By Matt Potter, Business Sense
Duncan Bannatyne OBE is one of the UK’s most successful entrepreneurs, with a multi-million pound business empire built on the principle of well-timed launches. Business Sense caught up with him.
We’re in Duncan Bannatyne’s London home, high above the cobbled streets of Covent Garden, with the notoriously prickly entrepreneur. We’ve just asked him about his weaknesses, and he’s deep in thought. It’s one of those uncomfortable moments that either breaks the ice, heralding the best part of an interview, or ends it prematurely.
“It’s, erm, gotta be dealing with staff, let’s face it,” he says finally, his face cracking a huge grin. It’s going to be a good one.
Even stripped of the lighting, theatrical editing and tense music that accompanies him on screen, Duncan Bannatyne is, as politicians say, a big beast. In person, the TV image (part grizzly bear, part Bond villain) is replaced by someone more approachable, if no less formidable. Affable and disarmingly direct, Duncan Bannatyne is in day-job mode – the company owner, not the Dragon.
We’ve been invited to his home to talk because the serial entrepreneur has a new business – “premium mass market” watch brand Kurt Zeiss – and a new business partner, the veteran marketeer and Kurt Zeiss founder Grant Morgan. And he’s agreed to lift the lid, not just on how this deal was put together, but on the methods that have seen him become successful as an investor over the past two decades.
“It’s never an exact science when you’re launching something new,” he says. “There’s no matrix, and there are no golden rules – although,” he laughs, “I did write one of those books. But I get annoyed seeing entrepreneurs laying down the law about the one and only way to make it work.”
Having made his first investment in an ice-cream van, expanding to become a region-wide network before moving into care homes and latterly health clubs, Bannatyne still retains the kitchen-table economic sense of the sole trader, and brings this fundamental approach to every business he touches.
“A lot of the difference between a successful launch or expansion and one that falters is down to you and your priorities,” he says. “I believe you should just be determined that, in the field you’ve chosen, you’re going to make an investment, and you’re going to get a return on it. And, then, that you’re going to enjoy that business, and you’re going to be proud of it. Because these are the most important things, and people just don’t focus on them enough. At the end of every day, ask yourself: ‘Have I made a profit or a loss today? And what can I do to be 100 per cent certain I make more of a profit tomorrow?’”
It’s a focus that makes Bannatyne’s operations highly flexible – as viewers of the BBC’s Dragons’ Den series will know, his sense for the fundamental of good (and bad) business cut through talk of new inventions, breakthrough products and paradigm shifts. “It doesn’t matter what the business is, the logic has to be the same,” he nods.
The power of networking
This makes the birth of his new venture, and his business partnership with Morgan, an interesting case study for his methods. It also shows us Morgan’s approach in winning Bannatyne over.
It came about when Morgan, whose day job saw him putting charity propositions together, and Bannatyne met at a Marie Curie function. Morgan himself takes up the story. “We met at this quiz thing, got on, began socialising. I’d formed this watch business about three years ago. I started selling pieces online, it grew, and last year, I sent Duncan a watch. He sent me a text back saying: ‘This is lovely – why have you sent me this?’ To which I responded, ‘Because you’re a mate, and I own the brand.’ Six weeks later, we met again and I said, maybe we could do something together. I felt that if Duncan was involved, and became the face of the brand, it could really increase its profile. I gave him a shareholding in the business in return for image rights, quotes and so on.”
As Morgan speaks, Bannatyne is listening attentively. He’s clearly fascinated to hear what was going through Morgan’s mind during the initial business courtship. So what are the questions in Bannatyne’s own mind when he gets approached? “One big question, always: what are the company’s own liabilities? That’s always first. Then, I had to see the watches. Once I was satisfied on those counts, it was time to look at the upside: in this case, it gave me a chance to get into a new market.”
Bannatyne’s quick, incisive answer is clearly informed by years of experience. He has a reputation for being instinctive in business – he’s said “a board will only slow you down”, and claimed the more red tape around a deal the better, on the grounds that if it put more potential competitors off, he could cut a better deal. While he admits that this experience plays a part in his surefootedness, he’s also anxious to demystify the decision-making process for other entrepreneurs.
“The key to any business decision is to break it down into easy small decisions,” he says. “So, let’s say that instinctively, you see that a deal is good. So you like it. But it’s not done yet. After that, it really is up to due diligence, to make sure the deal not only looks good for you, but that it’s right. Use that due diligence as part of your decision-making process – don’t just treat it like small print – and it helps you no end.
“I’m going through due diligence at the moment with two investments I’ve just made in Dragons’ Den. With these, I’m 100 per cent confident they’ll both go ahead. But there have been plenty of other times when someone maybe hasn’t told you the whole truth, or there are downsides waiting to be revealed, and you find that out during due diligence. Instinct is where, even in a situation like Dragons’ Den, you can just say: ‘Yes this business decision or deal looks interesting’. What you don’t see on Dragons’ Den, and maybe you should, is the fact that a ‘Yes, I’m going to go with this’, is actually only the decision to move to due diligence.”
This removal of the pressure on decision-making is a key factor in Bannatyne’s knack for good business propositions. Rather than leaping into something, he’s always split major business decisions into those two stages: what does this feel like, and does a full investigation back up that positive feeling?
Building the business
Deal made, it’s interesting to see how both Morgan and Bannatyne view their growing business. And here too, there are surprises. When asked how far ahead they’ve been thinking, Morgan fires straight back with “Exit,” while Bannatyne, the famed venture capitalist, says his goal is, “I suppose, to build the business and have a brand.”
So is there a master plan? “I think you always need a strategy,” says Morgan. “Our association is new, although the business is in its third year; Duncan and I haven’t actually sat down and put a finite plan together, but I think we both know where we want to be within three years.”
Bannatyne agrees. “It’s much more important to have a really detailed plan when you’re borrowing lots of money. We’re not borrowing any money (because it’s grown within its means from a small operation), so the important thing now is to find a manufacturer and get the new watch ready for sale.
The bigger picture
The next priority, both agree, is to make sure the machinery behind the brand – everything from customer service policy to corporate social responsibility – is put in place. “This is the time to make sure all the details are perfect,” says Bannatyne, “especially as we’re internet retailing, so you have to get it absolutely right.”
Can they tell us the thinking that’s gone into the detail polishing at this stage? “For example,” says Morgan, “the facility that manufactures for us is an A1, ethically compliant one. That’s an important message when you’re selling any product: it’s got to have a robust supply chain behind it.
“Then, as Duncan said, e-retailing can be a barrier to entry for customers, so it’s vital to have a 14-day, no-quibble money back guarantee. For a retail business model you need to offer USPs, and you need to demonstrate to the client that they can buy this with absolute confidence. Then there’s social responsibility. If as a consumer you’re looking at Brand X and you’re looking at Brand Y, that has a strong social compliance ethos, you’ll go for Y, won’t you?”
Bannatyne picks up on this. “I disagree. Corporate social responsibility won’t help build your business,” he says. “It’s the right thing to do and you should do it... but not because it will help grow business.”
And, for a brief moment, it’s easy to see the entrepreneurs without all the trappings; without the TV fame, without the tailored suits and Covent Garden apartments. For that moment, this really could be a meeting at almost any kitchen table in Britain.
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