In 2008 Mike Clare sold Dreams Beds for £222m. For Business Leader’s latest cover story, we met the entrepreneur to learn more about his background, how he achieved business success and his plans for the future.
What inspired you to go into business in the first place?
My mother and father both had their own businesses and when I was at school I used to buy and sell bikes and albums, among other things. I was always that way. I was a bit of a ‘wheeler dealer’ and it was these formative years that inspired me to venture into the world of business.
I also wanted to prove to myself that I could be a success in business. My brother was very academic and studied at Cambridge University. I knew I wouldn’t be cleverer than he was, but I tried to prove myself in a different way.
YOU WERE 30-YEARS-OLD WHEN YOU FOUNDED DREAMS BEDS. WAS this a MASSIVE GAMBLE AT THE TIME?
It was the biggest gamble of my life. My wife was pregnant with our first child and we had a mortgage. If it hadn’t worked – we would have lost the house and pretty much everything else.
But I see that as a good thing because unless you’ve got your balls on the line, you can sometimes baulk under the pressure of the first hurdle. However, if you know you’ll lose everything if it fails, you do everything to make it work.
DREAMS THEN BECAME A RETAIL GIANT – WHAT WAS THE KEY INGREDIENT THAT GOT THE BUSINESS UP AND RUNNING?
When people start businesses, they don’t quite know where it’s going to lead, it’s just about getting started. Some people write business plans and analyse everything to the nth degree, but I believe in getting on with it and just doing it and seeing where it develops. It was this approach that helped to fuel success.
IS THIS A MESSAGE TO FUTURE ENTREPRENEURS THAT A BUSINESS PLAN ISN’T FOOL PROOF?
That’s right, you just never know. There could be a competitor or a new market that’s opened up or something happens in life, business or the economy, which changes everything. You can’t predict everything. I originally thought we were going to open a load of sofa bed shops, but we actually went in the directions of beds.
IN OVER 20 YEARS DREAMS EXPANDED MASSIVELY AND ACCUMULATED 200 STORES. WHAT was the key to this growth?
Pleasing the customer was key and making sure you have loyal customers by offering good service with good value, but also making sure you offer a decent selection in stores. There wasn’t a presence online at the beginning, so what you offered in stores needed to be good.
Training staff, getting a good team, having a system which works, was all part of our success too. You need to get all the plates spinning at the same time to be successful.
ONE OF THE WAYS YOU MADE DREAMS SUCCESSFUL WAS THE LOCATION OF THE OUTLETS?
Prominence is important and car parking space is important too. Stores like ours are now mostly found In retail parks, but at the time we used a lot of ex-car showrooms. We’d go to a town that we wanted to open in and we’d negotiate a lease with the landlord and as we got bigger it became easier because landlords would approach us, and we’d have bigger rent-free periods.
To start with I’d have to give personal guarantees, but it got easier and easier, once we got bigger and the model was right – it was a case of just replicating what you had done before.
HOW KEY WAS MARKETING AND PR TO THE SUCCESS OF DREAMS BEDS?
It was crucial. We used to do a lot of PR and TV advertising, which was the bulk of our marketing. But we would do PR stunts where we would do wacky things to get publicity.
For example, we’d have a grand opening for a store in a new town we were launching in and would raise money for the Mayor’s charity, which usually consisted of a manager doing a sleep-in in the store window.
JUST BEFORE THE FINANCIAL MELTDOWN IN 2008, YOU SOLD THE BUSINESS IN MARCH OF THAT YEAR. DID YOU SEE THE CRASH COMING OR WAS IT JUST A CASE OF THE TIMING BEING RIGHT?
I should say I foresaw the crisis and my timing was impeccable. But, truth be told, we thought about selling for a few years. However, the business was doing well and in hindsight we could have continued on for a few years.
A number of factors came together to make it seem like the right time, and the timing was lucky. We got out on a good price.
WHAT WERE THE CONTRIBUTING FACTORS TO EVENTUALLY SELLING THE BUSINESS?
I wasn’t doing the stuff I originally enjoyed in the early days. I’d become the chairman, and it was a bit boring to be honest. The company was 21-years-old, and I just thought it was the right time.
YOU THEN SPENT NINE MONTHS “RETIRED”, HOW DID YOU DEAL WITH THE FREE TIME WHICH CAME WITH THE SALE?
I travelled a lot, moved to a new house and did a lot of the things that people do when they come into a bit of wealth, which was fun.
I wasn’t ready to sit on a beach for the rest of my life though. I wanted to do something else and I’ve always tried to make money in my life, so not doing that was difficult.
WITHIN A YEAR YOU SET UP CLARENCO AS A BUSINESS GROUP TO COMMERCIALISE A HOBBY OF YOURS. YOU ESTABLISHED FIVE PROPERTY DIVISIONS. CAN YOU TELL readers MORE ABOUT THE BUSINESS?
I’d always achieved success with my own personal houses, which I’d bought and sold a few of. At Dreams, when you had 200 stores, containing free holds and some lease holds – collectively it was a lot of property, which was where my understanding came from. We got into unusual properties, executive homes, country mansion estates and we wanted to work with something which was a bit more unusual than the run of the mill properties like buy to lets or student flats.
YOU’VE DEVELOPED A HABIT OF BUYING AND RESCUING WHAT ARE ‘UNIQUE AND UNUSUAL‘ PROPERTIES. WHAT IS IT ABOUT THE BUSINESS THAT YOU’RE SO PASSIONATE ABOUT?
Rather than buying investment businesses, like a hotel, which is a concrete block, which might have good return on investment, I was looking at unusual properties which we called ‘amazing venues’ whether it be castles in Scotland, a château in Wales or a monastery in Worcestershire. Each of them was unique in their own way. They weren’t hotels, so we turned them into one, which was fun.
IN 2013 YOU VERY NEARLY BOUGHT BACK DREAMS BEDS, WAS IT AN OPPORTUNITY MISSED FOR YOU, DO YOU BELIEVE?
I would have liked to have bought the business back, it was a big regret. I very nearly did but I think there were a lot of powers in the background that didn’t want me to buy it back again.
I’m very proud of Dreams, it’s always been my baby, but I’m not involved on a shareholding basis.
People always want me to start a new bed business and I have ideas, such as a new business called Buzz Beds, which a lot of people would get behind me to do, but at the moment with the hotels I don’t have the time, but we’ll see.
I wish I had bought Dreams back, it’s one of my biggest regrets, but I enjoy feeling proud about a company’s success.
AND FINALLY, WHAT’S YOUR ADVICE TO ANY FUTURE ENTREPRENEURS?
Persevere and don’t give up. A lot of people get daunted by some sort of problem they come across.
But there are always problems in business, if there weren’t then everyone would be doing it, but it separates the men from the boys. Face the challenges, become optimistic and move forward.
Come up with something different than anyone else has, if you do copy someone else, then why will you be better? You’ve got to offer some uniqueness about it, whether that’s a better price or better service, you have to find your USP.
You always need a bit of luck in business, work hard, be innovative, clever, fair and honest, but also a bit of luck never goes amiss.