Three Summary Insights From Bank of Dave — Lesson #1 — Starting Out

STARTING OUT

Dave asked the part exchange dealer to give him one of the cars without a down payment to sell and bring back the payment (see previous post here for the back story). The car cost just £70 and it was a lot of money back then. The dealer took a chance on Dave who went away, cleaned the car, silver sprayed it, painted it, and sold it for £97. It was a lightbulb moment for Dave and the beginning of what would become his transport business.

Dave realised he had just made more in one car sale than his entire week’s salary working as a builder. He was grateful for the man who’d given him a chance. He returned to the dealer, paid the money for the car, and asked if he could have another car. The dealer predictably responded, “of course you can!”.

Soon Dave was selling one car a week and then six a month! With his success selling the cars came leverage. He started negotiating better deals for himself because he had money t pay for the cars upfront.

“So now, instead of asking if I could take a car on spec and pay for it if and when it sells, I could start to negotiate: if I paid for the car first, and took the risk on whether it sold and what for, could I have it for less? I certainly could. I had very quickly learned, and at an early age, one of the most important lessons in business: money talks (and bullshit walks!). You get a much better deal if you can pay for something up front.”

Eighteen months after he started the builder's job, Dave left it to focus on his car sales business.

The Opportunity

We’ve heard about the importance of pouncing on an opportunity once you see it and not letting it go. That’s exactly what Dave did when out of nowhere someone called to sell him a van. Dave wasn’t sure about this one but he decided to give it a try. He paid about £650 for the van which didn’t look good.

He took about a day to clean and make it look better and advertised it. The first call he got about the van was at 5 am in the morning. Dave was surprised because the person had not even seen it but they still insisted on buying the van. But it didn’t stop there. Throughout the Day, Dave got several calls from those who wanted to buy the van. That experience opened Dave’s eyes to the importance of vans.

‘All day: ‘Van!’ ‘Van!’ ‘Van!’ Vans. It was a eureka moment. Life-changing. Forget the cars. Vans were where it was at.”

After that, Dave was out on the road searching for vans. Dave moved from selling cars to focusing on vans and it was from there that he was able to build up the cash he needed to expand his business.

But what really was the opportunity?

Lots of people wanted vans because it was a work tool for them. According to Dave:

The world and his wife were starting up businesses or working for themselves and needed a van to move their stuff around.

So, whenever he found a van and cleaned it up, it sold really quickly. Dave spotted the opportunity and capitalised on it quickly.

Mind your stake well

“It was through the sale of vans that I built up my stake — the core capital I had with which to do business. When you’re buying and selling, nothing is more important than your stake. It’s like a monkey wrench to a plumber. Without it, you can’t do anything.”

One thing that helped Dave grow in business was his ability to manage his stake well. What does Dave mean by stake? It’s the money he got from selling a car and later mini-buses. Whenever he sold something, he never spent any of the money on himself. He reinvested it in the business.

“My stake started off as the £27 profit I made from the sale of my first car, but I never spent it. Instead I had a second job at night so I could bring in enough money to eat, while ploughing all my tiny profits back into my little business. Once I’d cobbled enough twenty-seven pounds together, I was able to get myself down the car auction. As my stake got bigger, so did my business. Now, I have millions of pounds worth of buildings and infrastructure and stock and I don’t owe a penny to anybody.”

Dave was more interested in building up his business than living large or looking good and it worked out well for him.

“I was obsessed with my stake. Whenever I had a spare three or four grand, rather than go and buy myself a fancy car, I’d buy a house and rent it out. I’ve still got plenty of them today. (My first house cost me £4,200. I still own it. It’s still rented out. Now it’s worth £65,000.) So even when the vans were selling like hot cakes, and all my friends were mooching around in expensive cars, I was driving an ex-Transco van, because rather than spending my stake, I was building it up. I didn’t care that people laughed at my old set of wheels.”

One thing that is obvious here is Dave’s prudent money management. Probably, the biggest reason for his financial success. As a young man from a poor background, it would have been easy for him to live large but he didn’t. Eventually, it was the fact that he could manage money very well that gave him the confidence and resources to believe he could start a bank.

Dave built his business with some personal business principles. The second lesson from Dave will explore those principles.