Sub-postmasters net returns

by Julie Dove, Cobweb Information Ltd

There are currently more than 17,000 sub-postmasters in the UK, employing approximately 40,000 assistants. However, anyone watching the news on TV or reading a paper might be forgiven for thinking that the UK postal network is in terminal decline, as news stories highlight branch closures and focus on the difficulties faced by sub-postmasters in some areas.

No one is denying that sub-postmasters are operating in a market that is undergoing considerable change. However, for the enterprising business person this is creating a number of opportunities that appear to be largely unexploited.

Following a period of upheaval, which saw the closure of around 260 sub-post offices in 2002, the number of post offices facing closure is continuing to fall. Figures for 2002 suggest that when sub-postmasters resign or retire, more than 70% of rural branches, and approaching 90% of urban branches, are retained and a new sub-postmaster is appointed.

In June 2000, the Government's Performance and Innovation Unit published a report, Counter Revolution - Modernising the Post Office Network, which considered the future of the UK postal service and, in particular, the role of sub-post offices.

The report outlined a number of areas where action was considered necessary in order to maintain a national network of post offices, including the subsidy of rural post offices, along with plans to stop the closure of rural post offices. It was recommended that urban post offices should be made bigger and brighter and designed in keeping with neighbouring retail outlets, and that post offices in deprived urban areas should be subsidised.

Acting on the report's recommendations, in December 2002 the Government announced a £450 million support package, spread over three years, for rural post offices. Each year the funding provides £66 million to maintain sub-postmasters' income levels, £15 million to develop new business initiatives and more than £69 million to improve current service delivery - a sizeable investment in rural businesses.

Within the same month, the Government announced the formation of a £15 million fund for urban post offices located in deprived areas. The focus of the scheme will be grants of up to £50,000 for sub-postmasters to maintain, modernise and expand their premises.

These initiatives are designed to ensure that the post office network is not only maintained, but also grows, offering services and facilities necessary in the 21st century.

The UK sub-post office network is the largest retail infrastructure in Europe, and a number of organisations appear to be interested in using the network to deliver some of their services, particularly in rural areas. To assist sub-postmasters in developing the retail side of their business, Post Office Ltd, which manages the network, is looking at amending the sub-postmaster contract, which contains some restrictions preventing the development of some types of business.

Future developments include the introduction of the Universal Banking system, which will provide a post office-based solution to the new electronic system of paying benefits directly into recipients' bank accounts. The only organisations able to make payments into the account will be Government departments and agencies. The card account will be accessed through Automat PIN Pads within all 17,000 post office branches in the UK. Standard bank accounts will also be accessible via local post offices.

Post offices are to expand their role in the provision of information to the general public on Government issues, and will help customers with routine transactions involving Government bodies.

Dealing with pensions and giro cheques currently accounts for approximately a third of most sub-post offices' income. New initiatives are being introduced as the role of the post office changes. For example, to counter the loss of income, new business has been developed, with products such as travel and insurance being heavily promoted.

Although the position of sub-postmaster cannot be purchased, with applications being handled by Post Office Ltd, the opportunity to run a self-employed business with an employed wage (from the Royal Mail Group) as well as a self-employed income (from the retail activity of the shop) can be an attractive proposition.

If you think running a sub-post office might be for you, further information can be obtained from Postmasternet (www.postmasternet.co.uk) an online community for sub-postmasters, providing information on the day-to-day running of post office branches and the retail opportunities for sub-postmasters. After all, this might be the business opportunity you are looking for.

Postmasternet is an online community for sub-postmasters and contains detailed information relating to the day-to-day running and retail opportunities for sub-postmasters to maximise their retail business, www.postmasternet.co.uk

Cobweb Information Ltd is an independent researcher and publisher of the UK's widest range of factsheets, guides and reports for entrepreneurs and their advisers. Well known to business intermediaries, such as the high street banks and business advice agencies, Cobweb also offers information sources direct to end users. Cobweb is working with Postmasternet to deliver information that is relevant, up to date and targeted at anyone running a sub-post office, www.cobwebinfo.com