Interview with Duncan Bannatyne OBE
Duncan Bannatyne OBE (born 2 February 1949) is a Scottish entrepreneur, philanthropist and author. His business interests include hotels, health clubs, spas, media, TV, and property. He is most famous for his appearance as a business angel on the BBC programme Dragons’ Den. He was appointed an OBE for his contribution to charity. He has written seven books.
Failure is just something that happens. You just stand up, dust yourself down and start again. Simple as that.
Can you tell me about your background?
I was brought up in a highly-populated council housing estate and we were pretty poor; my father worked as a labourer and my mother brought us up. My parents didn’t have cars. I was sent to a local council school.
What were you like growing up?
I don’t remember much actually. I think if it was a great childhood I would remember it. I remember the poverty that’s all.
Were you a good student at school?
I was a good student until eleven years old, then we had the eleven-plus and I passed and went to a different school, which was known as a posh school. I went there and my schooling went downhill. So, from being in the top quarter of the class I was the bottom quarter, so I sort of gave up.
Did that damage your confidence?
Yes I suppose it did. I was a good student up until that point.
When did you go into the navy?
I was nineteen years old and was sent for nine months to detention barracks; I actually spent seven months there and arrived back home twenty years old, penniless, unemployed and unemployable.
How did your time in prison change you?
It gave me a wake-up call and I was determined I was going to do something with my life when I came out.
Did you think there was a chance that you could have turned to a life of crime?
Absolutely. I think life is sometimes like a game of cards – if the wrong card is turned over there is a different direction. I think everybody should know that they could determine how the cards are going to turn. Life can be different.
What would you say to young people who have done short spells in detention centres?
I’d say put it behind you and work hard – you can still make a life. That shouldn’t affect how they run their life.
Was there anything in particular that pushed you at that time?
One of the things was seeing Alan Sugar on television. And I thought ‘If he can do it, anyone can do it’.
Was he like a mentor to you?
Yes, it was something I aspired to, to achieve the same as him.
When you were doing odd jobs in the Channel Islands did you feel that you wanted more out of life?
The five years I had were very happy years because I was single, I spent a lot of time drinking and dancing in bars and I had a lot of friends – so life was great.
Did you think you were better than being an odd-job man?
Not during those five years. When I became thirty years old I was sitting on the beach and I just knew I had to start a new life; it was then I wanted to move on. I was thirty and I knew the fun was over.
What was your aim when you bought your first ice-cream van?
To make a good living and start up my own business. I started with one and within a year I bought the second one. The second one was actually the opposition.
Do you think business sense comes naturally to you?
Is it something that can be learned or do you think people either have it or they don’t?
I think everybody has got it, they just have to bring it out. It’s inherent with everybody but they just don’t know it. Some people have it a bit too easy, they have a good life and education, yet you get somebody who comes to this country from Asia with English as a second language and they work hard to set up a business and make millions. They are showing us how easy it is – they’ve got the drive. It’s not difficult and it’s not impossible.
Do you believe in starting small and growing bigger as a business, or should someone think big to start with?
I think you should start smaller, doing one at a time. I had one ice-cream van and grew to six. I’ve never been out and bought a whole load of anything – it took a year from the first one.
Is that sort of a benchmark you set yourself, a year before you ever expand?
No, it worked that way because it takes a year to assess it really. There were terrible problems, but I sorted them out and within a year I expected to get the second one. Problems in the first year are nothing to be fazed by.
Did you always have an entrepreneurial streak in you?
I did, yes. When I went to my new school all the kids had bikes and I didn’t. My parents couldn’t afford a bike. So I went to the paper shop and asked for a paper round. The man said no because there was no demand for it, so I told him ‘My mother wants her paper delivered’. He told me to come back with a hundred names of people who want papers and so I did. I got the job and bought a bike.
How much do you think a person’s background should influence what they achieve in life?
It shouldn’t influence what you achieve in life at all, though unfortunately sometimes it does. Although in the last twenty years there are more businessmen wearing casual clothes.
Some young people feel that this is always something that happens to everyone else and it could never happen to them – did you grow up with the same kind of mentality, that it was just something that wouldn’t happen to you?
No, not at all. Each and every person can do it. Anyone can start their own business. People put obstacles in their own way. They just need self-belief and to move those obstacles.
What do you attribute your fast success to?
Just ambition and a bit of an eye for detail with everything when I started. That really helped.
How sure were you of your success in the nursing home before you started?
It was so obvious that it was going to be successful – it was going to cost me £200,000 to build it and the property was £100,000. I saw a gap in the market. The gap was there for everyone to see; Maggie Thatcher had changed the rules. It was easy.
How old were you when you started this?
How did you market the nursing home when you started?
I didn’t need to – people just came to me like the social services. It was amazing.
So you had to contact the relevant services?
Well I had to contact them for the building anyway, so even as I was building they knew what was happening. They had to register me and as soon as I was registered they sent people down.
Do you think that the market is saturated now?
It became saturated, whether it has become unsaturated now I don’t know. About the mid-90s it became saturated – a few have closed down.
Venture capitalists obviously want to maximise the share that they take from the company that they invest in. What do you consider a fair share of the company to part with?
It depends on how much money a venture capitalist is putting in, but I think venture capitalists expect between 20-30% of the equity of the company, which is considered fair.
Would you advise those who can’t get loans from banks to raise funds through credit cards or go to venture capitalists?
I think use credit cards and borrow as much as you can from parents and anyone you can. If I really believed in the business I would want to keep 100%. I’ve never approached venture capitalists; I invest money as a venture capitalist but I’ve never taken money from a venture capitalist. I went to somebody but they wanted too much. Only go to one if you are really desperate.
As a venture capitalist what are the most important things you look for in a presentation pitch?
A brief pitch – I look for a product I can believe in and somebody who is aware of the numbers. There isn’t much else. The numbers are crucial.
You get creative people with a great product – if they are not so sure on the business side do you think they should take a business partner or sharpen their own skills?
They could bring in an accountant or somebody who knows numbers like a finance controller or a bookkeeper and they can have that person with them. They need to convince me of their ability to understand the financial aspect.
Is there anything you would have done differently if you were starting again?
Many things but I have no regrets. I remember only being insured third party with the ice-cream van and of course in hindsight I should have had comprehensive insurance but everything became a learning curve.
Do you purposefully choose areas that aren’t saturated already with big businesses?
Yes, I do. A lot are in places where there is not a lot of competition, for example places where nobody else would develop. I also opened a club half a mile down the road from a David Lloyd club because I knew he was charging too much.
So people shouldn’t necessarily look for big cities to start a business?
Absolutely. I never really developed any of my businesses in London. In London most businesses are run by people who own the lease not the freehold. It’s more difficult to make money in London. I own the freehold of my businesses.
When you are opening in an area what do you assess before you open there?
You can get demographics easily from the Internet. Also I keep the demographics of my own places so I can make comparisons.
Did you ever stop opening in an area because there was a competitor in a similar price bracket to you?
I wouldn’t open in one or two places that are saturated because they are saturated, and I actually closed Newcastle because there were just too many operators there.
How long would you give a business before you closed it?
The business would have continued but I was only given a very small profit – there was nothing else I could do. It was obvious to me that it wasn’t going to improve with the profits. I looked for other things to do with the building and the choices were residential. I leased that one and I can’t get out of it for the next 25 years.
Were you concerned that these areas were not populated with enough people to sustain the business?
No, because I did my research. Research is paramount.
What would you say to young people who come from similar backgrounds to you who are not interested in school or college?
I would say ‘Why not?’, because you should be interested. I did my best at school and college. The reason I failed at college was because of circumstances so I think they should get stuck in. After they’ve left school and college if they want to start in business there is nothing stopping them. If they say, ‘I can’t make money and I can’t get a job’, then they’re cry babies and it’s their own fault. Life is there for everybody.
I could take them to Romania to meet people who have lived in the sewers with no parents – these people have started their own businesses and are working in hotels as chefs and things like that. They’ve made a life for themselves. I have no sympathy for anybody in this country who says they can’t do it. Anyone can succeed in business as long as they want it and as long as they are determined and believe in it.
Are all personality types suited?
What are the most common mistakes you see people making in business when they start?
Since I’ve been on Dragons’ Den I have seen people who think you need to invent something – you don’t. I’ve never invented anything and I’ve never done anything unique. All my businesses are service businesses; a lot of people have done the same thing. So many people spend so much money – I met someone two weeks ago who thinks he has patented something and it’s useless. He spent thousands of pounds and re-mortgaged his house to patent it, and it’s crazy.
Unless you have an absolutely fantastic unique invention and you know how you are going to sell it and where your market is, there is no point. You don’t need it to start a business. I don’t think Richard Branson has invented or patented anything, but he copyrighted his brand name. Don’t spend on patenting unless you’re absolutely sure you’re going to sell the product. Another program I was on was called ‘Mind Your Own Business’ which was about me helping small businesses. The other problem on that show was having the wrong location. There was nothing I could do to help that.
A Beauty therapist situated at a crossroads without car parking – cars are coming by too fast so they don’t see it. She should be in a town, in a street, and a place where people walk past the window. Location is the first step.
How much should competition threaten you? If you don’t need to invent something then how much would you be interested in an idea that is not totally unique?
I would be interested – there is no unique service industry but there are always growing service industries and at the moment beauty and men’s beauty are growing. There are things like that, plus botox, plastic surgery and all those sorts of things are growing. If you can do it and do it in competition with someone else, you just have to be a bit unique and ensure that there are enough customers for both. If there aren’t then you will both be struggling. You can create more customers out there. In Newcastle, I’ve proved that there is enough room for three casinos. What I don’t do in business is try to get the competition’s customers; I try to create new customers.
By adding something to the service?
Yes, and then the location. Some people do open sometimes and tout the opposition to bring in membership cards. I would never do that and I always hold their value.
What kind of attitudes have you maintained since you started?
When I first looked at the nursing home industry I found the existing nursing homes – you always look at what’s available first before you start. The existing nursing homes had six to twelve ladies in a room and a terrible smell, so I decided that we wouldn’t start in the industry unless we could provide single rooms. I think we were the first to have single bedrooms, en suite toilet facilities and to improve the service. Otherwise I couldn’t live with myself. I believe everything we have done has improved the lives of people in nursing homes.
What motivates you?
Just enjoyment. I enjoy business and I am going to be in business until the day I die. I know of a seventy-eight year old who was on his yacht faxing a business proposal to someone when he died.
What is your attitude to what some people refer to as failure?
Failure is just something that happens. You just stand up, dust yourself down and start again. Simple as that.
Have you ever had a mentor, and if so who?
I would say it was Alan Sugar if it was anyone; he inspired me to do better. Donald Trump in one way only, in that he leaves his name on everything and so do I.
What is your one life principle that you live by?
To do what you believe in and enjoy yourself. To have principles and stand by them.
And you can do that in business?
Yes. People say you must be ruthless and I say you don’t have to be. I buy a plot of land, get planning permission, I pay a builder to build it, then employ staff who want to work. People then come that want to use my facility; it’s a business, what’s ruthless about it? You don’t have to be ruthless.
Can you be too nice though?
In a business programme we covered a hairdressing shop and the lady was too friendly with all her customers. She didn’t want to put the price up, her staff were coming in when they felt like it and would sit there doing their nails instead of working. She was too nice to her staff and customers. You’ve got to have strict lines that you don’t cross over.
Is there anything I haven’t asked you that you feel young people should know before they start a business?
No. Just know that they can all do it. One question I get asked is ‘Does money make you happy?’ Everybody I know is what I call a SMEM (self made entrepreneur millionaire). They have successful businesses and are millionaires. I have a lot of friends that are SMEMs and they all enjoy their lives and they are not focused on money. There are people in my company who have cancer or someone in their family is ill and we get to help them. We are like a big family. Life makes us happy and the fact that we own a business makes us happy. Enjoy it. I don’t know anybody that doesn’t enjoy it.