Theo Paphitis believes small business owners are not being given enough information to decide whether to remain or leave, reports James Hurley.
Theo Paphitis wants to know why he hasn’t been asked about the Queen’s 90th birthday, a polite dig after questions stray beyond the boundaries preferred by his public relations advisers. He is cagey, therefore, when invited to comment on a fellow retail mogul in a spot of bother and won’t be drawn on Sir Philip Green and the collapse of BHS because he “can’t make a serious assessment without the facts”.
Yet this is the exception that proves the rule. The Cypriot-born boss of Ryman, the stationer, Boux Avenue, the lingerie chain, and Robert Dyas, the DIY retailer, is more than happy to breathe fire whether the subject is big picture Brexit or Small Business Sunday, as befits one of the best-known denizens of the BBC’s Dragons’ Den.
On Britain’s future, or otherwise, in the European Union, the self-described “shopkeeper” has started a blog of his views on the subject to share with small business owners, who he argues are not being given enough information on which to base their vote in next month’s referendum.
He says that he remains undecided, although President Obama’s recent intervention, warning that Britain would be at the “back of the queue” for a trade deal with the United States following a departure from the European Union, has moved him a “little notch towards Brexit”.
Cue a flaming verbal broadside: “Obama, what was he thinking? This is Great Britain, not a third world country run by a tinpot dictator. It was: ‘Do as the Americans tell you to do because it’s in the best interests of America and you must give up your democracy and sovereignty.’ I think whoever was advising him must be an idiot.
“It might be that stay is the right answer, but I’m not going to vote stay if every time someone tries to talk to me they are giving me bulls**t. There’s no doubt that in the medium to long term, leaving will make no [negative] difference to trade. Whoever tells you otherwise is mad, because it defies every piece of logic and trade in the history of man.
“I can’t see Angela Merkel saying we don’t want to trade with the UK, we are going to lose £16 billion of car sales and make how many people redundant in Germany. It is rubbish.”
Not that the Leave campaign is about to get off lightly. “Whoever tells you there will not be a short-term shock if we vote to leave is not telling the truth. It’s worrying that people are prepared to go to these lengths to convince the British public to vote a certain way. It panics me because it means I’m being manipulated, I’m not been given the whole truth.”
Mr Paphitis, 56, who is worth about £250 million, is best known for the eight years he spent on Dragons’ Den. Unlike some of the show’s other stars, he already had something of a public profile before he appeared thanks to his chairmanship of Milwall Football Club. He doesn’t appear to miss the programme — “I don’t watch it very often. I’ve been there and done it” — but his association with early stage businesses didn’t end with his exit from the Den in 2013. Small Business Sunday (SBS), a project that began “on Mrs P’s kitchen table” with him simply selecting fledgeling ventures to promote to his 500,000 followers on Twitter every Sunday evening, has become a business in its own right, complete with an ecommerce site to provide an online shop window for start-ups and a networking event for the scheme’s 1,700-strong alumni.
“Running a small business is incredibly lonely when things go wrong. A lot of the SBS winners are mums who are running a business and a household. You need someone to talk to, you need to share your business frustrations with people who aren’t your kids. SBS was a good way of building a network of support.”
Given the long odds of success and the amount of time involved, why does he continue to invest in and advise small companies when he has his own much larger retail interests to worry about? “Helping small businesses is magical. The individuals are what I enjoy, their ambition to do something and seeing their faces when they make it happen.”
Mr Paphitis, who left school at 16 with no qualifications, says that a good investment usually involves backing “the great person with the average idea”, rather than the other way around. He’s hoping that the same might apply to his own knack for making a success out of humdrum, ailing retail brands. He says all three of his big retail assets are “going to plan”, but admits that Robert Dyas, the 144-year-old retail chain that he bought in 2012, is presenting him with his biggest challenge.
“It didn’t have an online presence or a warehouse. We’ve spent a huge amount of money at a cost to profit this year to reorganise the business, build a new website, warehouse and put the infrastructure in to be a national business. It’s painful, it’s expensive but I buy businesses to grow and invest in them. Fingers crossed, we’ve got it right. Ask me about it in a year’s time.”
He hints that he will open new Robert Dyas stores in the north of England over the next 12 months, although he is wary of shaky consumer confidence. “For the last few months we’ve seen a slowing down on the high street. I don’t think people are saying: ‘What are the financial implications of Britain leaving the EU?’ But the uncertainty doesn’t help and there’s lots of bad publicity.”
Not that it’s anything that a spot of improved weather wouldn’t sort out, he suggests. “Robert Dyas relies on the gardening and the barbecues. What we really need is the sun to shine and that will overcome the depression of politicians spouting rubbish on the television.”
Dodging bullets with the good, the bad and the ugly
On Dragons’ Den, Theo Paphitis would often berate hapless would-be tycoons for presenting ideas that might waste his “children’s inheritance”. However, even those who secured his backing were sometimes guilty of that.
He estimates that he is “just about” in the black on his investments through the programme. “One in ten small businesses fail in the first two years,” he said. “There’s no reason [angel investors] should be much different. Hopefully we choose better and we put the money in, but if someone thinks they’ve won a TV competition or the lottery and won’t put the hours in, it will fail. It happens all the time.”
Given the high risks of backing early stage companies, he says that equity crowdfunding websites, which allow ordinary retail investors to buy shares in start-ups, need more oversight so the risks are clearly understood. “There’s a place for crowdfunding and it has got potential, but it needs to be a lot more regulated. For people putting in £500, they can see a good pitch go up, it’s all very easy, but then the company doesn’t deliver. Even people I’ve invested in don’t deliver. It is very high risk. It’s the good, the bad and the ugly.”
May 2 2016