Purchasing a newsagency...help, please.

[stockt12]

Hello,

After much thought, a few chocolate bars, 20 overs... I've started
looking at purchasing a newsagency.
By chance, has anyone here owned one/ or does still own one?

I'm looking at a new developing area and have no idea how to go
about doing my research on this[completely opposite to my current field]

Do I go to the council ? Does each area need a specific allocation here?

Or is it as simple as finding suitable land/area and just starting up shop?

The design, layout, product groups I have an idea about[most of it's common sense] but who do I contact for bringing in all the publications. Are the costs tiered based on quantity purchased? Is there a specific place I need to contact to source most of them? Or just based on demographic and due dilligence do I just select all the groups myself.

From what I've read... lotto is a lot more complicated?

Any and all information would be greatly appreciated... I'll come up with a few more questions after I look into the legal requirements as well.

 

[PrimeCommercial]

I cant help, but I can recommend a guy that helps finding a site and negotiating a Lease. His name is Chris Hicks and apart from several other franchise's he is responsible for negotiating all the lease's for NewsXpress Newsagencies.
I understand that you may not want to become affiliated with NewsXpress but Chris subcontracts to them so you may be able to employ his services. Chris also looks after other francises as well, I have just sold a couple of Health Food shops that I've owned for the past 10 years. I operated under the banner of Healthy Life and Chris negotiates all the leases for Healthy Life and associated names incl DVC and HealthZone. From memory he used to or still does look after Michel's Patisserie lease's as well.

I can highly recommend his services.
I spoke to him last week becasue I'm now looking for work in the commercial sales/leaseing industry and chris knows just about everybody who's anybody in the retail leaseing game.
I just rang NewsXpress and asked for his number, no questions at all.

Good Luck

 

[stockt12]

thank you... all types of help are greatly appreciated. As I get my head around everything I will contact everyone.


as i read through a lot of stuff.. there are a lot of licenses required as well...

 

[Tone]

I personally work in newsagencys all across australia, and i honestly think eventually they will die off.

Everything is moving online these days, mags, books, newspaper content, even purchasing lotto and phonecards.

 

[boomtown]

News agencies just need to lose their stupid exclusive licence to sell newspapers and they will be dead overnight. Maybe if the ACCC grows some balls.

 

[wylie]

I know nothing about newsagencies except that my perception was that they used to be like taxi licences..... hard to get and expensive.

You had to have serious funding to buy into a newsagency (my opinion).

My son works in one casually and I asked the owner just recently what happened to another local newsagency that closed, and told him my thoughts about my idea that they were hard to buy into and very expensive. He made a comment that all that changed and his reason (I think from memory????) was that without Lotto "you could go out of business".

I would not rely on my memory but I do wonder just what it is about newsagencies that they used to cost so much more than other businesses.

 

[boomtown]

I would not rely on my memory but I do wonder just what it is about newsagencies that they used to cost so much more than other businesses.

Because they have an exclusive licence to sell Lotto and newspapers. Its a very narrow income stream and its dependent on the continued goodwill of our legislators.

Pharmacies have a similar arrangement - you have to be a licenced pharmacist to own one. Which is ridiculous - you could just hire a licenced pharmacist to do the work. Most retired pharmacists do exactly that.

 

[wylie]

I also think there may be a restriction on just where a newsagency can go. I mean, I believe they are regulated so that there are not two very close together, but not sure on that.

Interestingly, my parents bought a casket agency tobacconist with attached barbers at the rear 36 years ago when casket tickets were the "lotto" of the day. There was a big newsagency three shops away but my parents could not sell papers or cards, but could sell casket tickets, which were a huge part of the turnover. My parents business cost them a pittance, but a newsagency was big money back then (and possibly still is).

The other thing to watch is the 3am wake up (or similar disgusting hour to be out of bed) to wrap the newspapers ready for delivery. The agency my son works for outsources this to a chap who does it for at least two local newsagencies. A newsagency without a paper delivery run would be my pick .

 

[stockt12]

terrific feedback...

so, how 'much' does this license cost.. i gather it's time to contact a local council?

 

[stockt12]

based on the for sale prices of a few WA agencies, it doesn't seem like a dead market yet...

but i do agree, one would have to expand on the range and provide products of difference within the business for it's long term survival

 

[evand]

If you are in another newsagents' territory (and you probably will be) you will not be supplied newspapers, lotto etc.

You will have to become a sub agent to the agent that owns your territory to be able to sell papers, mags etc.

Can i ask why you are thinking of starting a news agency when you know so little (nothing) of the industry?

 

[pendo]

I'm a former newsagent (1998 - 2004)

Most State newagency associations conduct seminars on a regular basis, so I would check online to book a seat to get the latest info. Also they have listing of agents for sale.

Its not possible, to just set up a newsagency ad hoc, as the publisher, (newspaper and magazine) is King!
They decide, and tie you up with a contract so tight, that many agents have sold off their runs in disgust and protest. In so doing that they become sub agents, which they technically are anyway. The prices you charge are fixed by the publisher, including delivery. Other lines like stationery you have good markup,(100%) but lots of competition.

All newsagents (that still have them), have allotted territories with the publishers for distribution. The ACCC is a toothless tiger with no power over publishers. Been there done that with grievances in the past.

Magazine distribution is similar although many deals have been done directly between publishers and Coles service stations, and left the agent to do Coles returns. (In 2004)

Lotteries are no longer exclusive here in NSW to newsagents. In fact they are now internationally online with sales. OZ Lotteries is the name. Any corner store/service station can set up an outlet so long as you obey orders, have the expensive shopfit, and have the funds to cover the Tuesday sweep Lotteries do on your bank account.
Oh and you have to pay rent on the terminal as well as license fees

There will always be a market for newsagents but many have and will go broke if they dont look for new income streams. Pick your area well.

Make sure you have an older population that still swears by the ritual of reading the morning paper. And usually pensioners who are not savvy with computers and spend all their remaining pension on gambling.

The thing to remember with a newsagency is that you don't work for yourself. You work for the publisher. We made our money from it by buying a very high $ turnover territory and re developing a site across the road for the new shop. It helped that we sold it off at the right time.

Nett profit ran at 12% of turnover.

 

[stockt12]

If you are in another newsagents' territory (and you probably will be) you will not be supplied newspapers, lotto etc.

You will have to become a sub agent to the agent that owns your territory to be able to sell papers, mags etc.

Can i ask why you are thinking of starting a news agency when you know so little (nothing) of the industry?

new challenge...

I've already got/had a few other interests, it's time to head in the opposite direction and see where it heads. This would be a lot 'easier' to operate too, and would a lot less man hours from myself , considering the potential returns.

 

[stockt12]

pendo - absolutely fantastic stuff...thank you. Painting the picture so grim, do you still suggest going in this direction or are the margins too thin, the rules too strict and the market too flooded with people trying to make big coin in this field?

I'm going to have to head to some of these meetings to discuss these contracts and the overheads.

 

[pendo]

Depends on where and what demographic you buy into. Same old story do your homework. There are a number accountants that specialize in newsagency due diligence out there.

Although the margins appear thin, it relies on volume selling.
Our turnover was close to $4 million pa, which gave us a net profit around $480k.
As an example we moved 5000 Sunday papers through our home delivery, shop sales, 12 paperboys and 15 subagents per weekend.

It's an industry going through a transitional stage. Younger generations don't appear to be too interested in newspaper readership for obvious reasons. There will always be newspapers. Lotteries are struggling to increase sales here in NSW. In fact NSW Lotteries is to be sold off, so who knows how the distribution network will be diluted.

I don't think I would do another, but if I did, I would find a struggling run down shop ripe for redevelopment, and then get it up to speed and sell it.
The one thing newspapers do well is target market your local area, particularly if you ask them to mount a sales campaign.

The ongoing problem with newspaper publishers is the late arrival of the papers.
We managed it well cause we split the runs in two and did it ourselves. If the product arrived at 4am instead of 2am, then most agents are stressed, undermanned, whinging about paying someone to do nothing for two or three hours waiting, and having to deal with irate customers demanding blood, cause their paper is not on the front lawn.

You have to be pro active to cull magazine stock that does not sell. There is some great software available through your Point of sale, but the publishers have it set up to revert back to oversupply, and delayed returns and crediting. Which can be very stressful financially.

We profited from it well because I had myself, my wife and two older brothers, all in business together for the previous 20 years.