Taking over a small Post Office, advice please

earthstorm

Also if you are accepted as a sub postmaster then before you can run the PO, you will need to go on an intensive training course as a PO does not just give out Stamps and Pensions now.

jackyann

mrs_tooti-frooti wrote: »

Oh thank you so much for all of this.

They are retiring - but I am aware that it is a lot to do with ill health as well. I know the people who run the business - but not so much of a 'lets talk through the business' sort of well if you get what I mean.

They state that the turnover is £470,000 which to me - who knows very little - seems very high, and they say that profit is 20%.

We have looked at it as it is in the next village to us so its close, I'm not working at the minute so could work and run it straight away and then if all went well my husband could leave his job and come into the shop with me.

We wouldn't be looking to move into the property and it does have its own access. The house side is very nice. The owners now have been there for approx 15yrs and have totally renovated the shop and house.

At this early point do I get an accountant or the like to look at the books? Its like you say, its a hell of a lot of money. Nat West have said about a Commercial mortgage which would take a 25% deposit but have said to be wary as figures can vary?

I know people for whom this works beautifully and others have come the croppers described above.
some considerations: who else works in the shop / PO at the moment? POs are obliged to have certain opening hours. If you are working on your own and were living there, you can (with care) nip to put something in the oven, be around for older kids etc. etc. If you are living elsewhere, you are stuck! If you want to rent out the property, I think whoever oversees the PO has some sort of say (not sure, but suggest checking)
I would take a good look at the POs in your area - what is working & what isn't?
We have one nearby that is a thriving general store; we have one in a small village that is nothing but a PO (and a few associated stationery bits) but it does well for the owners, because it is on a through road and has parking outside - so lots of people from other villages use it as their PO "on the way to...."

colino

In general sub-post offices were great little businesses at one point, in fact many running them didn't realise they were running businesses, easily confused by the way they are paid to run the PO side of things, they actually get a payslip from PO for part of their work!
Unless this is the only retail outlet for miles around and there is no incoming competition and the retiree can substantiate his past three years income and a written indication from POL that they are willing to pass on the PO to you, don't even spend a pound on starting due diligence.

greyteam1959

470000........madness.
Our local PO & village store has been up for sale for 4 years now & no buyers.
Two main reasons.......
The guy looks out of his store & what does he see ???
Asda, Sainsburys,Tesco & all the other delivery vans delivering in the village.
Oh yes they use him.........when their delivery has gone to pot or their bananas are off or when there is 12 inches of snow !!
PO's are dying on their feet...... its all done online now.
Sorry its not what you want to hear !!!

vintagebrighton

And if there's any shortfall whatsoever in the PO books, you are liable... regardless of whether or not you think the computer's wrong

http://www.information-age.com/it-management/risk-and-compliance/123457185/post-office-software-did-cause-accounting-shortfalls--probe-finds

Might be all sorted now but who knows.....

bargainbetty

Please note that the Post Office can also decide to close the branch, leaving you with the lease/freehold on the shop and property. My parents were looking to do this 20 years ago, and had found a wonderful place with beautiful accommodation (I had picked out my bedroom etc) and then on due diligence it turned out the PO was being removed in eight months.

We ended up in SE London instead of Lowestoft. Ah well.

martinsurrey

Atidi wrote: »

As others suggest think very carefully before embarking on this venture.

Ask yourself if there was any profit in this, what are the current owners selling up for. I know you say it's to retire, with with most shop workers only being paid minimum wage, the owners could just employ a couple of people to run the shop ... and trouser the profit for themselves.
.

I agree with the top bit

But the bottom bit isn’t as easy as that.

Minimum wage people will run till, but would you let them order stock, balance books, do the banking... not a chance.

To run something like this from a distance, without ANY involvement, you would need a worker and a manager, say staff costs of £45k a year, after NI and all the other bits and bobs are taken into account, plus the risk of sickness and them not turning up.

Now if the business is making £60k a year clean profit, that’s a good living for a couple, and a good return from a £300k asset.

But take out the £45k staff costs and you are on £15k a year for a £300k asset, just not worth it with the risk and stress of a business.

Small business, like this, work well as owner manager, but not for hands off owners, in most cases.

The £300k is tied up in the property.

I had some people who were shocked at how little their businesses were worth, as they thought that their income was profit, which it isn’t, an investor would need to pay someone to run it for them, so their real profit was tiny = a good living, but worthless business.

earthstorm

martinsurrey wrote: »

Minimum wage people will run till, but would you let them order stock, balance books, do the banking... not a chance.

Why Not?
Does not say they are on Min. Wage, they are incapable of working on their own in a shop doing all the tasks such as ordering and book work.
The Min. Wage staff in my shop will order stock if it is needed, they will even take our van to local wholesalers to stock up as i trust them to get stock they they know will sell. I will do the main books, but then will do the day to day accounts for the shop and they get extra in the wages if they do these tasks

sequence

I wouldn't buy a post office, any post office. All of the ones I visit are really struggling. I can't see the post office even being around in 10 - 15 years, they really serve no real purpose that isn't already being replaced by other businesses. Post office is too inefficient to survive, they seem to work as though it's still 1960.

Mistral001

The OP needs to put holiday cover for the post office part into their equation when assessing costs. I believe it is very expensive as it cannot be done by just anyone.