Business Question

savethematches

savethematches

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The owner of the little paper for which I work has offered to sell the business to me. I'm no businessman, but I like the idea of being my own boss. Do you biz types have any helpful advice? Are there grants or anything to help w startup costs? Can TIF funds help in some way? Other thoughts?

 
And then staying after work...

But seriously, get as much information about the costs and potential profits as you can.

 
Find out exactly what you are buying! Have an accountant go over the books & past tax returns. Make SURE that you `have a lawyer! Most business owners think that their business is worth a hell of a lot more than it really is (myself included). Is there property involved? If not, what are the terms of the lease? Is there an option to renew? The list goes on & on.

 
Also look at the potential lifespan of this venture. Not sure what things are like where you live, but I just watched a 40 year program for several dozen small community papers go under because print media is pretty much dead in most marketplaces.

I would definitely think long and hard about it. I am not in that industry, for sure, but I do evaluate businesses of all types on a daily basis. Unless you can truly stand to lose everything you've invested in the next 5-10 years, I'd think long and hard about it, and at least get a valuation from some independent third party appraisers first. There is probably a reason he wants to sell it - transfer the loss and get out while he still can. I have seen more 3G and 4G businesses desperate to sell in the last 5-6 years because the next generations don't have any interest in perpetuating them and frankly, nobody is buying.

If it is your passion, you live in an area that you feel will support the business, you've checked it all 10 ways to Sunday, and the financial investment won't put you and your family in a potentially uncomfortable position, then go for it.

 
WHY are they selling? That'd be my first question.

As a fer instance, my podunk hometown (pop. about 5500 on a good day, and it's the county seat) can barely justify having a daily newspaper anymore after at least 125 years of existence (they REALLY need to go to a weekly publication), the 'downtown' area has been dead for 20 years, it was dying at least 20 years before that, and what business that is left has physically moved to the outskirts of town where the Wal-Mart is. That is NOT unique, unfortunately. I'd definitely be looking at what's left of whatever market is there for a print outlet, if there is one. Of course, YMMV.

 
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With the internet and 24/7/365 News Outlets, printed news is obsolete before the presses are even turned on for a run.

It's just no longer the way people get their news in the 21st century.

 
There's a reason the newspaper industry overall is referred to as, "the dead tree media", by many bloggers. Its usually meant in a derogatory manner.

I'd be super careful looking at buying this one.

 
I've been a political columnist in my "hometown paper" for over a decade. It's a bi-weekly periodical that's been around for over five decades in one form or another. I've been in an advisory capacity for ten years. Frankly, they use industry specific analysts and run their recommendations past me for feedback. It's a tough business.

I'd be very careful. Advertising income is much more important than circulation. Free periodicals are some of the most profitable in the industry. A business valuation is important, but very expensive if you really want a professional "opinion" as to ongoing concern. A break-even business after three years is not an opportunity. It's a failure.

Frankly, restaurants and periodicals require less staff than is needed and more time and money from the owners than any other business, if long-term success is the primary goal.

Don't do it. Professionally speaking of course.



 
Twenty five or years ago I was the youngest banker in the commercial department of a regional bank. I handled all of the walk-ins, many presented with situations like yours and asking similar questions. I had a few pat questions for them.

The first was, "why would you want to be in business for yourself?" No offense, but a response along the lines of yours, "I like the idea of being my own boss," was usually a red flag. It was a window into naivete that anyone who's been in business for themselves can educate you to: if you're in business for yourself, everyone is your boss!

The second (or so) question was, "what would it cost you to start up this exact business from scratch?" That would help us back into the amount of goodwill in the purchase (the value of the business as a going concern). Then we'd discuss whether or not the business was actually worth the premium asked over the value of the assets. You'd be surprised how many times this was the end of the conversation: they'd never thought of the transaction in those terms.

Getting past those points, the conversation generally moved toward evaluation of historical financial information of the business and the prospective buyer: could the business be expected to provide income sufficient to support the buyer's lifestyle and how much stress could be placed on the business (interest rates, economic downturns, reduced revenues, etc.) before the buyer's lifestyle was at risk?

Specific to your situation: it's been years since I fielded an opportunity in print media and I don't know your market, but my perception is in line with the concerns expressed above. That said, there are always ways of making money in waning industries, but success hinges on getting in at the right price and running it with a mindset that the profitable timeline is probably limited.

 
I still think one of the wisest luckiest moves I ever made was jumping ship from the newsroom to PR/media relations 15 years ago. Man, the horror stories I've heard from the few (emphasis on "the few") of my old friends who are still gutting it out in the newsroom. And this is a paper belonging to a big American media chain. I hear similar stories from the print media, both domestic and abroad, I work with in my current job. I could not count how many of my journalist friends have asked me about possible opportunities at my camp over the years.

I ran into my former AME a couple of years ago, first time I had seen him since 1999, and when I asked him about the paper he just shook his head looking down a little and told me "you wouldn't like it as much as you used to, Jeff." A year later I found out he was one of three vets in the newsroom that took early retirement packages they had been presented repeatedly (probably each earnings quarter) by the top tier. They all early-retired on the same day - probably 75+ years of combined experience pitched to the curb.

Proceed VERY carefully, Marty.

 
One of my clients is (and was) the primary distribution infrastructure for the big boys - the NY Times, Wall Street Journal, Chicago Tribune...every big US paper from the 20th Century that you can recall. Around the turn of the Century (or right after Jeff R. got out of the biz) things dropped off dramatically. The formerly rock solid financials of their clients reversed from black to red within a couple of years, and some of the larger papers just folded (literally, I guess).

When I met with the CFO and the rest of the exec team back in 2005-06, they confided that they believed that they had at most, 3-5 years left, max, since everything had gone digital and readership and revenue had all but dried up. They managed to shift their business model effectively since then, and became profitable for the (a real success story), but they had downsized significantly, and reduced their footprint to the large East Coast urban markets only. They managed to keep from running into the ground, but I'm just not sure that I'd touch it.

If you like that sort of risk, you may find a typewriter or 35mm film manufacturer looking to sell cheap...

 
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Back in the mid to late '90s when that new Internet thing was starting to gather momentum, we streetbeaters would joke in the newsroom that until people could bring their computers to the toilet, our job security was just fine.

Boy, were we unforeseeing dumbasses. Or were we?

 
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Jeff R said:
Back in the mid to late '90s when that new Internet thing was starting to gather momentum, we streetbeaters would joke in the newsroom that until people could bring their computers to the toilet, our job security was just fine.

Boy, were we unforeseeing dumbasses. Or were we?
Click to expand...
Pretty amazing for a boy that watched the Jetsons on a rabbit-eared black and white TV, a mere 40-odd years later, to enjoy the morning constitutional perusing the Drudge Report, itself an aggregator of news sources from all over the world. Who could have guessed?

 
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