Sibling rivalry may not seem like the most solid foundation for a business but it's proved to be a very useful motivating force for Mike Clare, the 52-year-old founder of bed retailer Dreams. "My brother was very academic and went to Cambridge. I didn't go to university. So I was always challenging myself to be better than he was," says Clare, who came upon the idea of selling sofa-beds in 1985 after working for about ten years as a furniture salesman. Trendy, yet not widely available at the time, it seemed the perfect market to exploit.
He reckoned he'd need about £20,000 to open a store and kit it out. But after re-mortgaging his house, selling the car and borrowing about £4,000 on his Barclaycard "for a kitchen extension", he had raised just £8,000. The bank matched it, but he was still short by £4,000. And, as he says, "there was a lot on the line. If I'd failed I'd have been homeless."
Luckily, Clare found the perfect property for his start-up. An old motor parts centre in Uxbridge, it was in a terrible state, so he got it cheap, redecorating it for its opening in the summer of 1985. Solid local press coverage helped him to bring in £30,000 in the first month. Not wanting "just one or two stores", he set about expanding by November. Clare's expansion formula remains more or less unchanged to this day. "I used to find a store I liked and negotiate a lease with the landlord. Then we'd put an advert in the paper for some staff, put in the beds, have a grand opening, invite the mayor, have a cake in the shape of a bed and then onto the next store."
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By 1987 the sofa-bed centre was up to four branches and was making decent business. But soon, Clare says, "we realised that it was just too much of a niche specialist product". So why not sell beds too, he thought? Everyone needs one and they were a lot easier to fit into his delivery vans than sofas. But no one would buy their bed from a company called The Sofa Bed Centre'. So in 1987 Clare changed the company's name to Dreams'.
"My accountant thought it was a stupid name at the time because it doesn't say what you do. But I thought it had a lot of mileage. And that's one of our big strengths now, our brand." In the first week of the rebranding, the chain brought in £15,000. Within six months it was selling more beds than sofa-beds and sales continued to grow rapidly, at about 24% a year, reckons Clare. But there were a couple of hurdles along the way. The 1991 recession was one, as "people began to cut back", he says. "Sometimes we were selling just as many beds but much cheaper [ones]. However, "it was just a matter of concentrating and keeping your head above the water" says the man who now presides over more than 150 stores.
"You need a bit of luck and a bit of skill. But the skill and the luck part are very small compared with the drive and the total ambition [you need]," says Clare, who now presides over a £160m business. "It isn't always for money. It's about trying to prove something and being successful."
Jody studied at the University of Limerick and she has been a senior writer for MoneyWeek for more than 15 years. Jody is experienced in interviewing, for example in her time she has dug into the lives of an ex-M15 agent and quirky business owners who have made millions. Jody’s other areas of expertise include advice on funds, stocks and house prices.
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