Published: 01 May 2009 in Independant Retail News
In the current economic climate, some sectors are struggling with increased pressure on both sales to the end customer and terms of trade with suppliers. Many agencies and high Street banks have announced specific ‘schemes’ to help the SME market, but is the Independent Newsagent precluded from these schemes? Is support & funding really available? Funding is available, for viable businesses not participating in specific activities, but far from being a simple answer, the key to obtaining funding is down to the quality of each individual outlet. Here we explain things to consider before making an approach for support. Location One of the key strengths of the independent newsagent is their ability to immerse themselves in the local community, and provide true convenience, location can be key to an outlets success (specialising in confectionary and ‘pocket money’ items in close proximity to a school). Have you considered the strengths and weaknesses of your current location and have a strategy to overcome any negative comments?
Diversification
Successful outlets are less likely to be dependant on the three ‘core’ product areas (tobacco, newspapers/magazines and confectionary), and variety of product lines offering a good range will always be looked upon favourably by lenders. Lottery Terminals can be an added ‘tick’, not so much for the revenues collected (which are minimal), but from the increased footfall and associated impulse buys which naturally occur. However, the recently released European Investment Bank Scheme (which offers low rate loans to businesses through selected High Street banks) excludes retailers who are involved in “Gambling & provision of related equipment” – EIB is off course just one source of funds, and needn’t preclude the sector from finance altogether. Given the community position of outlets, stores should also consider the sale of ‘Distress Items’ which can offer higher margins as well as offering payment by electronic means which forgoes the restrictions of today’s ’cashless’ society.
Premise Layout
Retailers can manipulate consumers using some clever planning and basic psychology. One advantage is an outlets small size, making them easier to navigate than a supermarket; however a badly designed store can cause overcrowding at peak times – which can also lead to losses through theft. Is there scope to include more than one till, easing queues and giving more viewing room to last minute impulse buys? Does the store 'path’ lead you past more expensive luxury items with items aimed at children located at the right viewing height? A lender would be encouraged if you had considered your layout and made changes accordingly.
Funding Options
There are a variety of options available. Typically banks will offer loans over various terms, the maximum usually being ten years, with the amount not exceeding 70% of the market value of the business (including premises) for well established profitable businesses. Facilities can also be used to acquire equipment, fixtures and fittings, with security being taken over the asset itself, and the cost spread over, typically five years. Overdrafts are seldom seen as appropriate as stock is usually bought on credit terms and sold for cash, although each individual concern is viewed on its own merits.
So support is available, on a case by case approach, rather than the sector as a whole. A good business plan, with prudent assumptions and creative ideas could be the key factors in obtaining support.
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