets will not get you to your target, but if you expand your operations into other areas, such as drinks, the National Lottery, snacks, greeting cards, and household goods, these lines can boost profits.

A wide variety of avenues and smaller merchandise at the counter can boost profits greatly, according to Ball. In addition to stickers, Instants cards, sweets and snacks, if you have a nice point of sale or counter filled with those items, people will flock to it. This is a good cash generator, but you have to spend to earn, and you have to keep updating the product logos and promotions.”

The owner of a newsagent in West Yorkshire, Peter Cryer, agrees. The profit margin you should aim for should be between 20% and 25%. You can increase this level by adding additional sources of income, such as the National Lottery, which offers a 5% return on your total turnover, but you must wait for them to approach you before finding out whether your outlet is satisfactory.

Basic stock margins

Stock Margin
Per Newspaper Approximately 25% of Cover Price
Newspapers about 25% of the cover price
Candy/Snacks 25%
Card/Email 50%
Homeland Security 5% of Total
Traditional 35%

Here are some tips for success

  • Make money by spending – Update your stock and think of new ways to earn money
  • Keeping your store clean and well-presented is key – By putting the right stock in the right place, customers often buy extra items as well as what they came in for.
  • Be prepared for a long day – It’s tough to work from dawn until dusk at the start of the day – and you may have to get used to it
  • Evaluate your competition – Find an area where you think the business will flourish – supermarkets can destroy small businesses
  • You may be able to find a bargain – you may find a business for sale that is in a good location but needs a facelift. That’s where you can make your mark.
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