If you are serious about buying a business you need to tread carefully and look at all the angles before putting pen to paper. First, ask yourself a list of questions to ascertain what you really want to achieve. Will this be your only income or a supplement to another type of business? Is this an investment or a career change? Are you prepared to work long hours? And if you have a family, how will they fit into the equation? Will you end up living in or above the business?
Second, take this line of questioning to another level and consider the financial aspects involved. Is this an affordable business for your budget? Have you already got some money put aside to pay for some or all of the business? Or will you have to borrow a sum of money from the bank or a financial institution? Think of all the costs involved in buying a newsagent. If you strike it lucky you may find the ideal business for you. But generally speaking you will have to put some extra cash aside for emergencies, as the shop will almost certainly require attention.
Ball believes the most important area to consider is the funding of the business and the ‘just in case’ cash you put aside. “This sounds obvious but going into buying a business struggling is just not advisable. You have to be confident about the amount of money that you have behind you. On top of the purchase price you will need around two weeks worth of sales to cover initial stock and working capital.”
You will also have to analyse and consider whether the business in question is viable, what its weekly turnover is and what condition the building and business is being left in. Do this by asking for a three-year account history of the business in question. If you need help ask your business transfer agent.
Ball says, “A good indicator of what you should look for is to say to yourself that a newsagents should always be turning over no less than £5000 a week. Anything less is sure to be a struggle.”
Newsagents can make anything between £2,000 and £20,000 turnover per week but solid profit can often be hard to come by as one newsagent told us. “£2000 to £3,000 turnover per week is quite tough to live on. If you take out VAT, wages, rent rates and bills you could be taking home a little as £250 per week.”
A further crucial decision in choosing a business is whether you wish to purchase a leasehold or freehold property. A leasehold business is, as the name suggests, leased or rented from a landlord. When arranging a loan or overdraft with a bank or lending institution, they will ask that you provide approximately 50% of the asking price, whereas a freehold property allows you to own the shop outright and will only require that you pay 30% of the asking price. If extra advice is required, your local bank manager will often help out. Alternatively, you can seek assistance from the NFRN, if you are a member.
There is no strict training when wanting to become a newsagent. Once you have taken the plunge, you are free to run, advertise, market, and forge new deals with suppliers. Of course, some retail experience and good business sense is a definite bonus. Fleckney says, “Any retail knowledge is good but fellow newsagents are the most useful source to learn from. Ask them if you can spend a day or more with them and get a feel for the business and for what goes on. Try a few and try to spot the differences between them all.”
The NFRN also operate a self-study training scheme for its members. This covers all the basics such as merchandising, security, how to control stock levels and finance, to name a few. It conforms to an NVQ qualification and is offered to members at a discounted price.