How to start up a newsagent

If you're thinking of running a newsagent, remember that offering a newspaper delivery service is still very popular. Check out our practical guide for help with starting and running your own business.

Research your target market

Estimating demand

It's essential to find out whether there is going to be enough local demand for your planned newsagent business. First of all, check out the competition. Count how many outlets there are already in your area selling newspapers, magazines and the other product ranges you intend to offer, such as tobacco products and confectionery. Don't forget to note down outlets like WH Smith, large supermarket outlets, multiple-owned convenience stores like Tesco Express as well as petrol filling stations.

Catchment area

It can be useful to identify and note down the different types of potential customers living and working in the area where your business will be. This will help you to decide on the range of products and services that you will offer. It is important that your business is located in or very close to a residential area or in an area that has a high concentration of offices and other workplaces. You might get lots of passing trade if you are located near a busy bus stop or taxi rank or in a thriving shopping arcade. The trend towards a 24 hour lifestyle in larger towns and cities might provide an opportunity for your business to open late at night.

Consider also checking out local crime rates - you don't want to have to cope with excessive levels of shoplifting, break-ins and theft.

Why will customers choose your shop

It's important to do all you can to make sure that enough customers will choose your shop rather than any existing outlets. Check out the competition to see:

  • what range of products they offer
  • what services they offer
  • what prices they charge
  • what their opening hours are
  • what type of customer they are attracting
  • if the premises and fittings are modern and smart

This might immediately show you that there is a gap in the market for your business. For example, a new housing estate may have been developed which is not currently served by a newsagent.

Check out future developments

Make sure that there are no immediate plans to open a supermarket or supermarket-owned convenience store in your proposed area, or to build new road systems which mean that local traffic will bypass your shop.

Find out what people want

It is a fact of life that the small independent outlet is finding it increasingly hard to survive and having to open longer hours to compete. It's a very good idea to try to talk to as many local people as possible (after all, they will be the ones using your shop) to find out:

  • what types of product they would want you to stock
  • what opening hours would suit them best
  • whether they would support services such as a newspaper delivery round or home delivery of groceries
  • would they use you as a drop-off point for services like dry cleaning and shoe repairs
  • what they think of your proposals in general
  • what, if anything, don't they like about the existing shops in your area

It is worth bearing in mind that recent research found that the most important reason given for choosing a local shop was the friendliness of the staff. This may be because many customers are single people, couples with children and retired people.

After the friendliness of the staff, reasons given for using local shops were evenly divided between the long opening hours, wanting to support the local shop, product availability and speedy service.

Practical experience

If at all possible you could try to obtain part-time work in an existing newsagent's shop before you take the plunge and open your own business. This will help you to decide whether you can cope with the long hours and the seven day trading typical of the sector. It will also give you an idea of how many customers you are likely to have each day and how much each of them will spend. You can then work out an average per customer 'spend' which will help you to estimate your monthly sales figure.

Research current trends, plus legal and tax issues

Decide what to sell

The range of products you sell will depend to a large extent on how big your premises are. If you plan to operate from a kiosk, you will only have room to offer a limited range of newspapers, some tobacco products and perhaps a few confectionery lines such as chewing gum.

If your premises are reasonably spacious you may be able to devote one long wall to a nine-shelf newspaper and magazine display. Don't forget, although newspapers and magazines are available from outlets such as convenience stores, you will be setting yourself up as a specialist newsagent so it's important to be able to display a very wide range of publications in order to attract customers.

It is also important that you will be able to display lots of magazines without too much overlapping. This is known as giving magazines 'full facings'. Otherwise customers can't see clearly what is there and, as most magazines are impulse purchases, your sales are likely to suffer.

As well as newspapers, magazines and comics you will probably also stock confectionery and tobacco products. Many newsagents now sell a variety of products such as:

  • 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 and so on

Some of your product ranges will be in demand particularly strongly at certain times of the year. For example, you will sell a lot of greetings cards for Valentine's Day, Mother's and Father's Day, Easter, Christmas and other important celebrations such as Eid and Diwali. Chocolate sales will be high at Easter and Christmas. Don't forget to order enough stock to cater for increased demand at these times.

Individual customers may only spend a small amount of money, but ideally they will pop into your shop very frequently.

Establish your customer profiles

Your market

You may have several different types of customer, for example:

  • working people and commuters. Many of these people may not live in the area but will use your shop to buy their daily paper and possibly their lunch items, drinks, snacks and tobacco products
  • local residents such as young families, elderly or unemployed people who are in the area most of the time. Many of these customers will be children spending pocket money on sweets and comics
  • local residents who work elsewhere and who return in the evenings and at weekends. These customers may buy their weekday paper somewhere else but will come to you for weekend papers, magazines and, if you are open in the evenings, for things like confectionery, cigarettes and top-ups of essentials like milk and bread
  • local businesses which have a regular order for newspapers and trade journals
  • people on the move, provided you have some parking nearby
  • trade customers, to whom you supply newspapers at a discount
  • holiday makers, if you are located in a tourist area

Each category of customer may buy different types of goods and services. Many of your customers will be regulars, with whom you will build up a personal relationship. You may offer a home - or workplace - delivery service to some of your customers.

How will customers pay

Your customers may pay you:

  • in cash - this is probably the most likely form of payment as many of your customers will only spend a small amount each time they visit you
  • by debit or credit card. Many customers prefer this means of payment, even for quite small purchases, particularly now that 'contactless' payment is becoming more widespread - from 2020 all retailers who want to accept payment by Visa will have to have a contactless terminal
  • by cheque - if you have a newspaper delivery round your customers may pay you weekly by cheque. Any trade customers may also pay by cheque

Special offers and discounts

You might offer your customers a discount on some lines, or have 'two for the price of one' promotions. If you do, this might attract more customers so you sell more - or, on the other hand, you might not get any extra customers and you will receive less income into the bargain! Check out the local opposition for ideas and keep a close eye on any special offers you do make to be sure they are working for you.

Decide which services to offer

Quality standards

Consumers have grown used to the standards set by the supermarkets and other multiple chains, so to compete it is important that your business:

  • is clean, tidy and professionally fitted out (don't forget to look critically at the outside of the shop - smart paintwork is important)
  • has well stocked shelves
  • does not display out of date newspapers and magazines
  • always sells good quality products. Pay particular attention to fresh items such as fruit, vegetables, bread and milk. Be prepared to throw away anything past its best
  • is staffed by well trained and smart employees - and remember how highly customers rate friendly staff when asked why they use a local shop
  • offers a high standard of customer service

Services to consider

Ideally your business will offer local customers as many of the goods and services they need as possible. You will be aiming to boost what is known as 'footfall' all the time by appealing to as many potential customers as possible. In this way someone who just pops in for a paper or a lottery ticket may end up buying a whole range of goods. You could think about offering:

  • home newspaper delivery service
  • Lottery tickets and scratch cards
  • a dry cleaning or shoe repair collection and delivery service
  • DVD rental (although shop-based DVD rental is much less popular than it was thanks to the rise of rent-by-mail and online streaming subscription services, there is still some demand for it in certain areas)
  • photocopying
  • a photo printing kiosk
  • payment facility for utilities bills
  • cash point machine (ATM)
  • mobile phone top-ups

You may also decide to offer customers an ordering facility for any magazines that you don't stock on a regular basis.

Think about how you can lay out your shop to persuade people to buy more than they had initially planned. For example, locating everyday items such as milk towards the back of the shop means that customers that pop in regularly have to walk past other products on their way to the till.

You may also consider applying to become a Post Office Local or a Post Office Main. You can find out more and register your interest on the Post Office website.

Advertising your services

Whatever services you decide to offer, it's vital to make sure that your potential customers know about you and your product ranges.

If you are going to make a feature of long opening hours, or 24 hour opening, you can make this obvious from outside your shop. Don't forget to make it clear that you sell newspapers and magazines if your displays aren't easily visible through your door or window.

You can also use your shop window to advertise any special offers or promotions you will make, or to highlight any new services or product ranges you introduce.

You could have a leaflet printed outlining some of the unique features of your business which you distribute to local residents and workplaces.

Whenever possible leave the door of your shop open to welcome customers in.

Home delivery service

You may decide to offer a home delivery service of newspapers to some customers. If you plan to employ schoolchildren to deliver newspapers, you should be aware that the employment of young people is regulated by local authority bye-laws. These restrict the hours that children can work each day and also generally specify that employees must be over 13 years old. It is your responsibility to make sure that any child you employ is registered with your local authority and has a work permit (most councils require businesses to apply for a child employment permit before they can employ a school-aged child).

You will have to be in the premises very early in the morning to:

  • receive deliveries of the papers
  • make up the rounds for each of your deliverers

You will have to provide each of your deliverers with a bag or trolley. If you plan to offer delivery services further afield you may need vans and drivers.

You will keep a record of each customer's daily order and at the end of the week you will make up their account so that you can give them a bill. You will have to be careful to charge the customer the right price each day - newspaper price wars can occasionally lead to paper prices being reduced at very short notice.

As well as employing your deliverers you will need someone you can trust to collect the weekly payments from householders.

How much to charge

Ideally the amount you charge each week to your delivery customers should cover the cost of providing the service, otherwise the cost will eat into your margin on paper sales. (However, in reality you may be prepared to subsidise the cost to a certain extent to maintain customer loyalty.)

When costing the service, estimate as accurately as possible the following costs:

  • wages for delivery employees
  • insurance cover
  • bags and trolleys
  • motoring expenses (if appropriate)
  • stationery (round books, invoices and receipts)

Ideally you would also want the charges to make a contribution to your administrative and overhead costs. For example, someone will have to make up the paper rounds in the mornings and prepare the bills at the end of the week.

Once you have arrived at a total cost for providing the service, divide this by the number of customers you expect to deliver to. Divide this figure by 52 to get a weekly charge per customer. You would then add this charge to the weekly paper bill.

Some newsagents provide home delivery as a service and do not try to cover their costs. Ask around at different newsagents to see what would be an average charge in your area and then compare this with the figure you have worked out. If your figure is much higher you will have to decide:

  • whether your customers would be prepared to pay this
  • whether you will reduce the charge
  • whether you are prepared and can afford to provide the service for less than it costs you

The National Federation of Retail Newsagents (NFRN) website includes a great deal of helpful information on running a successful home delivery service.

Lottery terminal

You may decide to apply for a National Lottery terminal so that you can sell National Lottery tickets and scratch cards to your customers in exchange for a small commission on each ticket sale. You do not have to pay for the terminal to be installed.

One of the main benefits of having a National Lottery terminal is that it brings customers into your shop and while they are there they are likely to buy something else.

However, there are a few things which can be a drawback, for example:

  • if large queues form for tickets on draw days, especially when the jackpot is particularly large, this might put off other customers who don't want to wait to be served
  • queues for National Lottery tickets can block the way to displays of magazines, confectionery and other products so customers go elsewhere
  • queues can make it easier for shoplifters to steal because all the staff are busy and they can't see the shelves clearly
  • if lots of people visit your shop on the morning after a draw to claim their prize money this can cause cash flow problems

If you plan to sell National Lottery tickets, treat the commission you will earn as 'Cash sales'.

Health Lottery

You may also decide to sell tickets for the unrelated Health Lottery, for which you'll need to install an epayment terminal. You can find out more on the Health Lottery website.

Buy an existing business

You might decide to buy an existing newsagent's shop rather than start your own venture from scratch. Buying a going concern can mean that:

  • the premises, equipment and stock are already in place
  • there are established customers
  • the business can generate income immediately
  • suppliers have been identified and relationships established with them
  • the business has a track record which can help if you are looking for finance
  • staff are already in place

However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up.

Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.

Other matters to consider include:

  • the state of the premises and equipment. Will you have to spend money refurbishing or replacing assets
  • the condition of any stock you are buying. Check this over carefully before agreeing a price. Make sure all stocks of tobacco products meet current packaging laws and are not counterfeit
  • existing staff rights
  • how to retain key personnel once you've taken over
  • does the business owe money that you will be responsible for
  • if you are paying for goodwill, to what extent does this depend on the skills or personality of the seller

Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.

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