Falklands veteran Tony Banks is the founder of Balhousie, the largest private care home group for the elderly in Scotland.
Today, the group employs more than 1,000 people and has a turnover of just under £27 million.
Banks tells Huff Post UK how it took a midlife crisis for him to start up on his own, how RBS helped fund his business from scratch, and why he’s no fan of the current government.
Why did you decide to look at care homes?
I was almost like a midlife crisis moment – I just woke up one day and thought, I could do better than the existing companies. I’m an all or nothing person; the analogy I always use is I never go out to drink just two pints, I go out for 10 – my current role is to make sure that I never do anything that puts the business in jeopardy.
When I left the army, I got a job selling home insurance and pensions – the company was called Financial Planning Services but it doesn’t exist anymore. But that was supposed to be a stop gap between leaving the army and going back to university to learn physiotherapy – but what it did was give me a hunger for making money.
The life assurance business was commission-only so the carrot that got me to take the job was I could earn £1,000 a month by just making four appointments a day – I did a lot more than that, I used to get into the office and immediately start cold calling – and I did quite well, I was one of the top sales guy after six months and earning £4,000 a month.
At that point I thought, now I know how the world works I can make money. We were about to go into the recession of the 1980s and then my employer made a fatal mistake – they moved me to Croydon.
I don’t know if you’ve ever been to Croydon, but now I was travelling two hours each way to work and that was my catalyst.
At this time, my then wife was a nurse and I thought that was a good business idea, build up a care home and build up a family run business.
She came from the Shropshire/Welsh border and I’m from Scotland so I gave her a choice, where should we go, and she decided Scotland.
We sold up our house, and took on some money from her father; all together it was a couple of hundred grand, which was enough to start the care home business.
Were you confident of moving into an industry you knew little about?
I understood all the finance side of it and my wife understood the caring side of it. At the time the industry was really immature – it’s still pretty immature now – but then care was being done in bed and breakfasts and it was largely unregulated.
Before the reguations you’d see six, maybe eight people in a room, and I wanted to set a higher standard. We offered en-suite rooms and everything we did was ahead of the game.
And for 12 years it was a real family business and we enjoyed it as a family. But after that I got this midlife crisis and realised I needed to expand the business. That was at the end of the 1990s.
I thought if I don’t do something now, I never will. I didn’t necessarily want to be the biggest, but I wanted to do it better than everyone else, and to try and make a difference.
At that point I had three care homes and we were probably making about £1-1.5 million in turnover.
A friend of mine says when things are stable and going nicely along, that’s when the hunger starts to grow and you want to do something different – and that’s what happens with me.
It’s dangerous, because you can wreck a business when you want to keep changing things, and it’s a big risk. When I’m bored, I’m dangerous.
What’s happening at the moment? Are you bored and dangerous now?
I am in that situation at the moment, because I’m not seeing much growth. It’s part of the reason why I bought a pharmacy business last year. We were putting £1m turnover into a pharmacy and I thought hang on, this is money for old rope, and wouldn’t this be a good opportunity?
We would understand our market - supplying care homes - and we’ve served them better than Boots, Lloyds and all the other mainstream ones. That gave me a spark again.
So we bought a small pharmacy and got the license and planning permission to build a huge warehouse at the back of a new pharmacy, which will eventually be a used to supply all the carehomes we own, as well as others.
This is the first recession I’ve been involved in where it’s really difficult to see where the light is at the end of the tunnel, because of the capital crisis.
I don’t just want to run a business, I want to grow it – I’m all about getting an idea, growing it, making it work and passing it on to someone else, and moving onto the next thing.
The age that people are coming into care homes is much older, and they’re much more dependent than in previous years
How have care homes changed since you’ve been in the industry?
The care industry is changing – gone are the days where you could just build a home and fill it with beds, now you have to work hard at patient enablement, helping them to do things for themselves and keep themselves active.
Now, if we can get them to return home at some point, that’s a success story; it’s a really pleasing thing to see them walking out the door – it doesn’t happen very often, but when it does, it’s great.
The age that people are coming into care homes is much older and they’re much more dependent than in previous years.
The current government policy is to keep people in their own homes for as long as possible but what does that really mean?
Is it acceptable to force someone to stay in their home and only have a carer come to see them for 10 minutes a day?
The patient will be incontinent, so the carer cleans them up, gets them dressed, puts breakfast in front of them, and then when they come back at lunch they see the breakfast hasn’t been eaten, they’ve been incontinent again, they’ll come back at dinner and they see the person hasn’t eaten they’re lunch… it’s a never ending cycle. Ultimately, this has been a thistle that nobody has grasped for 20 years.
Every now and then you’ll get a (government) commission, but the results are ignored because nobody likes what they’re reading; and that is you’re going to have to spend some money.
And turkeys don’t vote for Christmas. Any government who said we’re putting tax up by 1% which will pay for everyone’s care, that’ll put off everyone in their 20s.
If the Scottish Local Authorities really wanted to save money and become more efficient, they should look at cutting the number of local authorities – there’s 32 in Scotland alone – they don’t need more than 14.
So that’s 32 chief executives’ salaries, 32 directors of healthcare… there’s already a big fuss about amalgamating all the polices forces and fire brigades into one big police force and one fire brigade and there’s this huge hoo-hah about it – despite the fact we’ve had one ambulance service for years, and that’s because you’ve got 32 fire chiefs who don’t want to lose their jobs.
How did you secure the funding for your expansion?
So, after I divorced from my wife, I took my half and went to my bank which was the Royal Bank of Scotland. They had a development programme where certain customers were sent to see some specialists in Boston in the US.
The bank looked at the customer books and thought 'who are the people we should be backing?', and took them away to Boston for a few days to wine and dine them and get these specialists to look at the business and offer their advice.
There was one guy in Boston who was known as Nick the Rottweiler because his attitude was to asset strip businesses and then close them down.
So I remember it was me and a regional manager from the bank going to see him for the last meeting of the trip. I expected him to tell me to sell, I’d have betted my house on it.
He said: first thing you’ve got to do is fund the business, how are you going to do that? So I looked at the bankers and said, 'they’re going to help me, they’re going to fund it' – they nodded.
And he committed them to it, just like that. The second thing was, I had to pay off my ex-wife, and the bank gave me the money to do that too.
And what if Nick the Rottweiler hadn’t stepped in?
I think he just gave me the clarity to pursue what I was doing. So I went on an acquisition spree. I’ve taken businesses from the local authority and turned them around, bought them from charities and turned them around and now when I look at what we’ve done with the group, I’m proud.
The charity one was losing over £1m a year when I took it over, simply because it wasn’t being run as a business.
What do you think of the funding initiatives introduced by the government?
Well, what are they delivering? The bottom line is they’re delivering nothing. The analogy I use is there’s always loads of people in a pub who can play a great game of football on a Friday night, but when you get them on the pitch on a Sunday they can’t kick their own arse.
Because they can only talk a good game. I’m a great believer in being in business in spite of government, not because of them. If you talk to business leaders they’re chomping at the bit to get out there and do business.
My advice to entrepreneurs who don’t want to go to the banks or go into joint ventures with partners is to beg, steal and borrow.
Take a car loan out for a car that doesn’t exist if you have to. I’ve taken mortgages out and got inflated values of the property to put money into my business before.
Banks would like to see Vince Cable's BIS department do more to encourage the banks to lend money to entrepreneurs
But I will say, when I started we had the ERM crisis and we had interest rates in double digits. I genuinely considered lobbing the keys to my house into the banks on the way past. For people complaining about loans which are 4% above the base rate, they should remember what the rates used to be like.
A number of entrepreneurs I’ve spoken to have said it’s better to start a business from scratch and avoid the complications with having to change an existing business, but you seem to have achieved most of your growth through expansion…
I think in my case, I liked to acquire because you can take a business and see where you can add the value. You buy it and it’s worth x, and you say, right, well I can add a, b and c. What we’ve always done is fix the internal models first and then looked at things like can we get planning permission to expand? Can we get another 20-30 beds?
What’s do you class as being your biggest failure over the past 25 years?
I wouldn’t exactly class it as a failure, but I should’ve expanded my business much quicker, there’s no doubt about that. It was just because family circumstances held me back at the time.
And the biggest success?
That I’m still here. And I’m still excited about it and wanting to go forward in spite of all the crap everyone’s facing at the moment.
Any other advice for budding entrepreneurs?
Get a mentor or someone else who can give you advice – and remember there’s no such thing as a stupid question. Join as many business networks as you can find; networking is so important.
And help everyone who comes to you – one day they’ll be selling something to you, or will need your help. It’s happened twice to me in the past two years. You’ve got to work with your competitors, especially in my industry.