Buying a sub post office

The first step is to find an office that is for sale.

It is possible there will be a 'For Sale' sign in the office itself. Businesses for sale are also published in the NFSP’s monthly magazine The Subpostmaster. You should look in the local press. 

Copy of low-18Post Office Ltd (POL) provides a website which lists branches currently for sale. There are a number of business transfer agents who specialise in this market and will provide guidance on the purchase, for example Humberstones. Get their mailing list to obtain details of suitable businesses.

If you need to sell your house to raise the capital to start up the business, have your house valued to assess the cash you will be putting in. You will then need to find out how much you can afford to borrow. You will also need to put together a business plan for submission to POL and arrange such things as insurance to cover the premises, contents and business stock.

What to look for when selecting an office
A great deal will actually depend on the nature of the retail business. Clearly, information can be gleaned from the details sent by business transfer agents allowing a shortlist to be prepared but, once you have a shortlist, you should visit as many as you can, walk around the area and ask yourself questions such as:

  • What is the current economic status of the area?
  • Is the area growing, static or declining?
  • What long-term impact could this have on your business?

This is important as it relates to the number of potential customers. A personal visit to the local planning authority is strongly recommended. Solicitors only do limited searches so they are unlikely to discover the plans for a superstore two miles away. It is also worth checking to see if there are plans for new housing or redevelopment in the area.

Also consider:

  • Is the shop on a main road? If it is, it may be prominent but is it customer friendly?
  • Is there parking?
  • Is it near public transport?
  • Are homes nearby?
  • What are the neighbouring shops like? If so, will they compete with my business?
  • What is the outside of the building like and will this affect my expenses if there is a lease involved?
  • What is the inside of the shop like?
  • What is the post office section like? Is it modern or old fashioned and in need of a refit?
  • Is the business in the right location?
  • What is the natural flow of pedestrians and how many?
  • Are there any obstacles in getting to the shop?

20111118 122Legislation requires all shops (including post offices) to ensure they are doing all they can to provide access for people with disabilities. Many measures are relatively inexpensive and send a positive signal to customers that you want to attract them into your shop. Compliance and a good retail environment can help you grow your business. 

Taken together, questions like these help to form your overall impression of a business and will contribute to the success or otherwise of the business. Ask the outgoing subpostmaster or the agent to provide information about POL’s views on the continuation of the sub post office on the premises and any conditions of appointment.

There is an agreement between POL and the NFSP that subpostmasters resigning or contemplating resigning, can discuss with their local POL manager the suitability of the premises for continued use as a sub post office. The interview is of an advisory nature and would give both the potential purchaser and the outgoing subpostmaster a better idea of the future plans for the office with which to gauge the next step. It should be provided in writing and also contain details of any improvements required by POL and any likely conditions attached to the appointment. The aim of setting conditions of appointment for a new subpostmaster is to improve the performance of the business in question, to the benefit of both the subpostmaster and POL. The principles to be applied in setting conditions of appointment are:

  • They need to be for the benefit of the customer
  • They need to be essential for running the business and a matter of priority
  • They need to be realistic, especially in terms of cost, taking into account the importance, nature and probable role of the office concerned
  • They need to be reasonable, affordable and achievable, taking into account projected profitability

RYP 282Knowing about any conditions that may be required gives you the opportunity to include any estimated costs of those requirements in your application form and in your business plan. It should also be noted that there are standard opening hours, which are Monday to Friday, 9am to 5pm, and Saturday 9am to 12pm/1pm.

On transfer POL will usually require incoming subpostmasters to work lunchtimes and open for the full day, but you should assess the practicalities of such a situation as there will be a cost impact and every office is different. Most POL managers will listen to business arguments with regard to opening hours. 

Last three years’ certified financial accounts
Pay slips will also give written confirmation of  the Post Office salary and set out precisely how the salary is calculated giving a detailed breakdown of the work carried out at the office.   

Returns from the associated retail business
With such a wide variety of businesses associated with sub post offices, it is difficult to give an indication of average margins, especially as there is a growing move for all of these types of shops to co-site with a convenience-format. A detailed discussion with your accountant is advisable.

Look carefully at the overheads. In the case of leasehold premises, rent will probably be a major item. Check out how the rent compares with that of other similar-sized premises in the area and consider:

  • When was the last and when is the next rent review?
  • What maintenance conditions are included in the lease? 

The length of the lease could play a part in any financing arrangements you may be making. 

sub158Wages may also figure prominently. Ask for a list of employees, their hours and wage rate, and whether they are employed in the Post Office section, shop, or both. It is worth noting that under Transfer of Undertakings legislation, a current employer cannot make staff redundant on your behalf; they come with the business. They are your responsibility and you should see their written Conditions of Service.

If the budget is likely to be tight, you need to assess the minimum level of staff which the business requires to run at present levels of turnover and post office activity, then build any potential redundancy costs into your offer for the business. Should you need to consider altering the staffing levels after you buy the business, it is essential that you take advice before taking any action. NFSP members have access to a helpline that offers a specific service providing advice on these regulations.

Sealing the deal
Post offices cannot be bought and sold without POL agreeing to the appointment of the new subpostmaster. Although you may be happy with the agreement you have reached with the vendor for the purchase of their business, they cannot guarantee your appointment by POL.

The vendor and the purchaser must sign an agreement for the purchase of the business containing the sub post office, subject to the purchaser’s appointment as subpostmaster. Once this is done the vendor will tender their resignation to the Post Office and a vacancy will be created for the purchaser to apply for.

How can I safeguard my interests?
You should ensure that any option you have to buy the existing subpostmaster’s premises is subject to you being appointed. Once you have been appointed, the best way to protect your interests - as well as having access to a range of services and advice - is to Join the National Federation of SubPostmasters.  

Get in touch

You can contact the National Federation of SubPostmasters on:

T: 01273 452324