Business Leader recently sat down with entrepreneur and Dragons’ Den star Duncan Bannatyne to talk about the success of his leisure brand, his eclectic five-decade-long career, and why Britain is in a political mess.
You recently announced record turnover of £127.5m for The Bannatyne Group – what do you put the success down to?
Hard work and dedication from great staff – you cannot achieve success without this. I also have a great board of directors, that have all worked well together to get the business where it is today.
The business is in great shape and turnover is at a record high and profits are strong and sustainable. We expect this to continue into the future.
Can you tell me about the start of the company?
It was about 21 years ago that I broke my leg skiing, and I was looking for a machine to work out the muscles in my leg. I joined a gym that was 25 minutes from my house and I thought to myself, “I can build ones of these; I can build it cheaper and also make a profit,” so I started looking into it as a business opportunity. I then built my first one in 1997.
22 years later and we have achieved record profits and created a business empire of health clubs, hotels, and spas.
In total, we have 72 health clubs and four hotels, and within those, we operate 46 spas, which we run independently from the clubs and hotels, but within the same group of 3500 staff.
Before the Bannatyne Group – what was your history in business?
For the ten years before I started the Bannatyne Group, I founded a company called Quality Care homes, where we built accommodation for the elderly. Five years after we started the business I decided to float the business on the London Stock Exchange. Then a further five years down the line, I was unhappy within the business, and so I sold it.
It was a public company and I owned 50% of it. I took £26m and I used £16m of that to start and grow The Bannatyne Group. At the time, the care homes were a great business, and had a great need, however, for me, over the years it became very depressing working within that environment. So, when I sold it I wanted to move into something more exciting, more joyous, so I started the health club business.
What are the biggest differences between the sectors?
I love working in the leisure sector – it is amazing! When you are looking after the elderly, the reality of the situation is that your customer is going to die. With the Bannatyne Group, the customer is going to get fitter, healthier and happier, so it is completely different. It is depressing looking after the elderly in their later years.
The leisure industry is exciting and diverse – our youngest customer is 16, and our eldest is 94 – still working out, and still coming to the gym. That is amazing. I’m in my 70s and I am still going to the gym, and so this model works for a lot of different people. There are a lot of operators in this marketplace at the moment, and we are more than holding our own.
How is your life structured now? do you still invest in businesses?
I am not really looking at investing in any new businesses at the moment. I love this business, and it takes up a lot of my time and I enjoy the work/life balance that it provides me. I have a very busy life!
I have got a beautiful house in Portugal and another one in Monaco. My daughter has also gone to school in Miami, so I am flying back and forth over there at the moment. There is a lot of living to do at the moment, as well as running the business.
There is no point at looking at investing in smaller businesses as a long term project as I do not know how much longer I am going to be on this earth. And I have got enough money – I don’t need any more money. I am very happy with the life and money that I have got – I just want to work hard on improving this business.
Was it always the plan to be an entrepreneur? Or did you take advantage of the opportunities as they arose?
I always wanted to be an entrepreneur and involved in business. I wasn’t very good at school – and I didn’t realise at the time that I have dyslexia. It was only a year after I had finished school that I was diagnosed with it. However, I always knew I was better than what other people thought, and I knew I could achieve success.
Following this, I joined the Royal Navy, and after a few years there I left. At the age of 30, I started selling ice cream out of my own ice cream van. I was penniless at 29, and a ‘beach bum’ who was hiring out deck chairs. I didn’t even open my first bank account until I was 30 years old.
What lessons did you learn in the Navy, and how did they help you later on in your career?
What I did learn was the discipline of a day-to-day role and living. To be a successful entrepreneur, you need to be very disciplined. You keep notes of what your priorities are, and then you complete everything you need to.
Taking charge of your own role and achieving what you set out to do. Discipline and focus were the main lessons I learnt in the Navy that I carried into my business career.
Can you elaborate more on your time in the ice cream business?
At the age of 30, I moved to the north of England and got a job working in a bakery, where I was working 12-hour night shifts. I worked extra hours whenever I could to make extra money to get a bigger pay packet, so I could then afford a mortgage.
I then bought my first property – a £12,000 house with a £10,000 mortgage. To subsidise this, in my spare time, I bought and sold cars by doing them up and selling them for a profit.
Just after I bought my first house, I was at a car auction and saw an ice cream van – so I bought it and started selling ice cream! Over the next five years, I built up a fleet of ice cream vans, which made a decent profit.
I then realised that I wanted to build homes for the elderly. I bought some terraced houses and applied for planning permission and it was approved. During the process of building that, I sold the ice cream business, borrowed money on credit cards to get it completed and re-mortgaged. From then I went on to borrow and build more.
Are taking risks key to the success of an entrepreneur?
Taking calculated risks was definitely key to my success. I cannot see any other way of being successful. The way to not be successful is to be negative about what you are doing – if you are, you will not succeed. If you tell your friends and family that it isn’t possible to do it, then you will never be able to achieve anything. Believe in what you are doing and go out and achieve it. I did it – and I believe that anyone with the right mindset can achieve it.
What would you say has been your biggest challenges in business and how did you overcome them?
There have been too many challenges to mention. Having two wives and seven kids, and running a business is challenging enough. There are times in business that constantly throw up challenges, which you need to tackle.
In 2006, we bought 25 health clubs from Hilton Hotels for £92m, and it was incredibly challenging going through that process. A few years later, the bank that we were working with went bust, and we had no way of paying the money back.
The way we achieved this was selling the land from underneath the health clubs, and then having them rented back to us. That was one of my most challenging times in business.
What are your views on the UK at the moment and the political situation?
As I think we all know, the UK is in a complete mess. We can look to blame Theresa May or David Cameron, the MPs over the last few years – but we are in a complete mess. And how we get out of it is not easy.
Boris Johnson will not be able to deliver a ‘no deal’ Brexit by 31st October – I don’t believe any of them can. I do not believe a ‘no deal’ Brexit is possible. His premiership is a poisoned chalice. Boris has a terribly difficult task ahead of him to solve this issue and unite the people. I do not see a potential way out of this mess. I am so glad I am an entrepreneur and not a politician!
What would be your advice to Boris to move Brexit along?
The MPs need to decide what they need to do first! They are the ones that vote on the deal that is put to them, and they are continually divided. Whether it is no deal, the deal Theresa May proposed, or something different – they need to unite to get this sorted. Whether we go for another referendum or pass through Brexit, there needs to be a majority vote and then proceed with the plan.
So, do you believe we will be in this perpetual state of not knowing for a while to come?
Yes – definitely into 2020 or even 2021. There is no one that can stand up and unite the country. The country is so divided. David Cameron blew it all when they decided to have this referendum. Brexit should have been decided if there was a larger majority of 60% or more.
You were previously a supporter of Thatcher and then Blair – do you still have time for politics?
I am disengaged with supporting any political party because I like to tell each of them what they are doing wrong. I criticise and compliment them when I can. I don’t support a party, I just support this country, and hope that the leaders in place will solve the issues facing us.
We all laughed at America when they voted in Donald Trump, but we have now got our own Donald Trump now. Boris is a laughing stock, the country is already a laughing stock – so we might as well have a clown in charge.