The Profit & Loss statement (P&L) for any business, is arguably the most important document a buyer will refer to, in assessing the appeal of a newsagency.

There is an expectation however, that the new years P&L is available in July each year, and that does not happen for newsagencies.

To help understand why, there are a number of factors in Cost of Goods, that delay the ability to reconcile.

• Stocktake needs to be performed, and then checked, to qualify Closing stock
• Magazine credits from Returns won’t show on the statement until after end of month
• Card credits for Mothers Day returns may or may not show on the end of June statement, which arrives by mid July

All these factors and more, get checked and reconciled in June account payments, which don’t start until end of July.

Assuming there are no missing credits, disputed invoices or account questions to their supplier, once those end of July payments are made, a newsagent can then prepare their 4th Qtr BAS (business activity statement); which finalises the last Financial Year.

IF the newsagent is that efficient, they would then prepare and send those financials to their accountant, to start work on the tax return.

At which point, the newsagent has to wait for their accountant to schedule their work, alongside every other client their Accountant looks after.  This can be turned around in a couple of weeks at best (early September), and at times, may not be seen until early in the new calendar year !

As most newsagencies enjoy seasonal peak trade and profits from Halloween, Xmas, Back to School & Valentines (to name just a few); most buyers motivation is to secure their new business in time to enjoy those bonus profit opportunities. Logically, the buyer would want to see the last years P&L to make that judgement, and yet, it is rarely available that quickly.

Instead, most things being equal (eg understanding rent will go up each year), from the first week of July, a newsagent with a Point of Sales (POS) system, can run a Sales Report from POS, from which you can compare the latest years trade, to the prior years trade.

If they don’t have POS, at least, the Lotto terminal can produce an annual report, and again, that can be compared to the prior year.

So if trade is consistent or has grown, you can make a reasonable judgement on how your preferred business is performing; without a P&L, and make an offer from there.

From experience, we find Accountants will prioritise the work of a client who is Under Contract; so we just make the contract subject to a Financial Due Diligence, and the newsagent gets the accountant to prioritise their work.

Understanding the process, helps create a realistic expectation.

Newsagencies For Sale’s process, is all about helping our clients make an Informed Judgement.

Call us today to discuss any aspect further.