j Case with questions Duncan Bannatyne, Dragon Duncan Bannatyne is probably the best known entrepreneur in the UK because of his appearances on the BBC TV series Dragons’ Den rather than his achievements as a se- rial entrepreneur. His life has, however, been a colourful one. He was born in 1949 into a relatively poor family in the town of , . The second of seven children, his father was a foundry-man at the local ship yard. When told that the family could not afford to buy him a bicycle Duncan tried to get a job delivering newspapers for the local newsagents, only to be set the challenge of fi nding 100 people who wanted a newspaper to be delivered. By knocking on doors he collected the names, got his newspaper round and eventually was able to buy his bicycle. Duncan left school at 15 to serve in the . He served for fi ve years before receiv- ing a dishonourable discharge – after 9 months detention – for threatening to throw an offi cer off a jetty. He spent his twenties moving from job to job around the UK, including taxi driving and selling ice creams, ending up in Stockton-on-Tees. It was here, in his early 30s, that Duncan’s entrepreneurial career started when, using his personal savings, he bought an ice cream van for £450. He built this business into a fl eet of vans selling ‘Duncan’s Super Ices’. Even here he showed entrepreneurial fl air. He was innovative – he started using a scoop that speeded up serving and made a shape like a smile in the ice cream, which the children loved. He was good at spotting opportunities – he bought one pitch in a local park for £2000 which gave him profi ts of £18 000 in one summer. He eventually sold the business for £28 000, but not before he had spotted another opportunity. In the 1980s the govern- ment started helping unemployed people by paying their rent. Duncan used his profi ts from the ice cream business to buy and convert houses into bedsits for rent. He rented to the unemployed, so the rents were guaranteed by the government. Duncan used the proceeds from the sale of the ice cream business – and almost every- thing else he owned – to move into residential care homes with a business partner. He

P. Burns, and Small Business, 3rd edn © Palgrave Macmillan, 2011 took out a bank loan, re-mortgaged his own home and started building up credit card debt. The building costs of the care home were to be fi nanced by a 70 per cent mortgage, but this would only be released when building work was complete and the home was available for occu- pation. When building costs for the fi rst home spiralled out of control and no more funds were available, he, his partner, friends and family decided to fi nish the work themselves. The total costs for the care home came to £360 000, and nearly bankrupted Duncan. But the bank then valued the fi nished home at £600 000, giving a mort- gage of £420 000. This meant that Duncan could recover his costs, pay off his debts and still have equity to put into the next care home. Using a mix of retained profi ts and borrowings, and by offering shares in the company, he expanded the number of homes.

‘When I opened my fi rst nursing home, I had considered newsagents and bed and breakfast es- tablishments but then started to revolutionise care for the elderly … I spotted an opportunity. I came to the conclusion that land- lords who owned nursing homes could make a lot of money from the scheme. I took advantage and bought a plot of land with a bank loan and set up my fi rst nursing home in as soon as I could. When that was full, I paid off all my debts, bought another plot and repeated the process until the portfolio included 45 homes.’

The company was called Quality Care Homes and it was eventually fl oated on the Stock Exchange. Duncan also went into children’s nurseries with the Just Learning chain. In 1996 he sold Quality Care Homes for £26 million and Just Learning for £22 million. By now, however he had expanded into health clubs with the popular Bannatyne’s chain.

‘I remember while I was working in the nursing home industry, I injured my knee and used to travel 30 minutes to a local gym in the North East for exercise and physio- therapy. While working out my knee, I also tried to work out the gym’s business plan. I knew the membership fees and the number of members and I calculated approxi- mately how much the building cost because I sat and counted the number of tiles on the ceiling and equated them to square footage in my nursing homes. I did the necessary sums and worked out that, if I opened my own health club, I would make a 35%-40% return on capital. It was a no-brainer.’ Daily Telegraph 30 July 2009

By buying plots of land next to the health club sites Duncan expanded into the hotel business. He worked out that by sharing staffi ng, reception and other facilities he could save costs and offer hotel residents use of the health club facilities during their stay. So Bannatyne Hotels was born. Duncan has since acquired 26 health clubs from Hilton Hotels making it the largest independent chain of health clubs in the UK. He has also launched ON Bar Bannatyne and, in October 2008, opened Bannatyne Spa Hotel in Hastings. ntrepreneurial Duncan’s wealth is estimated by the Sunday Times 2009 Rich List at £320 million, which er traits can places him as the 167th richest person in the UK. He is also by far the wealthiest of the t in Duncan? Dragons in the Den.

QUESTIONS What entrepreneurial character traits can you spot in Duncan?

P. Burns, Entrepreneurship and Small Business, 3rd edn © Palgrave Macmillan, 2011