In 2000 I tired of buying London Houses and filling them up with Lodgers, and instead did something very stupid.
I bought a derelict castle in Wales. This was before 'Escape to the Country' got everyone moving out of London to the Country.
Maybe it was my own 'lifestyle change', my very own mid-life crisis.
I timed the completion date to coincide with my 40th Birthday, 27th October, 2000.
This was fortunate, as having exchanged and paid a deposit back in April, it did not occur to me there might be a problem with the lenders.
I had phoned the RBS back in April or May, around when I saw the Castle.
A young chap came to my office in London, had a meeting with me, and he said, 'no problem'. He could see (and I knew) that I had a sound business, and I just assumed if a bank chap comes along and says they'll lend me money (about £600k - quite a lot in 2000), that they would honour their word.
A handshake and that was that, as far as I was concerned.
It did not occur to me I was probably dealing with some fresh-faced salesman who had no authority to go around lending over £1/2m to people trading in a home business from their former bedroom in a terraced house. He probably went on his way without even filing a report, certainly I did not hear from him again.
Anyway, I thought nothing further, paid the 10% deposit in cash (£60,000), and got on with my day-to-day cleaning agency business.
A month or so before the completion date, I realised I had not heard from the bank, so I chased them up and they sent through some forms to fill in - five forms each with 16 pages of questions, one for each of the then five London Houses. I filled them all in the same day, working till about 03.00 hrs, all five houses had the same answers, no mortgages, no planning issues oustanding, no oroblems. I sent the five 16 page forms off.
And I left it at that.
A week before the Completion Date, 7 days before I was supposed to pay the £600k balance for Castle and Contents, I chased up RBS again. They'd not actioned anything their end. Nothing was in place, so they could not lend the money, they said, with a sort of telephonic shrug.
Irritated, I left the matter with my solicitor to sort out - though I may have threatened to sue the RBS for loss of my deposit. (With nothing in writing, I would not have won).
Meanwhile the owners were phoning regularly asking "is everything okay?" to which I answered confidently that I would see them on October 27th as agreed. I think they were wondering whether I would come up with the money.
By this point, so was I.
But as of 11.00 am on the morning of the 27th October, I was still without a loan in place. Should I get in the car and take possession or not?
My then partner and I waited by the phone for news.
At 2.00 pm my solicitor phoned to say the money had moved across.
The solicitor had come up trumps, telling RBS he had another lender lined up - did they really want to risk losing the business?
The RBS duly lent over £1/2m with no security in place, no paperwork completed, nothing. They did not even lend to the right business (the one with the houses), instead lending to another business of mine with no assets, in error.
Never in a million years would a bank behave in that way nowadays!
"No one", came the reply, "I made it up".
And so I became the owner of a derelict gothic Victorian folly, Craig y Nos Castle. It sounds grand but really it was just a sprawling mass of stone and leaky roofs, complete with some 160 buckets collecting rainwater. In the winter, a full time handyman was required just to bale out the buckets.
I had intended to use the Castle as an HQ for the Franchise, a sort of impressive looking place to reassure potential franchisees of the benefits of running a SelClene franchise. I did end up moving the cleaning agency office to one of the attached buildings, setting up a call centre for some of the franchisees. However by 2000, everyone knew what SelClene was, and without the 'C' of CIDA, no one was buying my franchises anymore. The only way the business could be sold to prospective franchisees, was by not telling them what it was!
Joining the British Franchise Association (BFA) as a Full Member did not help with sales either. Indeed a number of former franchisees set up in opposition, which rather put me off the idea of recruiting more franchisees. I had hoped joining the BFA would protect the business against copiers. People seemed to lack integrity, wanting to copy the business rather than trade as legitimate franchisees. This became a real problem as word got out what a clever business idea it was. The BFA were no help at all, and we now have hundreds more competitor clones of our business than we do legitimate franchisees.
So instead I focused my attentions on what to do with the Castle. There was no castle trading activity at the time, aside from a few antiques fairs which the previous owners had run.
So there was no Castle turnover, no income. We wasted some years encouraging an independent Opera company to sell ticketed events in the theatre. We promoted a poorly attended Jazz Club in one of the cellars.
It was difficult finding something that actually made money instead of losing it. People around me had lots of ideas, all 100% loss-making.
But we did find we were getting enquiries for weddings. And unlike anything else, weddings did make money.
The previous owners did not even have a weddings licence, as they disagreed with the idea of civil weddings.
By searching for 'weddings in wales' and various combinations of the words 'wedding', 'castle', 'Swansea' etc, I identified the top Directory websites to list the castle on. This brought in many enquiries - around 100 a month.
Unlike SelClene, where 1:3 of enquirers book the service, I found only 7 in every 100 enquiries (7%) booked a wedding. But at 100 enquiries a month, this meant within a few years we were up to 80 weddings a year. Turnover grew from nothing to £1.2m, with weddings contributing the bulk of the income.
As of 2018 Wedding Enquiries convert to sale at 1 sale per 5 enquiries (20%), following implementation of several Marketing Keys, specifically NOW Site, revised CTA's, and ALFUS and other Keys, with wedding booked rising to 140 a year.
Since I was spending £300k a year on renovations, all the profits from the cleaning agency and the franchise (and any surplus from the castle itself) were absorbed by the building spend. This was the case for first decade 2000-2010, and it would take another ten years of similar spending to 'finish' the restoration work. This at least had the effect of cancelling out any profits in the franchise - so no more corporation tax bills.
Since 2001, some £3m has been spent renovating this Victorian folly. Most of the roof now doesn't leak, 25 en-suites have been created out of former derelict areas, plus a hot tub and sports room, and several large function rooms.
It has been a risky, crazy venture, requiring the sale of three of the London Houses, and financially has not been at all sensible. There have been many ups and downs.
However, out of nothing, a £1.2 m business was created. In 2007/8, the upward trend in business growth looked good enough to have the castle valued by the bank at £2.2m, and we all know bank valuations are conservative, so I was confident it was worth a lot more. I upped the Mortgage to £1.2m for development works.
Ten years later, the Castle is worth half what it was in 2007, as Wales property did not really recover after the 2008 Recession. Any buyerr can see the Castle has another £3m to spend on renovations, and escalating costs. Not so much a Money Pit as a Black Hole, but an Opportunity, even so.
In 2007 the bank's estimate of its value was more than 3 times what I had paid for it, so at one point, despite my high spending on renovations, I would have 'just' got back what I put into it.
Our main niche was and remains weddings, but in addition we developed multiple niche websites and new streams of income in many diverse sectors of the leisure market.
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