Sir Alan Sugar (4 page)

During his short time with Henson’s, Sugar used regularly to collect goods from Binatone. He would turn up to Binatone HQ in Finsbury Square, in London, and wait his turn at the loading bay. Asked what is needed to form your own successful business, Sugar once said, ‘What you do need is sheer determination. Passion and great personal belief. And a slice of good luck.’ He was about to be served a delicious slice of that good luck. As he queued at Binatone’s loading bay, he got talking to Lalvani, who had already noted that Sugar had more ambition and drive than most of those who queued at the loading bay to collect goods.

Sugar also had an intelligent, enquiring way about him so he already had a firm grasp of how Henson’s relationship with Binatone worked. Henson’s received the Binatone products on credit, and sold them on for money, a perfectly normal way of doing business. ‘I can do that,’ thought Sugar. But he also believed he could earn four times his weekly salary of
£
20 if he went it alone. So he bought a minivan for somewhere between
£
50 and
£
80 (estimates vary in different accounts of this time), took out
£
8 in third-party insurance and approached Lalvani with an idea. He would resign from Henson’s and give the Binatone man a postdated cheque. In return, Lalvani would give him goods to the value of that cheque. Lalvani was a little nervous, because he didn’t want to fall out with Henson’s, who might, reasonably, conclude that Sugar had been encouraged to compete with them. Sugar was quick to allay Lalvani’s fears, telling him that he was going to quit with or without his help. As a compromise, Lalvani suggested that Sugar leave a two-week gap between resigning from Henson’s and starting up his own firm. ‘Deal,’ said the 19-year-old Sugar.

Lalvani recalled that his protégé was a very quick learner. In an interview with the
Mail on Sunday,
he gave his impressions of the young Sugar: ‘Alan used to drive a van for a customer of mine. He would come to the warehouse every day and buy electronics and sell them on.

‘But his boss made a mistake: he let Alan see how much he was paying for the goods and where they came from and Alan knew the customers and how much they were paying. He came to me and asked for
£
500 credit. It wasn’t difficult for me to say “yes”. I could see he was energetic and hardworking. I told him he couldn’t quit on Friday and start doing business on Monday – he had to wait.’

So, after two weeks with his feet up, Sugar returned to Binatone HQ and swapped the cheque for the goods. This cheque was postdated seven days hence. This meant that Sugar had just a week to shift all the goods, or he was in trouble. As it turned out, by the end of the first day of his new venture, Sugar had shifted the lot – a whole week’s goods in one working day. He drove into the Binatone car park, and told an astounded Lalvani, ‘Give me the cheque back. Here’s the cash.’ The following morning, he returned for more of the same. Recalling how he struck out alone in business, Sugar said, ‘Your average punter sees no further than finding a job and working for someone else. Business is viewed as a risk – and people are frightened to take the risk in case they fail.’ He had taken that risk, and, far from failing, he had exceeded even his own ambitious dreams. He must have been absolutely exhilarated. ‘You will understand the buzz once you have done something on your own. In a funny way, the money takes second place.’

With his new business venture proving a huge success
from the start, Sugar could afford to be bullish and confident about his prospects. The world seemed indeed to be his oyster. However, his assurance was not shared by his father, Nathan, who was proving to be rather more cautious. His son’s courage and entrepreneurial spirit soon caused more concern. The clash of personalities was to rear its head again when Sugar’s minivan broke down. ‘It was always in the bloody workshop,’ said Sugar. ‘We needed a more reliable vehicle because that was the lifeblood.’ Too young to sign a hire-purchase agreement, he had to turn to his father for help in getting a new vehicle. However, his father was so concerned about Sugar’s ability to keep up the payments on the agreement that he would sign only on the understanding that
he
buy the van and ask his son to pay
him
instead. ‘It was the typical mentality of my father. He couldn’t understand that I’d ever be able to pay the money back.’

He would of course be able to pay his father the money back. And, very quickly, he was earning more money than even he could have dreamed of.

CHAPTER THREE

MARRIAGE

F
or all his success and the millions he has made, Sugar has always been a family man at heart. He’s firmly of the opinion that the only way to have a successful and happy life is to put your loved ones before your profits. He is a wonderfully loving husband and parent. At his side throughout his remarkable ascent to the top of the business world has been his beautiful wife Ann. After originally meeting her in 1968 through the youth club crowd of Stamford Hill, Sugar soon fell for the charms of young hairdresser Ann Simons. And she for his – though she admits that he was not like most of the other teenage boys she knew at the time. ‘He was completely different from anybody else I had ever met,’ she said. ‘He wanted to work all the time. He wasn’t like an ordinary 18-year-old boy.’

It seems her initial instincts were correct, for it seems
there has never been anything at all ordinary about Alan Sugar. Right back then, there were already those hallmarks of ambition, dedication and a superb work ethic that were to separate him from the pack.

However, as the pair’s love developed, there was initially opposition to Sugar from his new girlfriend’s family. They felt that he was from the wrong part of town, but, according to friends and colleagues at the time, this only made Sugar more determined to get his girl.

As we’ve seen, Gulu Lalvani, chairman of the electronics company Binatone, was one of Sugar’s early backers and, in the
Mail on Sunday,
he gives an insight into the resistance Alan faced from Ann’s family: ‘[A] customer of mine pulled me aside at my warehouse. He was very angry. He said, “See that young man? Tell him I don’t want him to go out with my daughter.” I told him that he had to tell him on his own. Johnny was a good customer. He wanted his daughter to marry a lawyer or a doctor. I told him Alan was a good customer and I couldn’t say that kind of thing to him.’

So, despite these early difficulties, the couple’s love blossomed, and they married at the Central Synagogue in Great Portland Street. An eyewitness remembered, ‘The families put on a good show at the wedding – a clear sign that the Simonses were reconciled to Ann’s choice. It was a very joyous occasion and both families seemed to get on just fine.’

Their first son, Simon, was born a year later. His father
was doing very well indeed by this time. At the age of 21, a lot of young people are still directionless, either still in education or in low-paid jobs, often spending their nights out at pubs or clubs, and it is hard to see how they will succeed. However, Sugar’s life was far more dynamic at 21, and betraying more than a hint at the fortunes that were to come for this incredible businessman. Let 1 November 1968 become a key date in the history of British business, as it was on that day that Alan Sugar formed A.M.S. Trading Company (General Importers), and registered it as a limited company. Alan Sugar really
was
on his way.

As we have seen, to get there, he had overcome numerous obstacles. One of these involved a sharp lesson in the dangers that confront any business. He had been storing his stock in the family home in Marlands Road, east London, but there was no burglar alarm to protect it, and he had no insurance to cover it. With the benefit of hindsight, he admits that this was ‘bloody stupid when you think about it’, as one day a thief broke into the house and made off with all the stock. ‘I wasn’t completely flattened,’ he said, but he quickly made sure that he got his own premises and took out the necessary precautions to protect his assets.

His premises were on St John Street in Islington. It was a slightly odd location. Across the road was the Sadler’s Wells Opera House, and a mere stroll away were trendy eateries and posh antique shops. However, the new Sugar
HQ was in an area largely populated by other businesses, their storage buildings and workshops. It was on a busy main road, and generally the area lacked the charm that dominated nearby Islington, but he had a decent-sized premises that could safely store a substantial amount of stock. Next up, he needed an accountant, and he signed up with Guy Gordon, who not only managed his accounts, but also gave him plenty of general useful business advice.

For instance, the fact that A.M.S. Trading Company (General Importers) was a limited, rather than proper, company was down to Gordon’s guidance. He told Sugar that this way of working would mean he limited his personal liabilities, and therefore mean his house and other personal assets would not be at risk if his business got into difficulties. Just as there are things to learn from the nature of the company, so there are from the name he chose: the A.M.S. part was clearly formed by Sugar’s initials – Alan Michael Sugar. However, more revealing is that he chose the terms ‘trading’ and ‘general importers’, which suggests that at this stage his aspiration was not to make his own goods, but rather to import them and then sell them on at a profit. Exactly four years later, he would change the name of the company to A.M.S. Trading (Amstrad), although in reality he had been using that name for some time before he technically renamed it.

The name Amstrad is memorable, but Sugar says he simply took his initials, and welded them to the first
syllable of ‘trading’. ‘It was more luck than judgement,’ he insisted, adding that a lot of operations back then found their names in such a way. This was, after all, in the days before brand consultants appeared, delighted to charge extortionate fees in return for a catchy title to name your company.

An insight into how hard Sugar was working at this time in his career comes from a man who had his own premises near to Amstrad HQ, on Gray’s Inn Road. Colin Lewin was an electrical trader who shared Sugar’s physical build and much of his up-and-at-’em business style. They became friends and business contacts, swapping electrical products, advice and gossip. Sugar sometimes stopped by for a cup of tea near Lewin’s premises. This happened only occasionally, purely because Sugar worked so hard. ‘[He] certainly put in a good six-day week,’ recalled Lewin. These were tireless times indeed. As well as impressing Lewin with his work rate, Sugar was still very much impressing Lalvani of Binatone. One day, while loading up his van with electrical products that Binatone had imported from the Far East, Sugar learned that the company had taken delivery of a batch of radios that were faulty. He took the radios home and fixed them himself with the help of his wife, working hard overnight, having slogged hard all day. He was certainly a man full of energy and enthusiasm.

Lewin and Lalvani were not the only characters who
were impressed by the young Alan Sugar. Ronnie Marks was the owner of an audio store on London’s Tottenham Court Road. Running from Oxford Street to Euston Road, this one-way street is a shopping heaven. Although at the north end it houses department and furniture stores, it is best known for its collection of cheap electrical stores. Laptop computers, stereos and DVD players are among the many goods available here at budget prices. The electrical consumer revolution of Tottenham Court Road was sparked in the 1960s, and Ronnie Marks was one of the first men to open a store there. He was also a wholesaler, and one day one of his counter staff told him that there was a ‘new face out front’ who was seeking some goods on credit.

The new face out front was Sugar, who found that Marks needed some convincing to give him any sort of credit deal. He had never met Sugar before, and was therefore unable to assess whether he could trust him. The irascible Sugar wouldn’t back down and eventually a deal was struck. Marks would give him some goods on credit, but he would need to pay for them before he could return to collect a new batch of goods. True, this was a tight arrangement, but Sugar relished a challenge and selling was his forte, so it was not one that he feared. Like clockwork, at the end of each week he would return to the wholesalers with his money for the recent consignment, and ready to fill his vehicle with a
brand-new
batch of goods. 

Once again, he had stepped up to the challenge and passed with flying colours. Within a matter of months, Marks was so impressed that he allowed Sugar more leeway, giving him four weeks to pay for each consignment. Even under this looser way of working, Sugar never let him down. Indeed, he was to regard Marks as a confidant. Like many who are successful early in their life, Sugar gained a lot of respect – but he also found he had to put up with a certain amount of condescension and patronising from some old-school business types. ‘I can’t stand doing business with him because he treats me like a little schoolboy,’ Sugar confided in Marks, as they discussed a third party. ‘He always calls me “son”. I’d rather talk to his storeman.’

However, all the patronising people in the world couldn’t hold Sugar back. His success and reputation soon snowballed. As he approached new wholesalers, he could refer any sceptical questions to those he was already working with, all of whom would give him a glowing recommendation.

Soon, though, Alan Sugar wanted to turn from a salesman into a manufacturer. The first major breakthrough that Amstrad had to this effect came in the hi-fi market. Sugar noted, back in the 1970s, that the dustcovers for turntables were very expensive. ‘So I decided to find out how they were made,’ he said. ‘I’m a quick learner, when I want to be. I found out about
injection moulding, how it was done, and got someone to make me a few thousand. Until then, I’d been buying stuff at
£
1 each, and hustling to sell it at
£
1.10. With the plastic tops, I became a producer, making something at four shillings [20p], which I sold for a quid. I’d risen above being just a buyer and seller.’ He had invested
£
1,805 in the injection-moulding machine and he was quickly reaping the rewards.

However, the electrical stores that stocked turntables were also beginning to stock an entirely new kind of product – one that was to make Sugar an absolute fortune.