Understanding Post Office Ownership: Is It Right for You?
With approximately 19,000 post offices across the UK employing around 70,000 staff, the landscape of postal services is both competitive and stable. While brand new post offices are seldom established—primarily emerging in newly developed communities—existing branches are more likely to become available for purchase.
Interestingly, despite the limited availability of “new” opportunities, the post office sector remains a favored option for aspiring entrepreneurs. In fact, one in four individuals exploring business ventures considers entering this market.
What Does a Post Office Do?
Most people utilize post office services at least once a week, yet the full scope of their functions may not be immediately apparent. Many post office branches are located within larger retail establishments, such as newsagents or village stores.
The Post Office is currently navigating significant changes within its business model. Recently, discussions have emerged regarding transferring the payment of state benefits to the Universal Bank, allowing benefits to be directly deposited into bank accounts. Additionally, the implementation of the Horizon system introduces digital processes, making it essential for prospective owners to embrace potential changes within the industry.
Post offices offer over 170 different services, including mail and distribution services, banking, benefits payments, and more.
Types of Post Office Operations
There are two primary types of post office operations: branch offices and sub-post offices. Branch offices, of which there are around 1,500, are owned and operated by Post Office Counters. Franchising options are also available, allowing you to adopt the Post Office brand while benefitting from training and operational support.
On the other hand, sub-post offices, which total approximately 17,500 across the UK, vary widely in their service hours and operational capacity. Some may operate five days a week, while others might open only a few hours on select days. The sub-postmaster holds the license for these offices, supported by around 50,000 postal assistants nationwide.
Who Should Consider Owning a Post Office?
While you don’t need to fit a specific mold, maintaining a professional image is vital. In many communities, sub-postmasters are highly respected figures. A welcoming atmosphere is crucial; as Derrick Evans, a seasoned sub-postmaster, states, “A smile costs nothing.” His son, known for his humor, has also contributed to customer loyalty, highlighting the importance of a positive customer experience.
Be prepared for long hours on your feet, especially during peak times such as pension distribution days and the busy Christmas season. While there’s no strict age criteria, candidates between 21 and 60 typically have better chances of selection. A history of bankruptcy or a criminal record can hinder your prospects.
In terms of qualifications, common sense and numerical proficiency are essential, according to Derek Burgoyne from Bruce & Co. The Post Office offers comprehensive training, so a lack of computer skills shouldn’t deter you, as demonstrated with the introduction of the Horizon system.
As Derrick Evans advises, “If you possess enthusiasm, initiative, and patience, you can successfully manage your post office and drive it forward.”
Conducting Thorough Research
It’s important to recognize that around one in four individuals engaging with business agents are interested in acquiring a post office. This signifies a competitive environment. Therefore, it is crucial to clarify the type of post office that aligns with your goals. As Bruce Sprosen points out, motivations vary widely among buyers, and business locations can range from urban housing estates to picturesque village settings.
Conducting meticulous research is essential. The Post Office considers applicants who have thoroughly analyzed what running a post office entails. Factors to evaluate include the business and retail aspects as well as developing a marketing strategy.
Identifying competitors’ strengths and weaknesses is also critical, and crafting an informed plan is a must. Secure quotes and create a roadmap for where you intend to take your business. Remember, using terms like ‘remuneration’ instead of ‘salary’ can enhance your professionalism during discussions.
Regulations and Requirements for Post Office Management
Navigating the rules and regulations associated with post office ownership can appear daunting, particularly based on your business plans. For example, Tony Bevan requires a liquor license for his post office shop, which is manageable given his background in the off-licence sector.
Sub-postmasters must also obtain a license from the Post Office. Given the absence of a criminal history or bankruptcy, acquiring this license should not present significant challenges. Your contractual agreement is between you and Post Office Counters and can be terminated with three months’ notice. The National Federation of Subpostmasters negotiates these contracts, which do not constrain your retirement age or the duration of your license.
The Post Office sends regular updates to sub-postmasters detailing any operational changes. Given their essential role in communities, numerous regulations govern post office operations, with critical ones highlighted here.
Financial Considerations for Running a Post Office
The costs associated with running a post office can vary significantly based on size and location. Nevertheless, banks view post offices as sound investments.
For example, Tony Bevan is investing 20% of the purchase price in his Devon post office, with funding from Citibank covering the remainder. In general, post offices are perceived as safer than many business ventures.
According to Phil Lett from Barclays, the Post Office is selective in its franchisees, which reassures banks of their choices. This model fosters confidence in the business, as it follows a proven template. Consequently, banks may offer loans ranging from 50% to 70% of the purchase price, especially when working with institutions specialized in post office financing.
When real estate is included with the business, it’s advisable to pursue separate domestic and commercial mortgages for tax relief purposes.
Deciding Between Urban or Rural Locations
Obtaining price estimates from current listings can provide a clearer picture of post office valuations:
- Swansea Suburbs: £149,950
A £18,500 freehold business with three-bedroom accommodation on a busy city main road. Weekly shop income exceeds £5,000, totalling over £80,000 gross with net profits around £30,000. - East Sussex Village: £229,950
A £19,000 freehold post office with three-bedroom accommodations near Rye. Weekly earnings approximate £4,000, yielding around £40,000 in net profits. Planning permission to expand shop size is included. - South Somerset Town: £72,500
A £35,700 post office additionally selling cards and stationery. Weekly sales around £700 with a 33% gross profit margin. Secure leasehold with potential two-bedroom flat above.
Earnings Potential from Owning a Post Office
Your earnings as a post master can fluctuate, especially in smaller village settings, where service offerings determine income. Modern post offices typically provide a diverse range of services beyond just postage stamps, often functioning as mini-marts or convenience stores.
Services might include selling groceries, dairy products, and other essentials, subject to acquiring necessary licenses. Many post offices also offer fax, photocopying, and internet facilities, alongside a range of retail items that can significantly bolster sales. It’s common for sub-postmasters to see weekly earnings of £1,000 or more.
Compensation is transaction-based, with payments such as 12.8p per pension payment. The income varies based on your office’s transaction volume, while a fixed office payment adjusts annually based on negotiations between Post Office Counters and the National Federation of Subpostmasters.
Typically, payment is distributed across 12 equal installments, and larger offices might experience a different payment structure based on past transactions. Derek Burgoyne estimates the average remuneration at around £12,000 annually. Note that 25% of your initial earnings are withheld by the Post Office for training expenses.
The addition of National Lottery ticket machines can also enhance your earnings, and while these typically offer retailers 5% of sales, post offices receive a slightly lower percentage of 4%.
Overall, strong performance positively impacts business valuation, while the Post Office enables payment coverages for utilities and provides holiday allowances with a listing of replacement sub-postmasters.
Top Tips for Success in the Post Office Business
- When searching for a post office to purchase, engage a skilled agent and solicitor familiar with post office transactions. The buying process differs significantly from residential property purchases.
- Financial management is crucial. While you’ll process considerable cash flow, closely monitor your expenditures, especially in the initial months. “Keep a tight ship and watch your overheads,” advises sub-postmaster Derrick Evans.
- Be prepared to invest significant hours. Opening hours typically run from 9 am to 5 pm, plus Saturday mornings, but your working day will extend beyond this.
- Prioritize customer service. As noted by Derrick Evans, simple actions like providing excellent service and creating a welcoming environment can significantly enhance customer experiences at no cost.
This revised content maintains the original message while optimizing for search engines, enhancing readability with headings, and engaging the audience through an active and professional tone.