How to start a post office

Starting a post office in the United Kingdom can be a challenging yet rewarding business opportunity. The first step in the process is to secure a suitable location for the post office. The location must be easily accessible to the public, and must meet the necessary security and safety standards.

After securing the location, you must then apply for a Post Office franchise, which involves submitting a business plan and undergoing a rigorous selection process.

Once you have been granted a franchise, you will need to purchase the necessary equipment, hire staff, and comply with all regulations, including health and safety, security, and data protection.

You will also need to work with the Post Office to develop a comprehensive marketing plan to promote the post office and attract customers. It is important to note that starting a post office requires a significant investment of time, money, and resources, so careful planning and preparation are key to success. However, with the right support and planning, starting a post office in the UK can be a valuable and profitable business opportunity.

There are still many Post Offices around even though their number has declined in recent years. We have compiled a helpful guide to show you how to set up and run your own Post Office business venture.

Estimating demand

The income from post office transaction fees and retailing activity are both important factors to consider when buying a post office. You will be able to determine previous revenue from the Post Office and from the retail side from the sales particulars. The number of customers and the amount they spend determine both of these sources of income, so it makes sense to consider:

• What are the chances of the Post Office business being as busy as last year?
• Does the retail sector thrive, or can it be expanded?

You could also consider opening a new retail business and Post Office or installing a Post Office alongside your existing retail operation. If you plan to start retailing or offer post office services, you will need to thoroughly research the market.

Did you know that there are slightly more post offices in rural locations than there are in urban locations. At the end of March 2021 there were 6,122 post offices in rural locations in the UK, 54% of the Post Office Network, and 5,293 post offices in urban locations, 46% of the network.

Which Post Office model

Post offices follow the following operating models as part of the Post Office Network Transformation program:

• Post Office Locals. They offer a limited range of post office services but are open for a longer period of time. There is a counter shared by both the post office and the retail business
• Main Post Offices. In these larger post offices, all post office services are available for a longer period of time than in traditional post offices, from both a dedicated Post Office area and a retail counter service point

You might want to consider one of these models – they’re designed to make it easier for you to provide retail and post office services for longer hours and with fewer employees. Post office services are provided under these new models without a fixed payment, you only get paid per transaction.

Sadly, small shops and Post Offices in rural areas are finding it harder and harder to survive. In order to determine the level of demand for your products and services, you need to be as realistic as possible. It is well known to the government that rural post offices face problems, as well as how popular they are among residents. A total of £160 million will be invested in April 2018 to protect rural post offices from closure, and a further £210 million will be invested over the next three years to modernise the existing 11,600 branches (of which 6,185 are rural branches).

Catchment area

The Post Office should identify and note down the different types of customers who live and work in the area. You can then determine what products and services you will offer that are not Post Office-related. You might want to consider offering convenience items (‘top-ups’) or delicatessen items for local residents who work some distance away (say, in a nearby town or city).

The competition

The best results are born out of strong competition. You should not be afraid of studying and learning from your competitors if you want to be successful. There may be something they’re doing right that you can implement in your business to increase profits.

Depending on the sector, you will analyse competition differently. You might be able to gain information from other customers who dine at your competitor’s restaurants if you’re a restaurant owner. A chemicals company, for example, may have much greater difficulty accessing its competitors. An accountant and business professional would review not only what the company presents to the world, but also any financial information you may be able to obtain on it.

In addition to convenience stores, petrol stations, and newsagents, you may suffer from competition fromnearby outlets. Besides offering food and other products that will compete with your retail offer, many of these also sell stamps, accept payments for gas and electricity bills, and so on. Take a look at the competition to find out:

• Products they offer, both food and non-food
• Services they provide
• Their prices
• What are their opening hours
• Who are their customers?
• The shop’s image

There may be a gap in the market that you can exploit, or the existing business might provide a service that no one else is providing. There is also the possibility that people would welcome your Post Office business if they have recently lost their local Post Office. Nevertheless, more and more traditional post office business is now being handled by other organisations. Television licences are no longer issued by the Post Office, and vehicle taxes can be paid online.

Find out what people want

In order to stimulate demand, make sure your shop stocks goods and offers services that encourage customers to use the post office services while they are in your shop. You should discover the following:

• Whether there will be enough customers to support your retail activity
• Whether the post office will continue to attract customers
• What additional services customers would like to see offered by the post office

Try to get as many people to answer these questions as you can:

• What sort of retail products would they like you to stock
• What other improvements they would like to see in the post office services
• What opening times would suit them best
• What services they would support, such as home delivery of groceries or newspaper delivery

Read more: Post Office sector trends

Decide what to sell

In addition to the post office, you will likely be taking over an existing retail business. By opening longer hours and on Sundays, the new post office models (Post Office Locals and Main Post Offices) make it easier for post offices to provide retailing services.

Post offices used to operate alongside general stores in the past, selling everything from wool to DIY supplies. Before the new post office models were introduced, many post offices were operated alongside general stores. Competition from supermarkets and other multiples has been intense for these outlets. You might want to consider convenience retailing, or ‘top-up’ retailing, unless your store is going to be in a very remote location with no other options. If consumers are looking for healthy products, you may want to consider stocking organic or local produce. You might consider operating under a symbol group fascia like Londis – these tend to perform better than independent stores.

C-stores typically sell the following items:

• Everyday items such as bread and milk
• Different food items
• Chilled ready meals
• A range of alcoholic and soft drinks
• Fresh fruit and vegetables
• A series of newspapers and magazines
• Cigarettes and e-cigs
• Confectionery
• A small selection of household and grocery items, such as pet food, toilet paper, tea and coffee

Your market research will have helped you to identify the needs of your local community, and this will give you some guidance on the range of products and services to offer. If you are located in an area that attracts tourists you might consider stocking items like local food and drink specialities, or rural crafts. Possibly the addition of a coffee shop, tearoom or ice cream parlour would be worthwhile.

It is important to monitor demand closely so that you get rid of slow moving and unprofitable lines to make space for more popular ranges.

Don’t forget to site your post office counter at the back of your shop. This will ensure that customers walk past all the items for sale when they want to post a parcel, buy stamps and so on.

Decide which services to offer

There are over 170 different services available through the Post Office network, although not all post offices offer all services. All branches can offer customers certain services, including bill payment, home and car insurance, E-Top ups for mobile phones, and bureau de change services. Besides selling stamps and providing mail services, all branches can also assist customers with withdrawing pensions and benefits over the counter. To make sure that your business is as successful as possible, you should inform your customers of the services you offer.

Training

During the initial purchase and interview process, Masterstrides guides prospective sub-postmasters. Subpost offices and how to maximise sales are explained in their seminars.

Training is provided by Post Office Ltd for newly appointed subpostmasters and mistresses to familiarise them with Post Office equipment, forms, and procedures. During the training process, you will receive induction training, on-site training, as well as ongoing support and assistance with new business transactions. Any staff you hire to do Post Office work will be your responsibility, and you must notify the Post Office of their identities.

Quality standards

It is your responsibility to maintain the Post Office premises in good condition. Cleanliness, tidyness, and professional fittings are important from a business perspective. Since supermarkets set high standards, it is imperative that:

• In your retailing business, you only sell high-quality products. Take special care when purchasing fresh items such as bread, fruit, vegetables, or flowers. Throw away anything that is past its prime
• Employees at the company are well-trained and smart
• Customer service is of a very high standard

Opening hours

Several new post office models were created as part of the Network Transformation programme, including Post Office Locals and Main Post Offices. If you want your business to be open seven days a week, you must decide the hours of operation. It is up to you whether or not to offer post office services whenever you are open if you choose the convenience store route (particularly if you sell alcohol and want to catch the evening trade).

Services to consider

Your goal is to attract as many customers as possible to your business. In addition to your product range, you might also consider whether your customers would appreciate:

• A dry cleaning collection and delivery service
• Photocopying, fax or email service
• Newspaper delivery
• Home delivery of groceries
• Takeaway food such as freshly baked pies and pasties
• Café/ice cream parlour

Advertising your services

Your potential customers should be aware of you and your product range, no matter what services you offer.

Your window display has the potential to attract passing trade – keep it bright and regularly changed. Be sure your shop’s opening hours are obvious from the outside if you are going to boast long hours.

In addition, you can use your shop window to showcase any new services or product ranges or special offers you will be making.

It would be a good idea to print a leaflet announcing the change in ownership of the business. As a result, you will be able to:

• You and your members of staff should be introduced
• Provide customers with reassurance that their post offices are not going out of business
• Your business’s goods and services should be outlined
• Your opening hours should be clearly displayed to customers
• Offer a tempting opening promotion to entice customers

Residents and businesses in the area could receive the leaflet.

Starting any form of business venture is never easy

In this case, the old saying “Rome wasn’t built in a day” holds true. You won’t start making money right away just because you open a business. Getting people to know you takes time, so keep your short-term goals in mind.

Most small businesses don’t make a profit for several years while they recoup investment costs with revenues. The term “in the red” refers to companies with debts and payroll that exceed their profits.

A business that isn’t making a profit after a significant period of time is worth investigating to see if the product or service has issues, if the market is still viable, and other issues that might be slowing or halting its growth.

When you open a business, your work has only just begun, but the lead-up is hard work. Working for someone else requires more time, so you may spend less time with family and friends in order to succeed.

For business owners who are committed to making their business work, the old adage that there are no weekends and no vacations may ring true. The cost of starting and maintaining a profitable business is often underestimated by some business owners, and there is nothing wrong with full-time employment.

Establish your customer profiles

Your market

You may have several different types of customers, depending on where you are located and what you sell as well as what Post Office services you offer, for example:

• Local businesses
• Local residents such as young families, elderly or unemployed people who are in the area all day
• Local residents who work elsewhere and who return in the evenings and at weekends
• Working people who do not live in the area
• People on the move, provided you have some parking nearby
• Holidaymakers

There are different types of goods and services that each category of customer may want from the Post Office. It is likely that you will build a personal relationship with many of your regular customers.

Cash or account

You will most likely receive payment for your goods at the time they buy them, and many of them will pay cash. When selling higher priced items such as wine and spirits, it’s a good idea to accept credit cards or debit cards.

You will be able to create an account only if you have newspaper deliveries or are a business customer, though if you are a newspaper customer or a business customer you may be able to set one up. When you have established a friendly relationship with a customer, it can be awkward to ask them to pay.

Buy an existing business

Instead of starting your own post office business from scratch, you might opt to purchase an existing one. When you buy a going concern, you can do the following:

• Arrangements have already been made for the premises and equipment
• Customers have been established for some time
• Income can be generated immediately by the business
• There has been identification of suppliers and the establishment of relationships with them
• If you are looking for financing, the business has a track record that can be helpful
• There may already be staff in place

Nevertheless, make sure you negotiate a fair price with the seller for any business you are interested in. Consider the owner’s motives for selling the business. For example, is he retiring or is he looking for other opportunities? Sub-postmasters no longer receive salaries from the Post Office following the reorganisation, but instead receive compensation for each transaction they complete. You would therefore be most concerned about establishing the viability of the business to which the post office work is ancillary rather than the post office work itself.

It will be easier to determine whether the owner of the business is selling due to a lack of income from the business if you conduct market research into the sector and the locality in particular. There are plenty of businesspeople who are confident that they can turn around a failing business, so this may not necessarily deter you. For you to pay a reasonable price for the business, you must have established the current position. A new sub postmaster must be appointed when an existing post office is sold by Post Office Ltd (POL). Post Offices will be converted to one of three different models under the Network Transformation programme:

• Community Post Offices – Smaller post offices without other retail outlets nearby
• Main Post Offices – These are larger post offices with standard opening hours, as well as extended hours at the retail counter
• Local Post Offices – These offer limited post office services at their retail counters during regular business hours

There are also the following matters to consider:

• Premises, equipment, etc., should be in good Is it necessary to refurbish or replace assets?
• Any stock you are considering buying should be in good Be sure to review this carefully before agreeing to a price
• Existing staff rights
• Once you’ve taken over, how to retain key personnel
• Are you responsible for any debts owed by the business
• Does the seller’s skillset, and personality play a role in paying for goodwill?
• Competitiveness of your proposed retail activities in your local area

Examine your business’s accounts for the past three years with your accountant and discuss with them what the accounts reveal about the selling price. In addition to legal fees and valuation and survey costs, you should budget for other professional fees.

Most commercial property magazines and websites advertise the sale of post offices quite frequently. The SubPostmaster, a trade journal published by the National Federation of SubPostmasters (NFSP), also features advertisements for businesses for sale. For more information on buying an existing sub-post office, visit the NFSP website.

Post Office website includes information about how to purchase and set up sub-post offices, as well as business opportunities. You can find more information about the application process and case studies of existing postmasters on the Run a Post Office website.

Read more: Legal issues for Post Offices

Conclusion

Opening a post office involves several steps including securing a suitable location, obtaining necessary licenses and permits, setting up the physical infrastructure, purchasing equipment and supplies, and hiring and training employees. You may also need to negotiate a lease or purchase agreement for the location, and arrange for utilities, internet, and phone services.

Additionally, you will need to establish relationships with suppliers and postal organizations, and ensure that the post office complies with all applicable federal, state, and local regulations. After all these preparations, you will then be ready to officially open the post office and begin serving the community.