I have been working with several new newsagents in recent weeks to help resolve issues arising from poor handover from previous owners. In each case, the main issues could have been resolved with the outgoing newsagent providing a document at settlement which details information crucial to the running of the business.
Instead of a gracious and open hand over, I have seen situations recently where the outgoing newsagent actively sought to make life difficult to the incoming newsagent. People who have never owned or operated a newsagency before are particularly challenged in this situation.
One handover document I saw last week was appalling – from someone who ought to have known better.
A poor handover damages the reputation of the outgoing newsagent and the newsagency channel overall. It is in our interests to structure this process. I’d like to see a common handover document adopted. This could cover:
- Suppliers. A list including for each supplier: business name, products purchased from them, contact name, contact number, contact email address, website address, current account number, website login details including password and new account application form.
- Email. A list of each email address used by the business and associated passwords.
- Merchandisers. The names of merchandisers who visit the store and their contact details.
- Processes. Details of all daily, weekly and monthly processes including details of website logins and passwords necessary for this work plus copies of blank forms necessary for completing this work.
- Staff. Details for all staff members: Name, contact phone number, contact email address, superannuation details and details of current responsibilities in the business.
- Customers. A list of all current customers for the business including customer name, address, phone number and email address. (I was in a business recently where the outgoing newsagent did not provide anything more than a given name and address for a customer – no proper account details.)
- Computer details. Details of the location of original CDs containing software sold with the business. Passwords for all computers. Passwords used for any software on the computers. Passwords used for the in-house network.
- Operational details. This general list should include the combination to all safes in the business, the security code for any alarm system, the security code for any external monitoring service.
I am sure there is more which could be added to this list. This is something I would like to see Associations work on. It would be a valuable resource they provide to incoming newsagents and practically demonstrate the value of association membership.
If the new newsagents I have been working with recently were provided the information I have listed, their past few weeks would have been a more enjoyable introduction to the newsagency channel.
Mark, this is a very good start.
Some kind of proforma (available somewhere where everybody would know to look for it) like this would be a boon.
I say, where one would know where to find it, because it was six months before we stumbled onto this blog. Perhaps business brokers could have copies on file?
Our acquisition would have been so much easier with this kind of forethought.
Even if previous owners (like ours) are totally over the whole thing and can’t be arsed, at least a general proforma is a good start – in ‘homework’ phase, where prospective buyers would have such a resource to at least hold sellers to their responsibilities, according to “the list’s” relevant bits.
Your on the mark here Mark. Our takover was pure hell. Once we handed over the check, they were gone. Landed with stock that would never sell, $350 worth of partworks that were never picked up and too late to return. Mags past there return date. Customers on the round sheet but not being charged out (mates rates) some of these went for 6 months before being picked up. I would suggest the deposit paid, should be held in a trust fund for six months, then distributed according to the seller forfilling there contract requirements. I know I am not alone in my story, as I have heard it repeated by others. I have the things on your list in a folder already, just in case something happens to me, and what you are saying is correct, but you still need someone to hold your hand after takeover, this industry is so complex.
Danny, we had all of those situations as well and more. It all relates back to the Helping new newsagents post. Help for new newsagents is woefully inadequate, particularly in the country areas.
when we took over our newsagency the ex -owner inflated the stationery prices skyrocket.
Thanks for that information Mark. Am updating our company procedure manual (not that we are selling, we are actually just really new) and will be sure to include all the information – great stuff, keep it coming.
Thanks for the feedback on this. We certainly need to change how we welcome new newsagents to our channel.
When I investigated buying a newsagency, amongst the many things that confused me were the “Addbacks”. What does that mean?
One newsagent actually told me that although his figures showed “x” gross profit, he believed it could be “y” so his price reflected this. How do you price potential?
I attended the ANF training course and pretty much left knowing who their mates were but not much else to be honest.
Shouldn’t this kind of proforma be made availabel by our state orgs such as VANA or the ANF?
Oops. That was a typo not just bad spelling. (availabel)
Newstrade (Newsagency brokers)
have a booklet “The complete Newsagency Experience” which provides certain services for the incoming and existing newsagent. They range from.
Rent , wages and other costs as a percentage of Gross Profit. The return p.s.metre of Sales, Profit and overheads. Space allocation of product. Structure ans systems for Admin and a mentoring program.
For the past 12 mos. we have been helping those in financial strife trying to keep the afloat. One of the major, major problems is that they leave it too late to get any finanacial assistance and therefore it is too late to correct the problem. Cash flow management or lack of it is the biggest single problem. These systems and structure should be in place or put in place before/during takeover.
As for stock being overpriced or out of date we haven’t had that problem using a reputable industry stocktaker.
Addbacks are those expenses and Incomes not pertaining to the running of the newsagency, however allowable for tax purposes. i.e the leasing of Motor vehicles. Donations to charity Overseas telephone calls, These expense belong to the previous owner not the business.
Our take over went well untill we found that the old owners were charging people for papers that were never delivered and this was going on for years untill we took over ,one customer was paid back 5 years worth of papers it was about 3 grands worth (you don’t try to rip off an accountant ).Then there was the stationary a lot of the stuff we purchased went to the dump a few weeks after take over it was just crap and the same old story put aways that were never picked up old mags beyond recall date and not to mention a couple of grand worth of cigaretts that were way out of date ,but at the end of the day in our situation we new that we were buying from a dodgy operator but we only purchased the business to move it within 3 months but anyway after 2 and a half years we are still loving it (no matter how my i complain on here ABOUT EVERYTHING )_My advice to anyone buying a newsagency is to speak to as many people as posible that own one and put this blog address in your favourites because it is n essential tool for us
Hi all,
Im a person who has just started considering buying my own Newsagency Business. I have never worked in the industry ( im actually an electrician by trade ) , but to me seems to be a good , secure business to buy into. I have just stumbled across this site, and wanted to ask if anyone who has there own Newsagency ,If they would mind if I came in to have a talk with them regarding the running of the business , what I need to look for when buying etc . Im located in Sydney, so I could meet with anyone who has a Newsagency in the Sydney area. Or also any email contact would be greatly appreciated.
Cheers,
Daryl
email – incad2006@hotmail.com
Daryl,
The keys are to buyy a newsagency based on real numbers and not numbers with add-backs which don’t make sense. The multiple should be on real profit with all operating costs (including all wages) taken into account.
Newsagencies are good businesses if you want to run them like a real business and are prepared to drive the business yourself.
Our channel needs new blood to challenge the traditional newsagency.
Welcome to the conversation.
Reading this topic has been very affirming for us. How heartening to know that we aren’t complete idiots after all. We’re a few weeks off celebrating our first year here, and we’re still finding things that we should have known – e.g. calendar ordering procedure only because the supplier mistakenly sent us a list and form. 99% of the issues mentioned here are familiar to us, too. On top of that, we couldn’t move into the residence for some weeks, but that’s another story, just as big as the one about the business and its previous operators! As for money changing hands, we had to use some of the settlement amount for huge cheques to landlord and utility companies before the deal could go through!!!
And, like shaun s, despite the odd rant, it’s the best decision we ever made, and the blog has been an invaluable aid in our learning curve. Thanks for that.
Silly us for buying a very sick concern at the start of a massive recession LOL
But we’re laughing now 🙂
I’m always gobsmacked at how nieve people are at what it takes to run a newsagency. Why would you buy into something you know nothing about without fully understanding what it is you are doing?
It is a hard industry to get your head around as there are loads of suppliers and contracts that at times fight against each other and offer no assistance to the retailer at all.
We have owned our business for 20yrs and have seen new owners come and go, the only ones that seem to stick are the ones that have truely spoken to older newsagents and go into thew game with their eyes open.
It is not a retirement fund for people that have had enough of their regular jobs, it is bloody hard work with little or no time off.
In saying that it is also extremely rewarding if and when you get it right, so my only advice to new newsagencies is ask people that are in the game, not the ANF or NANA not the suppliers but the people on the ground.
Also if you are not getting at least 3 weeks training from the outgoing owner then do not buy in to that business, it takes that long to catch your first breath and understand the amount of suppliers we are dealing with.
Very good advice from all.
The biggest problem I’ve encounted and still is, was not knowing about the “full” or “sub” status of the business. Which is full with some suppliers and sub for others.
This was not fully disclosed/understood at the purchase. Another Newsagent poorly controlling parts of my business in a negative way being the result.
I must say the network of friendly customers we’ve got to know has been great and something you don’t find in other industries.
Luke i wouldn’t put people off from buying just because they know nothing about the industry ,i was a windscreen fitter before i was a newsagent 2 and a half years later we own the best newsagency in town and we basically started it from scratch by moving it and we did all of this without knowing a great deal about the industry .Everything else you have said i tottally agree with the old owners must stick with you for at least 3 weeks before leaving and make sure this is in the contract
Sorry Shaun, you missed my point. The point I was making was people buy into the industry not knowing what they are getting into and this makes us all look bad when they struggle or even fail. What I needed to stress was that new owners need to fully understand what they are getting into, I wouldn’t buy a coffee shop just because I saw someone make a cup and thought ” I can do that, it looks easy”.
It is a great industry if you understand the highs and lows first.
This is great advice. Thanks mark and others who have contributed.
Hi just a quick question, does anyone know how long we have to keep
1. eftpos receipts?
2. syndicate winning and non winning register sheets.
Thanks in advance
Thank you Mark for this important information that every prospective Newsagent should be aware of. The list could apply to a number of other related retail businesses and is by no means exhaustive. Perhaps others could add to it and Mark could turn it into an Advice Sheet?
I think there is another perspective to this that is a much more personal one of the new Newsagent thinking they will work this business out in their own way and can only do better than the person selling the business. I know of one Newsagency that sold near me where the new owner just stood there and didn’t take any notes even at the prompting of the old owner. The old owner even offered them a note book to take notes in but they felt they didn’t need it for some unknown reason. Perhaps some people base their eagerness or lack thereof to learn about a new business by believing their previous business experience will get them through and that the old owner hasn’t got a clue. I don’t care what business you come from this channel takes a lot of getting used to that only improve with information passed on by the previous owner. There simply must have be a sound transfer of current operational knowledge along with all the nuances that go with each Newsagency. Sure torches need to be shined into some dark corners of businesses but everyday operational stuff is imperative.
The previous owner of this business could not get out quick enough and I was left to work a lot of it out myself. I was fortunate in my experience in that I approached another nearby Newsagent and asked if they wouldn’t mind if I asked the odd question or two from time to time and to offer any help I could provide. That Newsagent in my opinion was one of the best of I have come across either here online or the many Newsagents I have met in the three and half years we have owned this one. I would only be too happy to help any other Newsagent that approached me as a result of this.
We now have a second Newsagency which we acquired a few months ago and is doing very well. I don’t have any dialogue with the last owner but I knew the one before him and he is a wealth of information and assistance with respect to its operation. Even after three and half years I still have a lot to learn.
My strong advice to any new Newsagent is don’t be stupid and think you know better. Listen, learn and ask heaps of questions and write things down as there is so much to know. Any Newsagent worth something would stick around as a matter or course with hopefully some pride as well at seeing their former business move on.
Well said.
As a few reps have told us, the previous owners of this business were too busy reinventing the wheel to bother with.
Thank you mark
It’s very useful to me.
I am look forward buy a newsagent business at Adelaide.
i was lucky that the previous owner of my store went into another business 2 doors down. they called by i phoned them and everything went as smooth as it could have. in saying that they had the business on the market for a long time and by the time we settled, they were over it, so there was a fair bit of tidying up to be done. with the help of tower systems, i have cut process and time they used to spend doing by inventing new systems and using the features of retailer software.
opeter
The lack of systems and structure in this industry is appalling. The procedure of changeover only emphasises this.
The industry needs to projected as one of consistency if it can survive.
Every day, today include, I receive more calls for help- the banks are closing in- 4 newsagencies under threat in the past week! Under threat I mean the Bank says -sell up! I can’t believe that newsagents leave it so long to seek support. It is too late I am witnessing 3 newsagents losing their house and two more their business.
This is alarming when they don’t know that the Banks really don’t want a fire sale or more to the point just close them.
I am thinking that newsagents/small business people do not know what help is available.
I had a meeting with an ex Banky today (lending and recovery) and he informed me just what is going on-not the media B.S. the real McCoy.
Newsagents that are put on notice know this.
The reason I state all this is because entry into this system can prevent a lot of the results we are seeing.Proper analysis of business has inspired Newstrade to format bpanalysis a program to assist new newsagents and existing ones – thus preventing bank carnage.