In our How I Manage My Money series, we aim to find out how people are spending, saving and investing money to meet their costs and achieve their goals. This week, in our celebrity edition, entrepreneur and Dragons Den star Theo Paphitis, 66, reveals his money weakness and the most successful business he has invested in.
Do you remember your first big pay cheque and what did you do with it?
In the early 80s, being told my first proper salary at a commercial finance company was the big moment for me. It was £30,000 annually – not an unsubstantial amount at that time, and my first salary where the income was almost as much as my annual expenditure. It paid the bills.
What has been the most successful business you’ve invested in on Dragon’s Den?
There have been many businesses that I have invested in on Dragons’ Den, such as Tiny Box [a wholesale gift box firm] which I still invest in now – and Magic Whiteboard that I ended up also stocking in my 200-odd Ryman stores around the country. Both successful businesses.
But, the best investment to come out of my time in the Den was when Rachel Elnough’s Red Letter Days [that sells gifts and experiences] had an almighty cock-up and went into administration.
The tall fella and fellow Dragon, Peter Jones, and I stepped in and bought the business and made sure that we honoured all outstanding vouchers. A great investment; bought for a few hundred thousand pounds and sold for tens of millions. It was never pitched to me, but it wasn’t a bad deal to come out of my time in the Den.
Are you a spender or a saver?
I am definitely a bit of a spender; I’m a shopkeeper that loves to shop! My particular weaknesses are shoes, clothes and gadgets.
What was money like in your household growing up?
Non existent – we lived pay cheque to pay cheque. It was difficult – we often didn’t have enough money to pay the electricity bill – or any other bill. It was very hand to mouth.
What’s been your most lucrative work in your career?
I have been fortunate in my career, so it’s difficult to pick one deal or moment that stands out as the most lucrative. However, I think the longevity of my work and being able to get up in the morning and go to work, doing something I love, has been the best thing for me. I do believe it’s true that you can never work a day in your life if you love what you do.
What’s the best purchase or investment you’ve ever made?
Key investments I have made over the years have been my businesses. Buying businesses that are in financial trouble can be dangerous, however cheap they may be.
Making sure that you buy them in the right way, with the right execution and vision, is a real opportunity for entrepreneurs like myself to do the right thing and nurse them back to health and profitability.
I have recently become the Visiting Professor of Entrepreneurship at the University of Derby and launched the Chancellor’s Entrepreneurs’ Club together with Chancellor Lord Burlington.
It is a fantastic opportunity to understand the right decisions that an entrepreneur needs to make – and the importance of good investments.
What’s your biggest money regret?
I try not to have regrets. You win some and you lose some. Luckily for me, I have won more than lost.
What’s your weakness when it comes to money?
I have always bought cars I couldn’t afford, until later in life. They are my passion. I am also a big tech fan, and am an early adopter of gadgets – many of which Mrs P makes me put up in the loft out of sight! Some of these are boxed first versions; types of iPhones, organisers, cameras, cassette players, phones and more.
How are you saving for retirement?
I have no intention of ever retiring. Most people retire to do what they love, but I don’t need to because I already love what I do.
Do you own property?
Yes, I’ve been fortunate to own my own home since I was 18 years old, well, when I say “own” that was with a 100 per cent mortgage, which is as rare today as chicken teeth.
Most homes I lived in in the early years were owned jointly with the bank, and in the 90s during the financial crash, one bank asked for the house back when times got tough. It was squeaky bum time for a bit, but, c’est la vie – you dust yourself off and go again.
Do you have a pension?
I have always been a big advocate of pensions and saving for when you’re older, but I do believe that the system in the UK needs a massive overhaul. It is important to have a plan for the future whether in property, investments or a viable pension.
What do you spend your money on now?
Enjoying life!
Theo Paphitis is a renowned retail entrepreneur (owning Ryman, Robert Dyas, Boux Avenue & London Graphic Centre), and was recently appointed Visiting Professor of Entrepreneurship at the University of Derby.