In 1965, 16-year-old musician Mike Smith's day job as a travelling salesman for a drapers came to an abrupt end. His bosses found out he had been using the company van to get him and his band mates to gigs, and fired him. But that would turn out to be a lucky break as the Yorkshireman soon found a much better way to make money.
"I had a mate who worked at a nearby rug mill. He gave me stuff on a sale and return basis." Smith began selling rugs at Leeds market and soon found he had a flair for market life. As sales increased he moved from rugs to carpets. His quick success saw him move from an outside stall to a slot in the Leeds indoor market. "Business was great in those days. There were no retail parks and the market was really busy." By 1975 he was selling about £150,000 worth of carpets a year "not bad when you remember that the weekly wage in those days was £25". Disaster struck when a fire destroyed Leeds market and Smith was forced to move back outside. But he soon realised his business had grown too large for an outside market stall so he bought his first shop.
Inundated with customers from the off, Smith was forced to turn to new carpet suppliers in Belgium. "By the late 1970s we were importing carpets by the shipping container load." With more money coming in, Smith set up more shops. By the early 1980s he had 13 shops dotted around Yorkshire and was selling around £2m of carpet a year. "They were great times to be in the business I only had about five other major competitors." Smith reinvested some of the sales proceeds in a string of local radio and TV ads, that have since become cult hits on YouTube. His performances on TV were so good that he was even approached to make adverts for a rival carpet seller based in Newcastle. "I agreed to do it on the condition that they didn't start selling in Yorkshire."
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Smith then decided to branch out. Since the late 1970s he had been using spare cash to buy cheap terraced houses. "Back then they were going for £1,000. Over the years they've returned much more in rent. They're worth a lot more now as well." By the 1980s he was snapping up flats, shops, pubs and industrial parks. "I didn't want to have all my eggs in one basket."
Latest Videos FromMoneyWeek
It proved a shrewd move. In the late 1980s the carpet business began to dwindle. The increased popularity of laminate flooring and tiles was mainly to blame. "It used to be that you'd carpet 90% of the house. Nowadays it's more like 40%." Mike also thinks "people nowadays aren't as house proud as they used to be. They'd rather buy the latest phone, go on holiday or go down the pub than spend money on making their house look nice." Smith now has a new strategy of selling through three large outlets. "We sell more carpet with the three stores as we did when we had a dozen."
But while the carpet industry may have declined, property has boomed. "Property hasn't done well in the last four years, but since the 1950s it's always gone up in the long run." His property portfolio, which includes 36 pubs, and his carpet business, is worth an estimated £50m. Smith, 66 this year, is still a keen musician. "I've been in a band all my life." The difference is that now he doesn't need to borrow someone else's van to get to gigs. by James McKeigue
