Would you buy a car off the lot without fuel? When you buy a newsagency you can reasonably expect to be buying the business in its then existing form: shop fit, stock, customers. It is also reasonable that you expect to be buying information necessary to run the business. Information is the fuel of any good business.
This is on my mind today because of a newsagency which was sold recently where the new owner discovered that the sales history and other business data had been deleted, leaving nothing with which to compare the performance of the business or to guide business decisions.
The people buying the newsagency have been denied access to a key asset which they assumed was part of the purchase. Their job for the next year has been made more difficult. They have no sales history at all. They didn’t want confidential customer account data, just information necessary to properly manage the business.
The people selling the newsagency decided to delete crucial business data for their own reasons. They would have known the cost to the new owners of this data not being available. Their choice has hurt the business they called home for years.
My recommendation if you are buying a newsagency is that the sale contract includes a special condition along the lines of:
The seller agrees to not delete, remove or change in any sales, stock of customer history or data stored in the business computer system or manual records without the written permission of the purchaser.
While such a clause may be more onerous that some newsagency sellers would want, use it as a discussion point.
Industry associations should play a role here and ensure that the business settlement addresses this and other issues – especially since they have commercial relationships with newsagency brokers. The future of the channel depends on new people coming in. One way to ensure this is to offer some guidance around change of owner best practice.
When a newsagent sells their business they are selling the business as it operates. Data is crucial to business operation. Selling an operating newsagency without historical data is like selling a car without any fuel in the tank.
I couldn’t agree more.
I’ve said it before – the people we bought off could have taught the Dodgy Brothers all they knew – and this is one of the things we had to contend with.
Not only that, but the till didn’t work properly, and there were no records. Have I said we bought a dog’s brekky? At least we knew what we were buying – it became apparent fairly quickly. But we could still see potential for a good lifestyle, so… Anyhoo I digress..
So, my partner had to start from scratch, setting up databases for stock, accounts, electronic diary and sales, as well as the internal POS system proper.
The funny thing is, we wouldn’t dream of not giving that information. Profit/loss statements would be good indicators of bad things anyway, but it’s just plain unhelpful, if not obstructuve, to not provide better info. Chances of making a good sale would be better if good information was a feature, surely? It would certainly go a lot more smoothly, and alleviate some of the stresses associated with selling one’s livelihood.
Where our predecessors (and theirs!) went wrong, was to not bother with such records in the first place. Hopefully we can sell a much better business when the time comes. And hopefully the effort expended will translate significantly to the overall selling price as well.
And if someone was taking over customer accounts, surely that data would have to be handed over as well? What’s that about? I’d sure be wanting customer account data!
I’m not so much inclined to associate this information with fuel – more like the Melways!
You mean to say that some people buy these businesses without source documentation of sales and expenses?
How silly when there are ways of getting the info before purchase.
We run a free monthly seminar for prospectives explaining just how to do that.
We purchased a newsagency from a vendor who instructed his staff to back up all sales data files and then delete these files during a stocktake.
We had no history to navigate buying decisions.
What a low act!
What are they hiding? I would ask.
they are hiding from the false figures they provided to buyers in order to sell their business.
it is extreemly unethical, but it covers them later if you try to sue because the business is not doing the sales they advertised.
i think we all have a list of things we will do that the old owners did not when it comes time for us to sell.
Graeme, people buy businesses expecting everything presented to them to be availalable following settlement.
There is Graeme Day again looking for business. It’s not about you Graeme.
Mark-Before settlement is the best way to do it. Put it in the negotiation offer “subject to etc” No wonder some of you are angry you must be dealing with some real shonks.
There is a rigid set procedure that we set and I have not heard any complaints yet from those that follow it. I am not saying that there are no risks but our aim is to minimise them.
Just recently I did a full business perormance analysis on a nexsXpress that you know about. I’m pretty sure that you visited the store. The report covered everything for the owner and the Landlord poducing performance per sq metre and performce per department. This type of report is available in this industry. however if if a purchaser were involved there would be a few more procedures to suit that transaction.Basically there are Computer sales Reports for 12 mos incl to last quarter. Latest rent reciept, copy of the lease, wages roster, hours open, time run starts finishes number papers delivered 3 years Profit and Loss accounts (if newsagent has been there that long) last stock take (if any. majority of newsagents do not enter all stock items in computer nor do they use their computer fully nor can they produce the sales accounts needed for the sale process)We obtain a comparison YTD where we canWe get source dociments from the NSW State Lotteries or Tatts where applicable and used to get them for Western Union until the ANF had problems with them.
I am saying this because most people blogging here seemlingly think that this is not available.
Mark, if you checking this detail after you take over then it’s too late.Mark my point peole should expect these things to be available bfore settlement in fact before exchange of contracts and even before they make an offer otherwise how do they know what they are buying?
Graeme, I am surprised that you mention clinet work. Indiscrete.
My post is about the state of some key business data on settlement and nothing at all to do with your comment.
My post warns people buying newsagencies to ensure that what they buy is what they get.
I dont understand Mark why you critisize Graham for using an anonymouus business reference to substantiate his arguement yet you constantly do this and go even further by naming actual sites,sometimes even including photos of sites when you try to make questionable points that dont suit your agendas…more hypocrocy on this site again…its very much losing any objectivity and reference value for independant views thoughts and helpful hints to us and becoming more and more a bandstand for you to push your own agendas and ideals onto others…and i know you will say dont read it if i dont want to but i do want to see varied debate on varied indusrty topics i just find it becoming increasingly boring when you belittle people whos opinions differ to yours
Helen,
Graeme has been indiscrete in his comment. It’s my vew and I am as entitled to this as you are to yours.
I would certainly not want him even vaguely referring to the work as he has if I were the customer.
If the rest of your allegations were true then this blog would not include the comments it includes and the posts would not be as broad in their scope.
Mark and Wendy
I mentioned work that is thorough and complete I didn’t name clients or sites or display photo’s and I don’t act on behalf of others I point out a benefit to buyers that due diligence should be conducted before take over that is only common sense. I am not picking on Mark or his position or yours Helen I get the drift that if one’s objective and offers more help not critisism I offered that it’s too late after the event. Now where is the criticism in that.
Mark as for the work you refer to you are the biggest participant in that This post is about computers the styock take is about computers I have no problem with that and they were related to a client. You didn’t name them nor did I I am pointing out that there is ways to combat these crooks. I am not point scoring against you. I go to lengths at our seminar to endorse computerisation. I don’t bag your living or markleting arm ever.
But I stick up for my integrity when other people knock brokers and stocktakers for we are not all the same.
Graeme, this blog post is not about your seminars, you, me or computers. It is about encouraging people buying newsagencies to ensure that they get what they pay for for some recently have not.
Helen dear Graeme did what Graeme does, freeloading off the goodwill of others. He takes every chance he can here to look for business. Mark is rigth when he says this post is not about Graeme hi or the other things. It is about people making sure they get what they paid for when they buy a newsagency.
You are welcome to your post and the falseness that goes with it. None of you know me and therefore are not in a position to judge. You don’t even look at things in oerpective. You’re welcome to you own self indulgence
oohhh someone is jumping at shadows again!!!!
quick question (as the last few comments were tl;dr)
wouldn’t some of the information be available somewhere?
like wouldn’t suppliers have the information or something along those lines?
[not sure how the whole thing works tbh]
I agree with the fact that Graeme is and will subtly bring his business to the fore, however, if this information helps even one potential new newsagent then at least it is a fair trade. Mark has given a good suggestion to those who need to be made aware (business newbies) but may need someone like Graeme to carry out the work that they have no time or ability to ensure every hidden issue is made open.
hi people i was looking at an newsagency for sale but i has unscrupulous agent selling how can i get any documentation of sales & expenses or prospectives explained when the agent is out for himself
Charlie, you need to get the P&L for the last couple of years, tax returns for the same periods and the actual sales data from the computer system they are using. This latter piece of information is the most vital.
If i bought a newsagency starting out would be very hard going, as would have to pick everthing up from scratch even in using a cash register & the computer system would the training given be enough to manage a newsagency
To Mark Fletcher can any account find this information out thanks
can any accountant find this out thanks
Charlie they can, anyone can ask for it. As the purchaser you have a right to whatever information you need to make yourself certain that you want to purchase this business at an agreed price. Anyone who says no ought to be considered as hiding something.