Newagents at a glance
- Need to be opened early, seven days a week
- Stock management is an important part of the job
- Suppliers may demand hefty bonds from new starters
- If the business makes enough money you can eventually employ extra staff and reduce your day-to-day involvement
- Provides a steadier income than most other sectors
Kevin Ball, director of sales at Redwoods Dowling Kerr, a business broker (meaning they help people buy and sell businesses), has several years' experience of running a newsagent.
"It requires dedication," he says. "It's a seven-days-a-week business with early starts. You need to be prepared to put the work in." Those starts are even earlier if deliveries are involved.
It's a seven-days-a-week business with early starts, you need to be prepared to put the work in
Kevin Ball, Redwoods Dowling Kerr
Organisation is vital. Unsold magazines will have to be sent back before a deadline to avoid having to pay for them; miss the deadline and it could cost you hundreds of pounds. You can also lose custom if you don't keep on top of your stock levels.
To sustain a reasonable business, a weekly turnover of at least £5k is needed; to sustain a reasonable lifestyle, you need at least £8k.
The purchase price for a newsagent will be based entirely on this figure. Unlike many businesses, there is very little variation across the country - mainly because a newspaper or magazine costs the same whether it is bought in Bloomsbury or Barnsley, and revenues are roughly similar.
Ball's advice to potential buyers is to insist on seeing the accounts before considering a purchase.
"If up-to-date figures are not available, get a certificate of turnover from the accountant," he says, pointing out that it's possible to estimate profit from the previous year's books, as outgoings remain relatively static from year to year.
However, do not underestimate the initial outgoings. Suppliers, who may be sending you thousands of pounds worth of stock, will often demand a bond from an inexperienced newsagent.
It is also important to make sure there are no huge outstanding delivery bills before taking up the reins. It might be worth asking the current owner to send out a few letters asking long-term customers to clear their debts before the shop changes hands.
"Good retail base"
All this might leave you wondering whether another type of shop might be a less stressful investment - so now for the encouraging news. A newsagent can offer a more reliable income stream than almost any other business, as long as you recognise the importance of the products from which these shops derive their name.
As Ball explains: "The size of the news and magazine account is really important. You can achieve 25% gross profit from newspapers and magazines. It's a good retail base."
Then, of course, there is the secondary business. With a bit of knowledge of who lives in your area and visits your shop, magazines, greeting cards, pre-packaged sandwiches, groceries and soft drinks could all boost your profits. This is where you can apply your own business sense and instincts to improve turnover.
Ball believes that owners should be constantly thinking about extending or moving on. The strains of the business are enjoyable for a few years, he says, but after a while the hours can become too much to handle.
If the business reaches a size where the owners can employ some part-time or even full-time staff, rewards can finally be reaped.
"You might have to get up early to make sure the papers are out and the deliveries are made, but once the staff are in, you could spend the day playing golf."
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