Business Question

[savethematches]

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?

[Ralph]

Plan on working lots of hours.

[mathman]

And then staying after work...

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

[louhamer]

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.

[cmatthes]

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.

[Studio Custom]

It's a dying industry, he's trying to sell you a lemon to get anything out of a worthless asset. Being a business owner is very stressful and only worth it when you can quadruple your pay.

[crunchee]

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.

[savethematches]

Quality insights. I'm leaning towards not buying it. More trouble than it's worth.

[cmatthes]

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.

[Boomerang~Junkie]

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.

[The Shark]

_{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.}

[Armitage]

Who buys newspapers anymore, or even advertises in one?

[it's me HHB]

Let it die then start your own

[velorush]

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.

[Jeff R]

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.

[cmatthes]

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...

[Jeff R]

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?

[DaveL]

from last summer. most of the value in the deal is from the real estate.

http://nypost.com/2013/08/03/new-york-times-sells-boston-globe-for-93-percent-loss/

[velorush]

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?

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?

[Armitage]

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?

Tablets and cell phones on the Internet have really changed a lot of things...

Damn that Star Trek!

[Steve Haynie]

While working on a political campaign this year we heard from ALL the political consultants that newspaper ads are a waste of money. The truth is that there are better ways to spend campaign money, but some people like my father still read newspapers every day.

Cartoonists have a tougher time launching syndicated comic strips because there are fewer and fewer newspapers. Morning and afternoon papers have combined to a single newspaper, cutting the content down to what one paper can support. Editorial cartoonists used to be on staff. Now fewer newspapers in big cities have staff cartoonists.

The small newspapers in my county are divided between the bigger paper and three smaller papers produced in the same office. The three smaller papers are put together by one person who needs two staff people. There is a great opportunity for someone who wants to jump into the newspaper business... while the newspaper business lasts.

Newspapers are putting content online. Some are charging annual fees to access the web site. At the same time, there are local people having fun setting up their own web sites for local news with expectations of selling web ads. Then there are those people who only live, and think, through Facebook.

Get your web skills together. Learn to be your own IT guy if your server goes down, or have someone ready to fix it on a moment's notice. Set up a news site that can work well with smart phones. Work Facebook. And now for the tough part, sell Internet ads to the same customers who have been buying print ads.

Advertisements are what keep newspapers afloat. Ads keep television news afloat. Katie Couric got dropped because of ratings. Jon Stewart, a comedian, has been approached to be an anchor for a network news program. It all has to do with selling ads. Content is not your focus. Ad sales are everything. Printed newspapers appeal to an older consumer base. The people who are young today will be reading news online when they are old. You have to go where the consumers are.

Switching to another topic here...

What is it about a newspaper that interests you? Are you looking to inform people about local news. Are you that person who likes to keep up with all the community groups, churches, schools, sports teams, and elected officials? Are you more focused on the local people who have interesting lives and stories to tell? Is it writing for entertainment or a desire to inform that appeals to you? Do you just want to find yourself in the middle of a lot of information that needs to be published as a service to the people in your area?

Figure out what you want to do and then ask yourself why you need a newspaper to do it.

[savethematches]

And now we have the whole story. I didn't get paid last week, prior week's check may have bounced. He's killing the paper or I can have it at no cost.

[Jeff R]

And now we have the whole story. I didn't get paid last week, prior week's check may have bounced. He's killing the paper or I can have it at no cost.

That's like me eating a burrito and handing you the wrapper as I'm licking the bean juice off it.

The heart of journalism (not advertising revenue, but pure journalism) is making a difference in your community. You have done and continue to do that with the youth in your community, Marty.

If you feel compelled to be a journalist, don't get a dying medium -- IMHO start a blog and share "your" programs and stories with fellow educators abroad who share your community's demographics, socioeconomics and community concerns and offer them stories regarding scenarios, challenges and outcomes (both positive and not-so positive).

If you want a business/revenue, kick ass at ^^^^^^ and then branch into selling ads on your online newspaper.

[savethematches]

And now we have the whole story. I didn't get paid last week, prior week's check may have bounced. He's killing the paper or I can have it at no cost.

That's like me eating a burrito and handing you the wrapper as I'm licking the bean juice off it.

The heart of journalism (not advertising revenue, but pure journalism) is making a difference in your community. You have done and continue to do that with the youth in your community, Marty.

Well said, my friend. Right now, I don't know what I'm going to do. Stress level is through the roof. I need the supplementary income, and I really enjoyed doing the newspaper. Do I take it over and retool it to be more profitable? Do I go back to selling light bulbs at Menards? Do I . . . ? The questions are swirling in my head. I'm not sure which path to take.

[Jeff R]

First suggestion: Run, don't walk, from the newspaper idea. I'd prefer to fall on a knife - higher survival rate.

There, I said it. Spike the idea. Immediately. There is a proven and sustainable market for light bulbs. I'd go there first.

[cmatthes]

And now we have the whole story. I didn't get paid last week, prior week's check may have bounced. He's killing the paper or I can have it at no cost.

That's like me eating a burrito and handing you the wrapper as I'm licking the bean juice off it.

Actually, it's more like Jeff eating that burrito, and then handing you the bill for every customer the burrito stand has had for the last 5 years.

Guarantee that the paper is saddled with debt, and by signing it over/transferring the business to you "for nothing", you'd potentially be assuming liability for those debts.