How to start your own newsagent business

If you are thinking of starting your own newsagent business, there are a few things you need to consider.

First of all, you will need to obtain a premises from which to operate. This can be either a shop or a stall, but it must be located in a busy area with good footfall.

Secondly, you will need to stock your newsagent with a range of different newspapers and magazines. It is important to offer a wide selection so that you can cater to the needs of your customers.

Finally, you will need to obtain a license from your local council in order to sell cigarettes and other tobacco products. With careful planning and preparation, starting your own newsagent business can be a very rewarding experience.

Consider offering a newspaper delivery service if you are planning to run a newsagent. Here’s how you can start and run your own newsagent business venture.

Estimating demand

If you’re considering opening a newsagent business, you need to determine whether there will be enough local demand. Look at your competition first. There are already outlets in your area that sell newspapers, magazines, tobacco products, and confectionery, among other products.

Remember to note down outlets like WH Smith, large supermarkets, convenient stores that are owned by multiple companies, such as Tesco Express, and petrol stations.

Catchment area

Identifying and identifying the different types of potential customers living and working in the area where you will be located can be very useful. You will be able to decide which products and services to offer based on this. You should select a business location that is close to a residential area or one that has a high concentration of offices or other workplaces.

Passing traffic may be plentiful if you’re located near a busy bus stop, taxi rank, or shopping arcade. In larger towns and cities, the trend towards a 24-hour lifestyle may present a business opportunity to stay open late.

You won’t want to deal with excessive levels of shoplifting, break-ins or theft if you check out the local crime rates.

Why will customers choose your shop

If you want your shop to succeed, you must do all you can to ensure that enough customers will choose it over any existing outlets.

Immediately, you will see that there is a market gap for your business. There may be a new housing development without a newsagent, for instance.

Check out future developments

Check to see if an existing supermarket or supermarket-owned convenience store will open in your proposed area, or if new road systems are being built that will prevent local traffic from accessing your shop.

Find out what people want

Small independent outlets are finding it harder and harder to survive and are opening longer hours in an effort to remain competitive. The best thing you can do is to talk to as many local people as possible.

Recent research showed that the friendliness of the staff was the most important factor in choosing a local store. Perhaps this is because many customers are singles, couples with children, and retirees.

Local shops were equally cited for their long opening hours, desire to support their own community, product availability and speedy service after the friendliness of the staff.

Practical experience

You might consider working part-time in an existing newsagent’s shop before opening your own business. As a result, you’ll be able to decide whether you’ll be able to handle the long hours and seven-day trading that is typical in this field.

In addition, it will give you an idea of how many customers you are likely to have each day and how much they will spend. In order to estimate your monthly sales figure, you can then calculate the average ‘spend’ per customer.

Decide what to sell

Depending on how big your business is, you will be able to sell a wide range of products. In a kiosk you will only be able to offer a limited selection of newspapers and tobacco products as well as a few confectionery lines such as chewing gum.

If you have a reasonably spacious place, you can dedicate one wall to displaying nine shelves of magazines and newspapers. As a newsagent, you will not only offer newspapers and magazines from outlets such as convenience stores, but also a wide selection of other publications in order to attract customers.

The magazine display should also be able to display many magazines without too much overlap. These are referred to as ‘full facings’. Customers cannot see clearly what’s there otherwise, and since most magazines are impulse purchases, you are likely to lose sales.

You are likely to stock confectionery and tobacco products in addition to newspapers, magazines, and comics but attention needs to be drawn to legal issues a newsagent my come across. Among the products you are likely to find are:

• Stationery, stamps and greetings cards
• Toys and gifts
• Books
• Ice cream
• Staples such as bread and milk and other grocery items
• Snacks and sandwiches
• Soft drinks
• Alcoholic drinks
• Seasonal items such as fireworks, Hallowe’en products and so on
• Mobile phone top-up cards, pay-phone cards and travel cards
• Miscellaneous goods such as tights, DVDs, computer games etc

There will be times of the year when certain product ranges will be particularly sought after. For instance, you will sell many greeting cards during Valentine’s Day, Mother’s and Father’s Days, Easter, Christmas, and other important holidays such as Eid and Diwali. At Easter and Christmas, you will sell a lot of chocolate. At these times, make sure you order enough stock to meet increased demand.

Ideally, each customer will spend a modest amount, but will visit your shop very frequently.

How will customers pay

Your customers may pay you:

• In cash – Most people will probably pay in cash since they spend only a small amount each time they come in
• By debit or credit card – Even for small purchases, many customers prefer this method of payment, especially now that contactless payments are becoming more widespread – retailers accepting Visa payments will need to have contactless terminals by 2020
• By cheque – if you deliver newspapers, your customers may pay you by check once a week. Businesses can also use cheques.

Special offers and discounts

Some of your products could be discounted, or you could offer ‘two for the price of one’ promotions. You may attract more customers this way, which will lead to higher sales – or, you may not get any extra customers, which will lead to lower income! Check out your local competition for ideas, and make sure any special offers you make are effective.

Services to consider

As many products and services as possible should be offered by your business to local customers. In order to boost foot traffic, you will need to appeal to as many potential customers as possible. A person coming in for a newspaper or lottery ticket may end up buying a whole range of goods.

If you don’t stock any magazines regularly, you may also decide to offer them an order facility.

Lay out your shop in a way to encourage people to buy more than they originally intended. The placement of everyday items such as milk in the back means that customers who come in regularly will have to walk past other products to get to the till.

Alternatively, you might consider becoming a Post Office Local or a Post Office Main. More information about the Post Office can be found on their website.

Advertising your services

Your potential customers need to know about your company and your product range no matter what services you decide to offer.

From the outside of the shop, you can let your customers know that your store has long opening hours, or that it is open 24 hours a day. If you have displays that can’t be seen easily through your window or door, make it clear you sell newspapers and magazines.

You can also use the shop window to showcase your upcoming promotions or special offers, or to introduce new products or services.

Print a leaflet that describes some of the unique aspects of your business and distribute it to local offices and residents.

Open your shop’s door whenever possible to welcome customers.

Home delivery service

Some of your customers may be interested in receiving newspapers delivered to their homes. The employment of schoolchildren to deliver newspapers is regulated by local authority bylaws, so be aware of that if you plan to hire them. Children are generally restricted to working four hours a day, and generally must be over the age of 13. In order to employ a school-aged child, you must ensure the child is registered with your local authority and has a work permit (most councils require businesses to apply for a child employment permit).

Each of your delivery people will need a bag or trolley. You might need vans and drivers if you plan to offer delivery services outside your local area.

In order to provide them with a bill, you will make up each customer’s account at the end of the week by recording their daily orders. Occasionally, newspaper price wars result in paper prices being lowered at very short notice. Therefore, you’ll have to make sure the customer is charged the right price every day.

In addition to hiring your delivery people, you will need someone you can rely on to collect the weekly payments from householders.

How much to charge

You should, ideally, charge your customers enough for the service to cover the costs, otherwise you will lose margin on paper sales. If you want to maintain customer loyalty, you may be willing to subsidise the cost to a certain extent.

The charges should also contribute to your administrative and overhead costs. As an example, someone will prepare the bills at the end of the week and make up the paper rounds in the morning.

Once you have calculated the total cost for providing the service, divide it by the number of customers you anticipate. The weekly charge is then divided by 52. The charge is then added to the paper bill.

Home delivery is a service some newsagents offer without trying to profit from it. Comparing the average rate in your area with the amount you have calculated at different newsagents can help you determine what to charge.

Information on running a successful home delivery service can be found on the website of the National Federation of Retail Newsagents (NFRN).

Lottery terminal

For a small commission on every ticket you sell, you might consider applying for a National Lottery terminal so that you can sell National Lottery tickets and scratch cards to your customers. No installation fee is required.

National Lottery terminals can be very beneficial to a shop because they bring customers in, and while they are there, they may purchase other products.

You should treat the commission you will earn from selling National Lottery tickets as a “cash sale”.

Health Lottery

The Health Lottery may also be sold through your website, for which an e-payment terminal will be required. Visit the Health Lottery website for more information.

Buy an existing business

An existing newsagent’s shop you purchase might be a better investment than starting from scratch.

Make sure that you negotiate a fair price with the seller for any business you are interested in. Look for reasons why the business is for sale – the owner may be looking to retire, for example, or may have another reason for selling.

By researching the sector in its entirety, and the locality in particular, you can determine whether the owner is selling because the business is no longer profitable. Even so, you may not be discouraged – many business owners are confident that they can turn a failing business around. In order to purchase a business for a reasonable price, it is important to determine the current position of the business.

Consider discussing the selling price with your accountant based on the business accounts for the last three years. Remember to budget for other professional fees such as legal fees, valuations, and surveys.

Conclusion

Starting a newsagent business can be an incredibly lucrative venture, with the average mark-up of magazines and newspapers allowing for generous profit margins. Although there is competition in the industry, a well-pruned roster of services – focusing on convenience items and unique products that cannot be found in supermarkets or large chain stores – will help to keep customers coming back, particularly as many people now avoid shopping online for convenience items such as newspapers and magazines. It’s important to remember that all markets are becoming increasingly competitive every day. Taking steps such as investing in IT infrastructure and quality customer service training is key to ensuring success when starting a newsagent business.