Buying a newsagent (any owners)

Buying a newsagent (any owners)

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Discussion

Wilmslowboy

Original Poster:

2,921 posts

162 months

Wednesday 10th June
quotequote all
A good friend of mine is returning to the UK, after 20 years of global corporate roles, a bad divorce (and redundancy) has decimated him financially and his willingness to get back on the corporate ladder.

He is looking to buy a small business that he can run for the next 15 years and this caught his eye, looks like a good deal (perhaps too good). 26% of net profit seems very high for retail, I guess it excludes the owner's 'wages'.

He appreciates it will be long hours etc however wondered if there are any other things to watch out for ?

News, cigarettes and sweets are all declining markets ?

cheers


Zetec-S

3,773 posts

49 months

Wednesday 10th June
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How close is the nearest Tesco Express, or are there any plans for one nearby?

Ziplobb

672 posts

240 months

Wednesday 10th June
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I don’t know anything about newsagents
But I do run a successful profitable shop and that does not add up
Someone is selling up a net profit of £133k for £149 k ?

It’s worth more than that if it makes that sort of cash

ozzuk

707 posts

83 months

Wednesday 10th June
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It does say under offer which might not help! I helped run a newsagents 20+ years ago and it was long hours for not a lot of money, and thats when you could pay people peanuts. I was offered the shop (as manager) as owner wanted to move to london, I turned it down to be an apprentice, shows how bad the money was!

singlecoil

28,783 posts

202 months

Wednesday 10th June
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That's strong money for a leasehold newsagents. There's plenty of ex McColls and Martins on the market at the moment. He should have a look at

https://uk.businessesforsale.com/

PrinceRupert

8,257 posts

41 months

Wednesday 10th June
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Does a newsagent really bring in almost ten grand a week? £1350 a day? Seems unlikely...?

singlecoil

28,783 posts

202 months

Wednesday 10th June
quotequote all
It's not unlikely for a convenience store.

Countdown

27,666 posts

152 months

Wednesday 10th June
quotequote all
My dad did something similar about 30 years ago - he took Early Retriement and got quite a large lump sum so he thought this kind of business would be ideal to supplement his pension and something he could carry on after the age of 65.

At the risk of stating the obvious it was ridiculously hard work and you needed to live on the premises. He would have to be up at 5 to sort out the paper rounds (waking up one of us if somebody didnt turn up) and then he’d be there all day until 7 with occasional breaks when one of us would cover whilst he nipped to the cash and carry). This was 6 days a week.

You need at least two people, you need to live on the premises, you need enough footfall from the newspapers/cigarettes brigade who will then hopefully buy something else. The profit from ciggies was something like 5% and generally on the retail side of things it wasn’t much more than 10%. He’d make £350+ a week but it wasn’t great when you look at the hours involved.

As you pointed out - Newspapers and cigarettes are a dying industry and the off-licence will be good if you live close to a Council estate but less so if you’re near a Supermarket.

Those profit margins also seem very high. It would be good to ask exactly WHAT products he sells that make 26% on their own, let alone result in an average 26% margin.

Ps More through luck than judgementit the investment turned out OK for my dad. He purchased the premises (rather than leased) and it was huge (4 floors, where the 1st floor was historically the living area and the 2nd floor having 5 bedrooms and a basement for storage) so he turned it into a block of flats.

Wilmslowboy

Original Poster:

2,921 posts

162 months

Wednesday 10th June
quotequote all
Thanks for all the replies.

Will suggest he digs a little deeper.








DSLiverpool

12,233 posts

158 months

Wednesday 10th June
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I know an Italian deli in St Albans that has them queuing down the road (2m gap) but seriously it does amazingly well.

There are easier ways to make money, what’s he into, what excites him? I bet we can think of something for him.

MonkeyBusiness

3,349 posts

143 months

Wednesday 10th June
quotequote all
Off yer rocker. The days of newsagents are gone unless you have an associated business (like a post office).

I should know...my Dad dragged me out of bed at 6am when paperboys didn't turn up (needless to say it was raining/snowing).


Wilmslowboy

Original Poster:

2,921 posts

162 months

Wednesday 10th June
quotequote all
DSLiverpool said:
I know an Italian deli in St Albans that has them queuing down the road (2m gap) but seriously it does amazingly well.

There are easier ways to make money, what’s he into, what excites him? I bet we can think of something for him.
His career has been HR and projects for the largest global blue chips, but really wants to leave all that behind.

Very hard-working, and smart but now wants something he can just pour his efforts into, without worrying about all the politics of the corporate world, or the undue stress of a start-up and high risk.

Not interested in becoming rich, but has lost pretty much everything, so needs to buy a job for the next decade and a half that can allow him to build up a decent nest egg for retirement (to supplement his ok pension he will get).

He is happy to explore most things.


Saleen836

7,746 posts

165 months

Wednesday 10th June
quotequote all
MonkeyBusiness said:
Off yer rocker. The days of newsagents are gone unless you have an associated business (like a post office).

I should know...my Dad dragged me out of bed at 6am when paperboys didn't turn up (needless to say it was raining/snowing).
hardly any money in have a PO in the shop these days,my local newsagents had a PO inside and when the PO told them they have a choice of £10k pa cut or closure, they closed the PO

Redarress

534 posts

163 months

Wednesday 10th June
quotequote all
If he is forward facing so able sell his HR skills to companies. He is more likely to make more money at this rather than any retail. I have made the assumption that he has skills to offer businesses.
He would be able to work from home so no premises outlay


Wilmslowboy

Original Poster:

2,921 posts

162 months

Thursday 11th June
quotequote all
Redarress said:
If he is forward facing so able sell his HR skills to companies. He is more likely to make more money at this rather than any retail. I have made the assumption that he has skills to offer businesses.
He would be able to work from home so no premises outlay
He has done chargeable project work into blue chips (through a consultancy), as well as huge amounts as an employee, but this no longer appeals, he wants a much more simple life.

His plan B would be to become a day rate 'contractor' (people change, projects etc) which he could easily do, turning over £150k+ a year (less expenses, Corp and PAYE tax). But this would largely keep him in the corporate world.

His heart is set on a beautiful laundrette, convenience store, online retailer.....

Given more time, he would probably be a good candidate for a dominos type franchise.

hotchy

2,102 posts

82 months

Thursday 11th June
quotequote all
Wilmslowboy said:
Redarress said:
If he is forward facing so able sell his HR skills to companies. He is more likely to make more money at this rather than any retail. I have made the assumption that he has skills to offer businesses.
He would be able to work from home so no premises outlay
He has done chargeable project work into blue chips (through a consultancy), as well as huge amounts as an employee, but this no longer appeals, he wants a much more simple life.

His plan B would be to become a day rate 'contractor' (people change, projects etc) which he could easily do, turning over £150k+ a year (less expenses, Corp and PAYE tax). But this would largely keep him in the corporate world.

His heart is set on a beautiful laundrette, convenience store, online retailer.....

Given more time, he would probably be a good candidate for a dominos type franchise.
I'll give him a year. Then a further 3 to sell it. 7 days a week 5am starts, late nights, long trip to attempt to get stock that can half compete with home bargains that will be open within a mile of his store, even then it's cheaper to buy out of a BnM than any cash and carry anyway. 90% of peoples conversation will be how they forgot the milk at tesco so decided to come to the shop. Drinks license, cigarette track n trace, waste license, all things requiring yearly renewal. Everyone will ask you for "tick" and he'll soon learn giving his best customer one thing to pay back laters a mistake as hes now never seeing them again. Dont forget at 1a.m he will get a call because the alarms going off. Ofcourse it's mainly a spiders decided to nest over the sensor. Hes up again for 5. His pal decides to web aswel the next night... occasionally it's because someones burst a hole through the roof as it's easier than the shutters.

Kids will play football against your window. The more you react the more they do it. Remove one from the store? You then have to prove to the police you never hit them like all 15 kids are saying while your pretty much carried away nearly cuffed.
Junkies will fill there pockets, but staff will fill them 1000x more. You wont notice £50- fiddled a day by staff until it runs into the thousands. That's if your lucky enough not to employ someone who's addicted to scratching your scratch cards.
You'll then get carers come in, the boy they care for will piss all over the place, say nothing and leg it. Old men will st themselves and wiggle it out the trouser all over your floor. Every 3rd customer will fill your store with the smell of dope, or just pure unwashed for 9 months stench. You will be held up for the money. It's the easier target than a supermarket. Forget or loose your cash machine settlement slip? Dont worry theyll be a que of liars already claiming they never got the £100 out it they actually did. No proof without the slip so the bank automatically refunds them.

That's the real life picture not this nice happy laundrette type store where he sits with his feet up building his we perfect nest egg. If he still thinks thatll be great then bash on, money can be made, but it's hard.

And in reality he would make more money working for 6 months doing the 150k stuff he was before and having 6 months off.

Edited by hotchy on Thursday 11th June 07:32

Wilmslowboy

Original Poster:

2,921 posts

162 months

Thursday 11th June
quotequote all
hotchy said:
I'll give him a year. ....
Great - straight talking insight - thanks

I'm going to forward it onto him.


hotchy

2,102 posts

82 months

Thursday 11th June
quotequote all
Wilmslowboy said:
hotchy said:
I'll give him a year. ....
Great - straight talking insight - thanks

I'm going to forward it onto him.
Sorry I talk from experience. My friend thought it was easy money aswel. lasted 6 weeks after spending 350k on one and sold quick at a loss.


Its not all bad btw but if he can handle all that stuff then he can get a present suprise at the good things

Edited by hotchy on Thursday 11th June 07:44

Teddy Lop

3,302 posts

23 months

Thursday 11th June
quotequote all
Ziplobb said:
I don’t know anything about newsagents
But I do run a successful profitable shop and that does not add up
Someone is selling up a net profit of £133k for £149 k ?

It’s worth more than that if it makes that sort of cash
seems implausible doesn't it.

There's a reason most of these types of business tend to be run by recent immigrants and ethnicities with very strong work ethics (or poorer worklife balence in western speak) where family etc can be co-opted for free and favours etc

WolfAir

415 posts

91 months

Thursday 11th June
quotequote all
Well.. we did exactly this. Bought into a post office/ newsagency..
We went in totally blind, the news papers are the killer.. smiths are just a crap company.. we do deliveries so manage to make some income from that.. most of our wage is the post office.. very busy little thing.
Cash and carry runs can be fun and we are the whole family chipping in.. as well as a few employees.. the post office hours are lovely and its a pleasure talking to the older generation with their stories and things.. the newsagents i would stop it tomorrow if we didnt provide a service for many people unable to get out for their paper..
It is nice. If i am honest.. its not a bad living.. and especially if your mate is looking to live in