Newsagent Venture

[BobbyDuerden]

Hello all,

An opportunity may have arose in the form of a perspective newsagents. It would be in a village where they haven't had a shop for around 6 years now and the nearest one is 3 miles away. There is enough residential properties to support a small local store as well as new housing developments coming soon. At current there are no shops that cover the area in terms of newspaper deliveries or small grocery deliveries. I have previous experience as I ran a newsagents that had turnover of circa £1 million and am experienced in terms of suppliers and some legislation ( although that may be a little outdated now ). However in terms of a start up I am inexperienced. Any help where to start would be great.

Thanks

Bobby

 

[Gordon - Commercial Finance]

How much will it cost to set up, and do you have the money?

 

[Clinton]

I wroted a piece on buying a newsagents. Not exactly what you're looking to do but you may find some bits useful.

 

[BobbyDuerden]

How much will it cost to set up, and do you have the money?

I've yet to decide on what it will stock, obviously the essentials so unsure of initial outlay on stock. I'll need a van for the deliveries etc and obviously all the shelves and chillers, epos systems etc but I do have the money to kit it out, stock it and keep some in reserve for cash flow. I have a current alcohol licence and health and hygiene. I'd like to say I know what I'm doing with running a store it's just the initials starting up I'm unsure of.

 

[Gordon - Commercial Finance]

it's just the initials starting up I'm unsure of.

Sounds like you've got the essentials in place. Not sure what else you need?

Do you mean the "initials" as in setting up a company, registering with companies house etc? Engaging an accountant?

More specific questions will lead to more specific answers/guidance.

 

[Financial-Modeller]

A great idea...
...50 years ago!

Amazon Fresh, Readly, digital editions of newspapers, Supermarkets and Google are rapidly destroying the business that you are considering buying.

An opportunity may have arose ....

...for the seller!

 

[BobbyDuerden]

A great idea...
...50 years ago!

Amazon Fresh, Readly, digital editions of newspapers, Supermarkets and Google are rapidly destroying the business that you are considering buying.



...for the seller!

That's purely an opinion. Generally as a society I think we forget not everyone is computer/tablet/Internet user friendly.

Yeah it's the companies house etc I'm struggling with.

Cheers

 

[Gordon - Commercial Finance]

Yeah it's the companies house etc I'm struggling with.

Ok so you just need to register a limited company. It’s cheap and easy - use a company like Swift formations whose forms will guide you through the whole thing.
Make yourself a director, and maybe anyone else who will be directly involved with the day to day running of the business.

 

[Financial-Modeller]

...Generally as a society I think we forget not everyone is computer/tablet/Internet user friendly...

Of course, but is that population increasing or decreasing, and would you rather attempt to earn a living from a business that depends on an increasing or decreasing market?

 

[billybob99]

If the location is right, you will make ££££.

My friend has a small shop near Corsham. The village is full of old retired military folks and wealthy farmers who don't mind driving their big Range Rovers to buy over priced goods.

When I ran the joint for a few days, average customer was spending £50-60 notes, none of this credit card stuff.

Turnover has grown year on year.

 

[The Byre]

How big is this village and what sort of demographic structure does it have?

 

[JEREMY HAWKE]

A word of advice
I once had a paper shop
but it blew away !

 

[BobbyDuerden]

How big is this village and what sort of demographic structure does it have?

The village has circa 200+ houses with development for another 90 if I remember rightly. Also there is quite abit of passing trade as its a very popular alternative route to the main round. No other shops in a 3 mile radius.

Full age range including many families. Probably more predominantly the older age ranges as it would be classed as a slightly more affluent area without sounding up me own chuff.

 

[estwig]

People who buy new houses tend to be strapped up to the eyeballs, they don't spend in local shops or pubs, they tend to be internet literate for cheap shopping. Don't bank on this crowd putting a shilling in your pocket.

 

[Socio South West]

Having lived in the country for the best part of 60 years, I have seen the number of small villages of the size described that have shops fall to probably single figures percent.

Those that have survived have developed USPs with many doing coffee and cakes, and working with local producers to cut the cost of their supplies by taking out links in the marketing chain.

Not many years ago I remember meeting the owners of the local shop shopping in Asda for stock for the shop.... not much future in that..... but the only way they could achieve the low stock volumes needed. They didn't last long.

It's a great idea to have shops in villages, and everyone swears they will support them, but with the retail leviathans offering the basics of life such as milk as loss leaders it's a real struggle to turn those words into £££ commitments.

One ray of hope.... Is there a good sized retirement community nearby? They are the ones that do support a local shop.

 

[Bobby Duerden]

Having lived in the country for the best part of 60 years, I have seen the number of small villages of the size described that have shops fall to probably single figures percent.

Those that have survived have developed USPs with many doing coffee and cakes, and working with local producers to cut the cost of their supplies by taking out links in the marketing chain.

Not many years ago I remember meeting the owners of the local shop shopping in Asda for stock for the shop.... not much future in that..... but the only way they could achieve the low stock volumes needed. They didn't last long.

It's a great idea to have shops in villages, and everyone swears they will support them, but with the retail leviathans offering the basics of life such as milk as loss leaders it's a real struggle to turn those words into £££ commitments.

One ray of hope.... Is there a good sized retirement community nearby? They are the ones that do support a local shop.

As you mention it there is elderly residential properties. And in the development there are several retirement apartments planned'

 

[Noah]

And in the development there are several retirement apartments planned'

That's jam tomorrow.

Your business plan needs to be based on what is actually there now; don't bet your business on the unholy alliance of council planning, developer, and builder.

 

[The Byre]

As you mention it there is elderly residential properties. And in the development there are several retirement apartments planned'

I'll be 70 next year and I only shop on-line and at Lidl and Aldi (with tools and building materials from Screwfix, Wickes, local wood-yard and local building supplies). We have a village shop, but they're expensive and hell will freeze over before I part with one penny more than I have to.

I have never seen and I don't know or recognise all these OAPs that are supposed to toddle frail-limbed to the village store, forking out small fortunes for dusty old rubbish.

 

[billybob99]

Lidl and Aldi

Sell some good grub.

 

[bodgitt&scarperLTD]

I'll be 70 next year and I only shop on-line and at Lidl and Aldi (with tools and building materials from Screwfix, Wickes, local wood-yard and local building supplies). We have a village shop, but they're expensive and hell will freeze over before I part with one penny more than I have to.

I have never seen and I don't know or recognise all these OAPs that are supposed to toddle frail-limbed to the village store, forking out small fortunes for dusty old rubbish.

I'm gonna be like you when I'm older

Much, much older

 

[estwig]

I have never seen and I don't know or recognise all these OAPs that are supposed to toddle frail-limbed to the village store, forking out small fortunes for dusty old rubbish.

 

[Blaby Loyal]

Jan Leeming is looking her age these days.

 

[Financial-Modeller]

I have never seen and I don't know or recognise all these OAPs that are supposed to toddle frail-limbed to the village store, forking out small fortunes for dusty old rubbish.

Over-simplifying the financial side of the OP's newsagency venture, if the shop will be open 12 hours a day for 7 days a week, he'll realistically need some help.

Assuming he wants to take an average UK salary of GBP29k out and part-time staff cost the same again, plus GBP1k per month for business rates, heating, refridgeration, lighting, payments, bank fees, etc etc, AND no rent as he owns the shop, he needs GBP70k gross profit. Assuming 100% mark-up (or 50% margin) and ignoring VAT, he's got to turnover GBP140k.

If half of the 290 households (90 of which are yet to be built) shop with him, he needs them to spend GBP1k each per year, or GBP90 per month.

As time goes on, he needs to sell more news, chews, and booze to the fewer luddites remaining, as his core customer base dies out, and more consumers buy news content online and have groceries delivered. Eventually, his few remaining customers will have to spend their entire pension on rich tea biscuits and the Radio Times to enable him to keep the doors open.

Tough gig, OP!

 

[The Byre]

I'm afraid that our @Financial-Modeller is taking a wildly over-optimistic view of things. 50% margin??? £1k a month fixed costs?

Please point me at such businesses that achieve 50% margin and have £1k a month in fixed costs and I'll take ten of them!

 

[Financial-Modeller]

I'm afraid that our @Financial-Modeller is taking a wildly over-optimistic view of things. 50% margin??? £1k a month fixed costs?

Please point me at such businesses that achieve 50% margin and have £1k a month in fixed costs and I'll take ten of them!

Apologies, none of that was based on an actual newsagency, it was round numbers to aid arithmetic, so illustrate the challenge that the OP is considering in a tongue-in-cheek manner.

Fixed costs were GBP6k per month in my example, including staff and OP salary.

By the way @The Byre Out of curiosity, what margins would a newsagency/convenience store expect to earn on groceries?

 

[The Byre]

God knows - and he ain't never told me! I know what chains like Aldi and Lidl earn - but then they operate World-wide, so the calculations are going to be somewhat different!

My first proper business was a musical instruments shop, so I can give you the skinny on every aspect of that game. I ran a PA and lighting company for a long time, so that world is clear and bright. I have worked for various manufacturers of electrical stuff, ranging in my duties from lowly skivvy during student days, to exalted (yer, right!) consultant. I ran a news agency and market research company for 12 years, specialising in trade news for US and UK trade mags and market info for manufacturers. I've even worked in radio, film and television and I have a reasonable understanding of their markets and how they have to calculate.

I even appeared on Granada television with Kenny Everett and Germaine Greer as the Nice-Time Nut-Cracker in which I played tunes by hitting myself over the head with my fists. They paid me Musicians Union rates!

But corner shops and yours truly live in different worlds.

 

[ecommerce84]

By the way @The Byre Out of curiosity, what margins would a newsagency/convenience store expect to earn on groceries?

Low ones. I’ve just had a look on my Booker account for some examples.

Walkers crisps 23%
Coke 20%
Jack Daniels 21%
Tetley tea bags 15%
Kronenboug 20%
Olive oil 50%
Carex Soap 20%
Shredded Wheat 21%
Babybel 20%
Cathedral City 25%

Those are all margins based on ‘price marked’ products I.e the manufacturer prints the price on the box. This is usually less than the RRP of the non price marked packets but the retailer pays a little less for them. They are still generally more expensive than the same product in Tesco etc.

And granted Booker may not be the cheapest but it gives you an idea.

 

[CornerShopDev]

Hi I run a small newsagents, so I am actually in this trade and I can't believe you have 20+ posts and no one has asked you about rent + size of the shop + parking.

Rent is the number1 killer in this industry, the margins that you could make 10-15 years ago have completely disappeared - do not enter this trade unless you plan to do deliveries and have something in place to set up some form of under 1 hour deliveries... be prepared to work 12-14hours days 7 days a week for roughly around 2-8 pound an hour. Then think about if you do these kind of hours in your current industry how much would u earn? this is not a one man job, you need manpower to make it successful.

Shop size you don't want a big shop and you don't want a small one either. You'll need loads of storage, your number one overhead is going to be Refridgeration and Freezers maintenance and purchasing. Huskies are useful here with a interest free payment plan but the big remote units are more cost effective but also the most expensive initial outlay and when you run these gigantic things all day and some a*** comes in and asks you why the beer is not cold, you just want to pick up the chiller and land it on their head.

Parking is a must have nowadays, the people spending 20-50 pound a on a Friday and Saturday night want to do so because its easy and they want it instantly, they do not want to walk anywhere!!! You need at least 5 parking spots now a days to make customer feel like its easy access like a M&S garage.

Also, 50% of your turnover will be you "holding cash" for lottery, gas/utilities-top ups and then tobacco. plus say 5% wastage. Your stock taking and ability to shop around has to be pinpoint otherwise your going to feel like your working for nothing.

I hope I haven't put you off, its a nice job that gives you amazing satisfaction and provides a sense of massively contributing to society when you build up a lovely loyal pensioner army that enjoy seeing you on a daily basis. and your the only person they see every day.

good luck if you have any questions just ask.