I was disappointed to see Gerry Harvey on Lateline last night continuing his doom and gloom pitch about retail in Australia and the threat of online. While I agree with some of Gerry’s comments, especially around politicians being out of touch and not understanding business, his overall pitch of doom and gloom for retail and that small businesses in particular are struggling was not clear or pitched well.
Gerry Harvey does not speak for retailers. Sure he makes for good TV with his shrill voice and hand movements, but he does not serve our cause well. Retail businesses, large and small, need to deliver clear and consistent messages around the core opportunities for maximising government return from small and independent retailers:
- Labour costs. Penalty rates based on day or week and time of day for casual workers need review. These flexible hours suit many people and are therefore not a penalty. Most retailers don’t have an opportunity to pass on the penalty costs they for opening on weekends and late in the evening.
- Rent. We need consistent retail tenancy laws in Australia. We need a consistent and low cost approach for handling tenancy disputes. Landlords need to be forced to publish real traffic numbers by door quarterly. Tenants need easy get out options if a centre fails to deliver reasonable traffic growth.
- Capital. Funds from the Future Fund, or some other sovereign fund, should be allocated to small business development loans. The return would be better than what the Future Fund has achieved so far yet with a cost to business much lower than current bank rates.
- Government purchasing. As I noted a couple of weeks ago, government purchasing of everyday items fro local businesses, ensuring that government offices are putting back into their local communities.
For more ideas go to my Small Business Minister TO DO list from March 5.
Profitable small and independent retailers are more valuable to government. We are more likely to invest in our businesses.
Mark, I thought Gerry was pretty much on the mark last night.
We are not even in the ball park of competing with imported goods or goods purchased over the internet.
We have the dearest housing (with Canada) in the world. We pay the highest rents in the world. Food and our cost of living, one of the dearest in the world.
People used to work full time. Now many, particularly in retail are hired as casuals for flexiblity, no sickies no holidays etc (its all in the payrate). Now we want the flexibility and to force down wages.
These are the same people we want to spend more. Something not quite right there somehow.
To compete with asian countries (where we are mostly importing from) we will need to live the same lifestyle. I dont think thats what we aspire to.
I really dont think saving 50 cents an hour or whatever is going to make us even remotely competitive with good purchased online.
I dont have the answer but the shift has to be huge if we want to compete on a price basis.
Leon, you can’t compete on price. Competing on price is the last thing done by a desperate sales person. There are many other things you should look at first.
Leon,
The public expect us to open Sundays and in shopping centres this is usually mandatory. For us opening extended hours we we are rewarded with wages costs doubling, the 50cents you mention is wrong.
If we are expected to trade for 80hours per week for the benefit of shoppers who demand to shop at their leisure when it suits them then we need to work within a viable cost structure. Those wanting long trading hours and large penalty rates want it both ways and this is unrealistic.
Leon,
As Brendan points out, wage costs double on Sundays. I don’t think anyone credible is calling for a reduction in the minimum wage. It penalty rates that concern retailers. Most retailers would be happy to allow for some penalty rates on Sat/Sun, but these rates should be more reasonable. They should reflect society’s shift away from the traditional 9-5 Mon-Fri work week.
When the national Modern Award came into effect, businesses in a number of states went from a 50% Sunday penalty rate to a 100% rate (with a transition period). The idea was to ensure no worker would be worse off under the new award. Unfortunately what that resulted in was employees getting the highest benefits from all the previous state awards with few or no trade-offs.
I’ve always thought that a good solution to penalty rates was to stipulate a five day working week, but not Mon-Fri. So you could employ someone Fri – Tues for example. If you then wanted them for wed/thurs penalties would kick in. Basically, as we are now all meant to be seven day a week trading, wage structures should reflect that by doing away with the typical “weekend” to a shifting structure similar to what I outlined.
At least thats my pipe dream! 😉 not likely to see it every happen.
Robert, if you are not price competitive you are not in the ball game. Only a fool will price themselves out the back door.
Brendan, I don’t disagree with you but suppressing wages is not the answer. People are not spending and paying less probably means they will spend less. Rents are extortionate. If rents were reduced by 10% that would save you far more than a wage reduction. We need to tackle the big thing first.
Jarryd, not sure what the minimum wage has got to do with penalty rates.
Vickie, I couldn’t agree more.
I must have touched a few nerves because the blog post got ignored.
Leon, I don’t know if you are in a business or not and if so what type of rental situation you are in but rent and wages are often on par and while rent could always be lower penalties not wages but penalties, are in themselves extortionate. We work Sunday and do not employ staff because of penalties so rather than maintain an employees conditions as you assert, penalties are causing weekend staff to lose their income opportunity with us totally. I’d rather pay a uni student to work and give them some income but cannot afford to so penalties are to the detriment of staff in these circumstances.
Vicki I share your pipe dream.
Leon I have gone back through the transcript of Harvey’s interview. I stand by my comments. He is the wrong person to interview on this topic. His shrill comments are inaccurate, unhelpful and selfish. As a director of a public company his only obligation is to his shareholders.
If you are relying on price to compete then you have a business problem … as I have written here previously.
Leon
Nobody wants to “force down wages” Mark was talking about penalty rates.
You must think of how many small businesses no longer employ casual staff on weekends because of penalty rates. I know of 14 people in my town alone who had their weekend shifts cut when the last wage increase came through, thats 14 working between 4 and 10 hours less each week, and earning less money than before. Hence they spend less and the effect circulates. This is in a small town of 800-1000 people.
“If you are relying on price to compete then you have a business problem … .”
If this were true then why is Coles/Woolies forcing out of business hundreds of small fuel operators, bottleshops, hardware stores and if they wanted to newsagencies? They are promoting low prices as a point of difference and are having huge success, not customer service, not convenience, simply lower prices.
I do not agree with it but who is making the money?
Mark, What comment / s were inaccurate, I must have missed them. Don’t recall saying we were relying on price to compete.
Brendan Uni students are available during the week as well. No penalties. We own a Newsagency that my wife & son run and I also work a full time job so I guess I see both sides of the coin. My wife works eighty plus hours a week and takes a very small wage.
Steven, Penalty rates have been paid on weekends for at least the 40 years that I have worked. Whats changed that all of a sudden we cant afford to pay them. Something is fundamentaly wrong and it wont be cured by abolishing penalty rates.
Leon,
The reality for many Uni students is that work during the week is difficult because of travel, changing timetables and workload. The weekend is usually most suited for students and employers in that it is a fixed time of availability that provides some level of guaranteed work.
My reference to the minimum wage was in response to your “force down wages” comment. No one is calling for reduced wages, only a more reasonable penalty rate structure (especially Sunday).
Leon your last sentence mentioned price.
I don’t have time to critique Gerry’s comments but I’d suggest the following quotes form gerry Harvey are inaccurate:
But nothing, nothing – most of the stuff that’s bought overseas on that $1,000 thing, all I was saying was it’s going to be a problem for retail, not for me; it wasn’t a problem for me. But they all said, “Oh, you’re protecting yourself.” It wasn’t me.
…
EMMA ALBERICI: But doesn’t that present an opportunity? You’re an entrepreneur. Isn’t that an opportunity? If they’re buying if from overseas online, surely they’d buy it here online, if it was available.
GERRY HARVEY: Yes, but they can’t buy it at the price, so they don’t buy it. Simple as that. So the guy overseas has none of the on-costs. he’s got none of the rent, none the wages, none of the GST and none of the duties, so of course he can sell it a lot cheaper.
…
But that means all the staff in Australia get sacked. 1.3 million people are employed in retail in Australia. If you sack 200,000 of those people, that’ll be at least 500,000, 600,000, 700,000 people that’ll lose their job. Can’t people see that?
Leon #12 “My wife works eighty plus hours a week and takes a very small wage.”
And that is the point, we are expected to invest substantial sums of money and work long hours for a minimal wage AND pay staff double just because it is not a weekday. Something wrong there. Sure penalties have always existed but it’s only relatively recently that Sunday penalties were doubled. This is not a 5 day 9-5 industry so wages should be structured appropriately, seems common sense to me. The fact that you wife ( like most of us) works 80 hours a week and you to work outside the business highlights that costs (wages included) are a problem
Sorry to beat up on you Leon but I can’t justify staff being worth three times more than my wife and me.
And Brendan this is another reason there should be a tax free threshold for profits earned by small businesses.
I think what are people are missing is that Gerry Harvey’s business success was based on cheap, accessible credit.
Gerry, and most of his contemporaries from the 1950s and 60s, built his business on offering hire purchase for working people.
During the great debt binge of the 1990s and 2000s his business went berserk and he reaped the rewards.
Now the debt binge is over, Gerry’s business is returning to historical norms and he doesn’t like it.
I’d suggest Gerry Harvey’s problems have little to do with the internet or have much in common with newsagents or other small business folk.
Mark,
Wouldn’t a tax free threshold for small business be double dipping? Small business owners would already have the income-tax tax-free threshold applied to any wages they take.
Jarryd I am thinking of this more as profit held in the company structure, funds for development of the business.
Brendan, don’t worry about beating me up, I’m thick skinned and I don’t take it personally.
I understand your perspective because we live it as well. But we look at thing from our own perspective. We have invested ourselves both financially & emotionally in a business 7 days a week and the return for that is poor to say the least. But we made our own bed …
Let’s put it this way. You make a phone call between certain hours and you pay a certain rate outside of that time it’s cheaper. Electricity, peak & off peak, plane travel in or out of season, internet yada yada yada.
Now if you are paying for someone’s time you are renting a part of there life. Life is a precious commodity it’s non re-newable. If I work a tradition working week (some will say there is no such thing anymore (Jarryd)) then I sell my time (life) at a certain rate. If you want my time (life) on a weekend when I should be actually living my life with my children, family, friends or even attending church if that’s your thing, then you want my peak period and it’s going to cost you.
We all see it differently and currently we don’t even get a weekend but that’s our life at the moment. It comes down to “Do we live to work or work to live” that ones a bit clouded for me at the moment.
We probably disagree less than it seems.
Jarryd we employ a Uni student. Each time he gets his timetable we work around it. Its not rocket science.
You can argue the semantics but bottom line is, if you pay me less on a Sunday then my pay packet is lower. You have suppressed my wages. (Def. to reduce or eliminate)
Mark, my reference to price was meant to refer to Gerry’s comment about competing on price if internet traders don’t pay rent, duty or GST nothing more although I probably didn’t convey my thoughts clearly. One of the hazards of a hurried reply to a blog.
I think Gerry was merely using the interview to deflect his previous comments as much as he could because of the backlash. I think most of what he said was reasonable and some was a little subjective (job losses). He is a colourful character but he is also pretty smart and very successful.
He is NOT the voice of small business but then who the hell is. The silence is deafening.
Leon, online businesses have different costs compared to bricks and mortar. These costs will increase considerably as the online space becomes more cluttered. The one big difference is the GST which is not applied equitably.
My issue with Gerry is that he is trotted out as a representative of retail. He’s not representative and media outlets should ignore him.
Gerry and many bricks and mortar retailers are yet to work out how to compete with online businesses. For me, the point of difference is about leveraging the personal physical shopping experience. This is where we can demonstrate value and build relationships.
That said, thee is considerable work being done in Europe to improve this side of online retailing and while you cannot physically touch someone through the Internet (yet) they are working damned hard at providing live shop floor type experiences.
leon
im sorry but i cant afford to rent your life on a sunday anymore, sorry but you have been priced out of the market. I have replaced you with a junior, as their life rental is much more reasonable and affordable.
rick,
Your right but don’t be sorry. I already work every Sunday.
How many of you own your own home outright or have a business mortgage against it?
6.4% of all Australians houses are worth less than what they owe ‘negative equity’.
Removing or reducing penalty rates will only cause this figure to spiral out of control causing our housing bubble to burst.
Paying employees less than what they earn now is a surpression of wages, just face it.
For those of you without a shopping centre lease etc that requires you to be open 7 days a week:
Why do you open Saturday / Sunday? If the wages at penalty rates are causing you losses – just close the doors.
Or is it really that for all the complaining – you actually still make a profit on those days even with penalty rates.
If you want the “freedom” of working a 5 day week and not have to work weekends to save on penalty rates, why do you expect your staff to do the same without getting compensation for missing out on their weekend?
Personally I do think 100% loading for Sundays is a bit much, but I work a 9-5 job. I wouldn’t come in for double pay on a Sunday regardless. (business emergency like a client in legal trouble etc, sure but not for anything less)
higher penalty rates have already caused me to lower my empoyee wages, I have dropped one off the Sunday roster, and run with a junior instead.
im contractually obliged by suppliers to open Sat & Sun
Blake , in a perfect world. No offence walk Newsagents shoes for 1 year, you will see the other side of the coin.
The comment on who is a spokesman for small business outside of politics I mean is something all different associations / organisations should look at. You are right it is not Gerry.
We need a collective voice for the big issues and it needs to be spread, told, highlighted, challenging the appropriate department / person, media driven.
How many associations / guilds / groups etc do we have – Mark has noted some of the things that need to be driven hard that are common for all small business’s.
I know I’m old, but I saw Gerry Harvey on Lateline and I totally agreed with him.
Our six children all worked for us as they
were growing up (along with hundreds of
others over 33 years of rounds and shops).
Who is going to give these kids a start in
the workplace?
Our grandchildren will not be as well off as
us in the future if we don’t consider what
online shopping (overseas) does to our economy.
That’s all Gerry was saying. I don’t think he was whingeing at all about his own plight as I am pretty sure that he is
very well off.
My own children purchase from other countries and I constantly tell them off for
sending their money out of Australia and their attitude is that they save money by
so doing for shoes, clothes, electronics and books etc, but the long term effects of the online purchase will affect them in the future.
I don’t understand the “now” mentality of
our younger generation.
Anyway I like Gerry Harvey and I don’t like
the way Emma Alboreci treated him. She was laughing and condescending and I thought she should have been far more
respectful to a person who has worked in
Australia for Australians (he was adamant
that we need to continue to manufacture here) and he said he purchased Australian
made products (e.g. bedding, furniture etc)
How can that be a bad thing????
Leon,
Not all businesses can so easily work around timetable changes. Many uni students would not be able to work during a large portion of the week, if it all.
Regardless of the semantics, the fact remains that wages and penalties were increased when the Modern Award came into effect. The increase was not reasonable and was established on the basis that “no worker would be worse off under a new award”. Business owners got slaped with substancial labor cost increases (outside the normal minimum wage increases) with no reasonable justification.
Interesting to see David Jones and Kathmandu reporting massive profit downturns. Perhaps not everyone is doing it hard in retail but plenty certainly are.
James,
The same argument can be made for business. If business can’t make enough money to employ people then those people have no income to repay their mortgages.
Business should not be responsible when people over extend their debt or pay too much for housing. That responsibility lies with individuals, lendors and legislators.
That said, the housing bubble argument has been touted for years now. If there are housing bubbles in Australia they are isolated. Negative equity is only a reflection of a decrease in property value, not the ability of the borrower to repay the loan.
Blake,
Many newsagents are contractually obliged to open every day.
We personally aren’t … but still open every day. However our business is a bit bigger than most newsagencies and relatively more profitable. Not all retailers are in the same position.
You might not come in on Sunday for double pay … but plenty of other people would. They might prefer to work on the weekend. They might only be able to work on the weekend. An over-inflated penalty rate structure reduces their opportunities for weekend work.
June,
You might not like it but economies become more global every day.
Gerry worked in Australia for himself. He didn’t establish and operate HN as a philanthropic NFP.
We have to let go of the nostalgia associated with manufacturing where there is no real economic benefit in it. Low end manufacturing in Australia is all but dead – as it is in most other first world western countries. Instead of throwing money at a sector that can’t compete we need to be investing in sectors that can (which would very likely include some non-low-end manufacturing).
One can’t condemn people for purchasing globally without also diminishing our export industry. If we stop Australians from purchasing overseas why should be we expect people overseas to purchase from Australia?
Small business needs a unified voice (a leader) on common issues. Their role is to lobby / make noise via any medium that wants to listen or hear truth on how the small business community are being let down by – take your pick.
Rent, Investment, employment, Banks, Coles/Woolies, incentives and the areas that Mark mentioned.
Its not all about online purchasing that are making operating small business’s uncomfortable.
@Derek #28
I’m not saying newsagents have it easy. More along the lines of – if the owner wants Sat/Sun off and to employ staff, they should do so with penalty rates. If not they should take say Wed/Thur off and work the weekend.
@ Jarryd #34
Thats why I lead with excluding shopping centre leases. The only reason to be open on a Sunday is that it brings in enough business to warrant paying wages & opening the doors. No different to any other business.
You say that businesses are not responsible for people that over extend their debt for housing. By the same logic consumers & employees are not responsible for businesses that over extend their debt for the business.
In the space of 12 months, one of my clients after the purchase of a retail franchise for a national brand, has had their commissions reduced dropping GP 10%, and now has had credit terms cut by 14 days. If a newsagents suppliers did that how many would survive.
Jarryd,
Sunday trading is relatively new not only in Australia (it differs from state to state) but around the western world. All other industries that I know of paid double time on a Sunday (we are really getting bogged down with this one point in my first entry). So when we talk about Modern Award we really are talking modern. In that context we need to define “real justification” I guess retail see’s itself as a little bit different.
We could discuss the pro’s & con’s of globalisation or modern neo-classical economics versus pretty much any other school but I doubt that would be very productive or we would agree very much.
You wrote
“We have to let go of the nostalgia associated with manufacturing”
You may one day be saying we better get over the nostalgia associated with bricks & mortar retail but I’m sure you will regurgitate double time on a Sunday as being responsible.
You wrote
“One can’t condemn people for purchasing globally without also diminishing our export industry. If we stop Australians from purchasing overseas why should be we expect people overseas to purchase from Australia?”
Exports really struggling because of the inflated dollar (plus double time on Sundays) we don’t really manufacture any more so I don’t’ think too many people overseas would be buying Australian on-line. I think it’s pretty much a one way street. I’m sure that’s a real good thing for the economy.
Blake,
When I say many newsagents are contractually obliged to open Sunday I am not referring to shopping centre leases. Many have contracts with newspaper publishers that require them to open.
I agree, consumers and employees are not responsible for the over extension of debt taken on by business.
Leon,
Retail is “a little bit different”. Consumer shopping habits and lifestyles have changed. They expect retailers to be open 7 days. In many places Sunday Trading has been the norm for some time. The same applies for the hospitality industry.
The pros and cons of globalisation are essentially irrelevant if the market continues to drive its increased prevalence.
The manufacturing and nostalgia issue has nothing to do with Suday penalty rates. I may one day be saying that same thing about bricks and morter retail. Although I doubt it given that both forms of retail offer different things.
Yes some exports struggle because of our dollar. However currency valuation is not a fixed problem, it can, and very likely will change in the future.
You define exports to narrowly. We export all sorts of things from resources and skills, to technology and intellectual property. There are some areas in which we can and do compete. These are the areas in which we need to focus the country’s resources.
Jarryd, you wrote
One can’t condemn people for purchasing globally without also diminishing our export industry. If we stop Australians from purchasing overseas why should be we expect people overseas to purchase from Australia?
This was written as a response to June in the context of on-line trading.
My reply was in the context of on-line trading.
Don’t think too many people in London, New York or anywhere else are buying our resources, skills, technology or intellectual property on-line
I think they are after Jimmy Choo’s & such. Just really hope they aren’t trying to buy our yellow cake.
I don’t think we can achieve any meeting of the minds, I think were are more in the realm of Perception Management.
with such deep thinking here let’s work together to fix this newsagency channel and magazine distribution Gerry who
@ Jarryd #38
If the contract with the newspaper publishers has a requirement to open Sunday. You would need to evaluate if the total GP delivered by newspapers – including basket sales where the customer only comes to the newsagent for the paper itself – is greater than the cost of opening Sunday.
If it isn’t drop the line. The same way many newsagents have dropped their distribution runs.
The reason isn’t contractual that you open Sunday – it’s merely that it’s profitable despite wages being high. Especially once the weekday and combined basket traffic is taken into account.
Falling GP is what will kill newsagents not rising costs. The labour and rent costs are meaningless if the product you sell isn’t what consumers want to buy.
Leon,
While my comment was in response to Junes comment on on-line trading it is relevant to the whole import/export argument. When talking about imports and exports it is impossible to seperate e-commerce as its own special case. It contributes to total imports and exports just like any other market segment.
Jarryd,
Dont think this blog was about Australias terms of trade. It was about Gerry & buying stuff on-line. Just the simple stuff.
As I said Perception Management as your comments could be relevent to all sorts of thingies.
I was wondering if anybody has any ideas who / how / if their is a role for a spokesperson for all the common issues that small business have?
A loud persistant voice backed by the various small business associations, guilds, small independant business’s, groups, franchises.
Its not Gerry, he is pushing his own agenda however I respect that he is out their making noise for his agenda.
Blake, do you or have you ever run your own business, in particular a bricks and mortsr retail business?
Leon,
“Buying stuff online” cannot be separated from other forms non ecommerce imports. Importing is importing regardless of who purchases the product and how it is purchased.
If Australia put up barriers to importation, under the notion “we should buy Australian” then it would be hypocritical of us to then criticise other countries if they implemented the same and we found it harder to export.
Derek,
The problem with one voice representing such a large and diverse group of businesses is that, well, they try represent a large and diverse group of businesses.
Not all small business have the same problems. Not all small business agree. That is both the strength and weakness of the sector.
Derek,
The problem with one voice representing such a large and diverse group of businesses is that, well, they try to represent a large and diverse group.
Not all small business have the same problems. Not all small business agree. That is both the strength and weakness of the sector.
Jarryd
Thankyou for showing an interest. I agree with nearly all what you have shared, history has shown us that people will protect their empires no matter what the cost is.
I believe nearly all small business have a common set of problems that make it hard for small business to prosper and they are all related in my opinion to the Government of the day, Federal or State. Without going into the details, how about Lease, Employees, Investment, Slow Beauracracy, Banks and Incentives.
Jarryd,
“Barriers to importation” “Buying Australian”
Sorry I’m lost between the smoke & the mirrors.
@Brendan #46
Run a business yes (service), retail online formerly, retail bricks no.
There shouldn’t be any pretending that a retail online business is any different to a retail bricks & mortar business. You have to sell what your customers want, newsagents are in a convenience market.
You can’t do a Gerry Harvey and say that you only want to compete with physical retail customers – you’ve had to compete with physical subscriptions for year, now digital subscriptions as well.
I stand by my claim that a newsagents problem is falling GP, not rising rent/labour. The bottom line costs rising makes it harder, but what you should be more worried about is if you will even have sales in 5 years time.
This is Gerry’s problem too.
Blake I didn’t get the memo about falling margin in newsagencies could you send it to me?
For the record, the margin I get on gifts, stationery and confectionery is up year on year. Margin dollars as well as margin percentage.
Okay magazines are, for the most part, static as are newspapers and greeting cards. But I am growing sales so margin dollars are up.
If margins are static as are cover prices, GP% will remain static – however as more customers give up physical magazine & newspaper sales $GP falls. Obviously not something I have to tell you.
Gifts, stationery (including ink) & confectionery might be up year on year. (I do enjoy reading your benchmarks, far greater detail than I can get for most other industries) But at what point do you stop becoming a newsagency and start becoming a gift/office store.
Don’t get me wrong, I’m not a newsagent. There have been disagreements before with those on here on my opinions which I can understand. Most of my industry knowledge comes either from clients who are newsagents, or in related industries (e.g. news ltd employees) – or from this blog itself. Growing lines outside of newspapers and magazines is extremely important for current newsagencies from what I can see.
Your last benchmarks seemed to indicate that newspapers & magazines were down 4-4.5% on average. And from what I’ve head from inside newspapers – if that was accurate it would be a “good” result.
The main client I have has a hospital based newsagency as well as a LPO in the other. The hospital location obviously has prime trading on gifts, cards, lotteries & magazines. So the feedback I get from him isn’t always particularly helpful to newsagents as a whole.
On my original point of GP. The level of consolidation in physical publishing from what I can see – has been dramatic, with only more to come. If you think digital sales won’t eat into physical sales over the next 5 years let alone 10… lets just say I’d love to pick your brain on that one.
Blake, magazine cover prices are not static.
There is no doubt digital sales will eat into print and I have written here many times about that.
For each decline we have to work to address that … at least that’s what smart business people do.
Right now we are on a fast moving freeway connecting two major cities – the newsagency of the past and the newsagency of the future.
is it still a good time to buy into newsagencies. Was looking at Supanews sites and the prices seem extremely low for some of them – should that ring alarm bells
Leon,
No smoke and mirrors. If you don’t understand those two phrases I would suggest google or a dictionary.
Semi, if the numbers stack up and the return available for your investment what you are looking for then, yes. Newsagencies are like any retail business, operating in a competitive marketplace. Better owners and managers usually achieve better results.
are newsagencies “keeping pace” with today’s world or should they be treated with more caution then other retail businesses.
I have commenced due diligence on some of them but I am still running cold because of the comments that appear on this blog – cheaper is not necessarily better as you would know, so if a newsagency is offered to the market at a price that defies logic, despite the trading figures, should I still continue due diligence or move onto the next one. I don’t understand why Supanews has changed tact with its fees and charges, in recent times, to incoming franchisees. This is a big investment so as a “newby” all advice is appreciated
Semi, I think you should pay more attention to the numbers for any business in which you are interested than the comments of some here.
The keys are to ensure you are working with accurate sales and expense numbers. Verify their accuracy.
There are various reasons a newsagency could be offered at a considerable discount. I know of some right now available for stock and fixtures. Owners are tired or their situations have changed. The businesses are good.
Here are my due diligence tips: http://bit.ly/GJFDK7
I’d be happy to speak with you on 0418 321 338.
thank you so much
Blake and semi, for different reasons for both of you here are some facts about my business and some thoughts regarding what helps causes outcomes.
Margins don’t fall but in a poorly run business turnover will, that spells opportunity to a good operator.
Our magazine sales are growing at an outstanding rate due to implementing strategies often offered on this blog by Mark. Newspapers have declined largely due to our relocation farther away from a train station and bus terminus but on subby rates that doesn’t affect profitability much.
Gifts are growing at a rate even better than magazines and ink is replacing newspapers in maintaining foot traffic.
YOY growth on my last report was 6% with profit margin rising so all is rosy on that front.
The issues I face are that we took on a much larger site believing the end of the GFC meant growth but this has not happened to the extent we need. As Mark states in his initial post on this thread we need a more realistic wage structure that would not necessarily reduce wages paid because it would give us the capacity to grow the business further and increase staffing when appropriate.
Rent also needs to be at a realistic rate but is variable and negotiable already so that leaves wages as the single largest expense that we cannot change bar employing less people for less hours. Hence the strong need for flexibility on this front. I like June’s idea of rostered hours seven days a week being paid at single time and penalties paid for hours worked outside those rostered hours. A properly rostered business would minimise expenses and staff would be paid better when working off roster, it’s a starting point at least.
Semi, look at the right group to join (and I have to plug newsXpress here) and you will have all the support you need to make the most of any business you buy so long as you have performed the due diligence Mark suggests and are satisfied the business is currently viable.
Brendan
I note you would like to:
a) Have realistic rate but is variable and negotiable.
b) Need for flexible employee roster and wage structure.
How are you going to address these issues, it is alright to agree or like someone’s idea but what is the steps needed to achieve these.
Thanks Brendan,
Can u give me a heads up on Supanews then? I did do a search from this blog site and some less than healthy comments were made some time ago. There appeared to be some animosity between proponents of this site and the Supanews regime. WTF is that all about???
Semi, my posts related to a couple of specific situations some years ago. The issues were resolved and everyone moved on.
There are various models for purchasing and or managing a newsagency. Do your homework, get accurate data and decide what is right for you.
The Supanews model provides a supportive and educative way for people to enter the channel.
Derek, I’m negotiating rent at the moment as for wages that a political matter where the pollies need to recognize that they opened up extended shopping hours and have an obligation to legislate wage structures that fit the situation they created.
I won’t achieve any thing on wages, that takes everyone lobbying for the same result.
Thanks Brendan