Newsagencies

[markpatric]

I have a lot of options very soon and have long thought about buying a newsagency in CBD Brisbane.
They are not cheap to buy although I have long heard they are a safe business to buy generally, how true is this?.
Anyone have experience or advise about buying and running one?.

 

[geoffw]

I don't know about newsagencies, although my dad used to run a bookshop- all the lines of a newsagency without the 5AM starts. He did OK- but that was well before the advent of the big chain bookstores.

If you have not been in business, it's perhaps not the best business to start in. A Subway does not have a big number of stock items, but stock ordering and control can still be a big job.

There have been a lot of newsagencies for sale around Canberra ATM- I don't know iof that is indicative of the state of the business.

Bear in mind that more people are getting more information from the web, and less in print. A newsagency will have to be very innovative to survive.

Talk to people who run newsagencies, as many as you can find. Look for all the negatives as well as the positives, and make your decision with as many facts as possible in hand.

 

[Peter Parker]

I have a lot of options very soon and have long thought about buying a newsagency in CBD Brisbane.
They are not cheap to buy although I have long heard they are a safe business to buy generally, how true is this?.

I can't directly help on the topic, but have you considered risks like:

- Government regulations (like pharmacies, a free market does not operate; would the capital value of the business fall if deregulation happened?)

- Newspaper circulation has been in long-term decline for years

- For a long time magazines held up, but I think these are also past their peak (anyone noticed how thin 'The Bulletin' is these days?)

- Public transport tickets; rechargeable smartcards may reduce the need for people to buy tickets at newsagents each week.

- Dependence on gambling revenue due to Tatts sales. Risk of encroachment from online (another area sensitive to regulations)?

- Relationship with publishers & distributors/does the newsagency come with a delivery round?

- For office supplies, competition from Officeworks and even the post office!

Peter

 

[markpatric]

I have thought through those issues mentioned but like property investment at the end of the day.....you shut your eyes jump and hope for the best!.
It`s difficult to weigh up the affect of these intangibles, but I will investigate thoroughly before making any moves.
I have found some great websites and free one day courses, they are run by a mob that sells newsagencies!! ....knew there was a catch somewhere, I`ll go though, nothing to lose.
Just thought there may be an owner of one with some inside info to share.
They all look great on paper so far but it`s being able to determine the accuracy of whats on paper that could be a bit difficult, this is supposedly one aspect of the "free" one day course.

Thanks for the suggestions.

 

[Glebe]

Personally, and without knowing any financials, I'd look for a food franchise rather than a newsagent. I can't remember the last time I walked into a newsagent, but I eat out alot.

 

[crest133]

We looked at newsagencies before buying a motel instead.
Newsagency positives were :
Reliable income - provided there was only one in town or in the near vicinity (check the local population count and see who controls the local sub-agencies like at railway stations, malls etc.)
Predictable cash flow
Opportunity to increase profit & value of business ( people business )
Some include residence above retail shop
Freehold commercial property


Negatives
The very early starts, long days, 7 day weeks, very few holidays.
Huge inventory
Constantly dealing with full cross section of the general public, all day, every day.
Beware the new mall opening nearby, you then need to run 2 shops.
Dependant on the goodwill of major suppliers of newspapers.
Ongoing stationery, greeting cards, magazine & confectionery sales competition from supermarkets, same for books & paperbacks with bookstores.
Customer parking hassles with Council.
Staff (hmmm)

Do your homework very carefully, and be prepared to give up most of your life each week to run the business. If you have kids at school, it's an easy job for them after school, and provides a very good "parents always there" home base for the kids, as well as some early business experience for them.

A lot of them also make very good money.
Sorry, that's as far as I got looking at Newsagencies.
good luck.
cheers
crest133

 

[markpatric]

Thanks Crest, one of the reasons I`m buying in the CBD (or an airport etc) it is five days a week with no run and no early start, well 5am is not too early for me, good holidays as well.
I would not buy a suburban Newsagency as my time is a factor, not interested in 7 day a week type businesses, done that for long enough, I may even try and work it so I only need to be there 3 or 4 days.
I need a reliable business, I have in a sense been living of equity to a degree I haven`t worked in a day job so to speak in a long while and I enjoy the 9 to 5.
I need high CF and something I can improve and I like being right in the thick of the action.

 

[ani]

Thanks Crest, one of the reasons I`m buying in the CBD (or an airport etc) it is five days a week with no run and no early start, well 5am is not too early for me, good holidays as well.
I would not buy a suburban Newsagency as my time is a factor, not interested in 7 day a week type businesses, done that for long enough, I may even try and work it so I only need to be there 3 or 4 days.
I need a reliable business, I have in a sense been living of equity to a degree I haven`t worked in a day job so to speak in a long while and I enjoy the 9 to 5.
I need high CF and something I can improve and I like being right in the thick of the action.

Hi markpatric

Friends have one in the CBD in a NZ city which opens 5 and a half days. They start at 4am to be open for 6. They also go in for a few hours on Sunday to set up all the Monday mags as there are so many.

Another thing they need to do after hours is all the paperwork on returns and monthly accounts

I'd call it an all consuming life not a business

Having said that they have made good money. The icing on the cake for them is the regular orders for govt dept's and businesses.

 

[Sleeper]

The best way to assess a newsagency is the same way you would assess any other potential business aquisition.
You can buy really good ones or average to bad ones just the same as most other businesses or any investments for that matter. A certain category of business does not guarantee it's success.


Points and Issues to consider. Not in any particular order

the financial statements, get a professional to check them and then check them yourself. Goes without saying. Same as due diligence on investment properties.

if the business is profitable enough you shouldn't have to work ridiculous hours. Competent reliable and honest staff are still available, you just have to find them and keep your finger on the pulse in the management of them. If the business is not going to be profitable enough to support a good staff wages budget I wouldn't buy it. You need them to be able to open and close the shop when neccessary otherwise you are chained to it.

paper runs can be profitable and still be done by staff.

there is a lot of paperwork, but I don't think this is exclusive to newsagents.

as someone else mentioned there are ongoing threats from big supermarkets, post offices, service stations etc etc etc. Just about any other business I can think of also has to compete and be able to adjust and compensate in an ever changing business environment. Those that can innovate and roll with the punches will be the winners, the rest will be also rans.

the previously segmented industry associations are in the proccess of uniting (at least on the Eastern seaboard). This can only be good.

there will be many changes within newsagencies in the next few years and a lot of these will be technology based and have already started eg. bill payments, electronic communications etc. As these increase in turnover they will compensate for decreases in other areas.


Very important things to consider

Location

Potential for an increase in turnover, both through demographics and improvements to the existing operation.

The competition if there are other newsagencies in close proximity and just how competitive they are.


This is just a few things to consider. One thing I know is that you shouldn't go into something like this if you are not prepared to apply 100% effort, because in my experience that is what it takes, especially in the earlier stages. If not stick to the 9 to 5 stuff. Also, you need full family support.


Sleeper

 

[markpatric]

I went to the day long seminar today and came away still enthusiastic but more realistic.
It`s obvious you need to buy the right one for your situation/needs at the right price.
There are certainly a lot of other businesses you could buy far cheaper and easier to run, but these have far more competition and less certainly of income/future.
The only big question marks are the fact you pay so much goodwill and then are still bound by a lease, at the mercy of publishers and maybe the government, and the many other outside influence like any other business.
I am going to look around for many months before making any moves, but I`m still keen on the idea.
Thanks all for the comments.