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:
- P&L from the accountant for the last two years. i.e. not a spreadsheet created for the purpose.
- A list of add-backs used to achieve a profit figure on which the asking price is based.
- 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.
- Sales data reports, for the last two years, from the POS software in use – to verify the income claim. This source data is key.
- Sales data reports from the lottery terminal to verify the income claim.
- BAS forms to confirm data in the P&L.
- 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.
- A copy of the shop lease.
- A copy of any leases the vendor expects you to take on board.
- A list of all forward orders placed on behalf of the business.
- 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.
