Month: May 2023

For decades, major card companies in Australia won new business by offering a rebate on purchases, and we all loved it.

Newsagents would change card companies because of a bigger rebate offer. Oh, that and ‘interest free’ loans we could draw based on anticipated rebates.

What many of us soon realised is that the rebate is worthless unless you sell the cards as it is only when you sell something that you bought at a discount off wholesale, which is, after all, what a rebate from a card company is, that you bank the rebate value.

Switching to a new card company because of rebate could be a mistake unless their cards sell as well as or better than what you have today.

The main reason to switch card companies in my view is to sell more cards.

It’s only when you sell cards that you make money.

Already in 2023 we have seen enough trading to consider 12% year on year growth in card sales as a reasonable benchmark against which to compare your newsagency business.

If a card company’s main pitch is the quantum of the rebate, my advice is question why they pitch this ahead of the actual products.

What you want, and need, is cards that drive new traffic and more purchases in each visit, you want product that perform above average. This is about card company choice and about how your in-store range is managed – two quite different things.

Cards are the best margin products in our businesses. They deserve our active management attention.

My advice is check your year to date performance against 2022. Are you up 12%? If not, think about what you might do about that, and consider it in the context of any rebate pitch put to you.

This has been on my mind because of conversations with some newsagents recently where rebate was the topic.

One stuck out – they said they would not switch unless a card company matched their current rebate. Their card sales are down 9% year on year. That decline is twice the overall business decline, meaning there is a problem with card range. They refused to look at any other supplier, thereby =not considering that range might be the issue.

I see any rebate as a pot I can draw from to help drive card sales, and I do that to fund a loyalty program, and more. each month I am seeing terrific results, like for April.

Yes, that’s 19% growth in 2023 over 2022. If I compare back to 2019, cards in this business are more than 50% up.

I know that if I get the card story right in-store and in socials pitches not only does that department benefit but the whole shop benefits because of card shopper dwell time. And, all that flows to margin dollars banked, which are far more value than the promise of a rebate in the hope of selling something.

This post is not about any specific card company. I am not suggesting you switch to any specific card company. My advice is that you make your business decisions on what you bank, and that spends solely on sales.

newsXpress helps newsagents run retail businesses they love and value. We are often asked for advice on buying a newsagency. Here’s some of the advice we share:

There has been a surge of interest in buying a newsagency this year.

Aussie retail newsagency businesses are proving to be good businesses to buy.

So, to the question: what should I ask for when looking at buying a newsagency?

The question itself, when asked, indicates how green a prospective purchaser is when it comes to purchasing a business. Our first advice is that they better understand the newsagency business of today, to understand what they could be buying into.

Here is an updated list of data we suggest prospective newsagency business purchasers access from the vendor or their representative:

1. P&L from the accountant for the last two years. i.e. not a spreadsheet created for the purpose.
2. A list of add-backs used to achieve a profit figure on which the asking price is based.
3. Tax returns for the same two years. While note always appropriate given business structures, they can provide a cross check with the accountant P&L.
4. Sales data reports, for the last two years, from the POS software in use – to verify the income claim. This source data is key.
5. Sales data reports from the lottery terminal to verify the income claim.
6. BAS forms to confirm data in the P&L.
7. A list of all inventory in the business including the purchase price and date last sold for each item. And, copies of invoices from which you can randomly select to verify.
8. A copy of the shop lease.
9. A copy of any leases the vendor expects you to take on board.
10. A list of all forward orders placed on behalf of the business.
11. A list of all employees: name, hourly rate, nature of employment, start date, accrued leave and accrued long service leave.

This is good basic information, a starting point, which will enable any purchaser to undertake reasonable assessment of a business.

Don’t get too worked up in what a retail newsagency used to be. Rather, once you have the business performance data, consider what you could make of the business. Consider the opportunity for change.

The typical Aussie retail newsagency today can be a gift and homewares shop first and offering traditional newsagency lines more as a service than as a core traffic and profit driver.

But, the success of any retail newsagency business you purchase will have its roots in the performance numbers of the business today.

Our advice to newsagents looking to sell who may be concerned about this list is: think about it now and focus on your business so the data we have listed looks good. The time to prepare your newsagency for sale is every day you are in the business.

This is why we say every day is your pay day. Run a smart, lean and profit focused business and you will have a good pay day today and a good one when you come to sell.

The most appealing businesses are those that are easier to run and are making money.

Sure a purchaser can turn a business around. They should get the rewards if they are expected to do that for your business.

The price you can sell your business for will be based on what it is making now.