Duncan Bannatyne: £300m TV dragon

Duncan Bannatyne is probably best known for his role as a celebrity venture capitalist on TV's Dragons' Den. But the serial entrepreneur, who is worth more than £300m, built his first fortune on ice cream.

Duncan Bannatyne, 61, is probably best known for his role as a celebrity venture capitalist on BBC TV show Dragons' Den. But the serial entrepreneur, who now owns a chain of leisure centres and is worth more than £300m, according to The Sunday Times rich list, built his first fortune on ice cream.

Born and raised in a working-class family in Clydebank, near Glasgow, Bannatyne left school aged 15 to join the Royal Navy. But he became disillusioned and was thrown out of the service at the age of 19 for threatening to throw a commanding officer off a jetty. That episode also earned him nine months in military prison. After being released, Bannatyne moved to Jersey. The various jobs he tried there included working as an ice-cream seller.

The owner "taught me business terms like 'franchise' and 'concessions'", says Bannatyne. And when he returned to England a few years later, to settle in Stockton-on-Tees, he bought an ice-cream van of his own for £450. "It was pretty tough work in the high season. But if you put the hours in and had a good pitch you could make a lot of money." Bannatyne used the proceeds to buy more vans, building a fleet of six. He largely managed to avoid the ice-cream turf wars that broke out around pitches in the 1980s, although "there were some fisticuffs".

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The business was a success. But it was Margaret Thatcher who set him on the route to his first million, when she liberalised the care sector. "The newspapers were full of stories of private-sector care operators who had turned a profit from running care homes. I didn't want to miss out." He also felt that he could improve standards. "I was amazed to learn that care homes made their residents share bedrooms. I didn't think that was a very dignified way for people to spend the final chapter of their life."

During the ice cream off-season, Bannatyne got a care-home licence, bought a plot of land in nearby Darlington and began building a 30-room residence. The project began to "eat up money", but Bannatyne could not get any support from the banks. "I knew that the idea had a lot of potential but I couldn't persuade them to give me any real support. One manager even asked: 'If it can really make so much money, why isn't everyone else doing it?'"

So Bannatyne cobbled together some personal loans and borrowed on credit cards. When that money and his profits from the ice-cream business ran out he was forced to "first sell my business for £30,000 and then my house". But it paid off. Despite having no track record in the industry, he filled the home within six weeks of opening. His rapid success made it easier to convince the banks to support him, and he secured a mortgage on the home. This allowed him to pay off his other loans, leaving enough to build a 28-bedroom extension. A pattern followed whereby he financed new homes with debt, then used them as collateral to raise yet more debt.

His Quality Care Homes (QCH) chain quickly spread across Britain. By 1992, the group had 14 homes and Bannatyne sold 48% of the firm publicly through an initial public offering. Yet five years later, he decided he had "had enough of the industry" and sold his stake for £26m. "I was tired of sitting in an office and I started to find working in an industry where all of your clients eventually die quite depressing." He used the money to launch Bannatyne Fitness, which now boasts more than 60 clubs across Britain.

But what made QCH a success? It was the fact that the firm didn't put making money ahead of residents' needs. "All of us [the private care-home operators] received the same amount per patient from the government, but not everyone spent the same amount on the patient. We insisted on putting residents in private rooms and spent a lot on getting good personnel."

He acknowledges this highly leveraged model might not work today, but denies he has had any special luck. "There's no businessman in the UK today who owes all of their success or failure entirely to luck." He notes his business had to cope with recessions in the late 1980s/early 1990s not always a bad thing. "Recessions throw up positives, such as cheaper land prices."

The wit and wisdom of a celebrity capitalist

On BP's Beyond Petroleum marketing campaign: "The BP crisis highlights how glossy and expensive campaigns can come back to haunt even the most established of businesses, and helps us understand that the most successful marketing is consistent, simple and reflects exactly what the company does well."

On his charity work: "I'd love to show Madonna what we have built in Romania because although I have no wish to knock her, cherry-picking the best kids from an orphanage to adopt and bring up in the West is utterly distasteful to me."

On entrepreneurship: "Everyone should pull their finger out and start a business and believe in themselves. There is nothing else to it. Anyone can make a £100m. But most people don't go out and try. They just stand in the pub and complain."

On tax: "Non-doms are too influential. Eventually, they'll run this country and the only people paying tax will be the workers."

On life: "You only live once. If you don't enjoy it, it's your fault, nobody else's."