Imagine the scene. Amstrad owner Lord Sugar sat in a Hong Kong hotel room with Dixon’s Chairman Stanley Kalms…

Kalms had just told Lord Sugar, he’s computer arch-rival and Sinclair C5 inventor Clive Sinclair, was about to go bankrupt and there was a small opportunity Amstrad could buy the Sinclair brand.

Price Waterhouse had asked Kalms to sound Sugar out on a deal to bail out Sinclair, and as Dixon’s sold hundreds of thousands of Sinclair Spectrums, Kalms was happy to oblige.

Sinclair was in dire financial straits and Barclays Bank were on the brink of forcing them into administration.

Price Waterhouse explained there were deep political connotations, and they could not allow Sinclair to go bankrupt, as he was the flag bearer of the British computer industry.

After further discussions with Price Waterhouse (without Dixons) Lord Sugar had a gut feeling there was a deal to be done.

What he did next simply defies logic:

Before meeting Sinclair or discussing any numbers with the banks, Lord Sugar (in his Hong Kong hotel room) made up his mind to buy the Sinclair business one way or another.

He and his associate (Bob Watkins) immediately got on with redesigning the Sinclair, by noon the next day they had a full colour picture on the drawing-board, but still no deal discussed.

Then they got the UK office to buy a Sinclair from Dixons, open it up and fax a list of components. This acted as a bill of materials for their discussion with Avnet (Taiwanese manufacturer).

By the following afternoon (still in Hong Kong), they’d drawn up the external dimensions of the new Amstrad Sinclair and faxed it all through to Avnet to get a tooling cost. Still no deal discussed.

Lord Sugar knew, if they were to get stocks into the market for the Christmas season, he’d have to press the button on 3 sets of tooling immediately.

At this stage Lord Sugar had done no deal to buy Sinclair, nor had he even met Clive Sinclair or discussed the situation with Barclays Bank, yet he approved an order for 3 sets of tooling worth $100,000.

Lord Sugar thought it was a risk worth taking, and if the deal went south, he’d put it down as just a bad outing that didn’t work out.

The following day Lord Sugar invited the Dixons team to visit Amstrad’s Hong Kong office, where they showed them a polystyrene mock-up of the new Amstrad Sinclair.

They couldn’t believe their eye’s and said, “we only met you a couple of days ago Alan, what are you doing, you haven’t even done a deal yet”.

Lord Sugar replied, “all you need to focus on is whether you want to be the first to buy these, as I’ve already given the green light to produce the first 100,000 units with a retail price of £139.99.”

“So, do you want to buy them – yes or no? You’ve got nothing to lose – if it doesn’t happen, you’ve lost nothing.”

Amazingly for Amstrad and Lord Sugar, Dixon’s placed an order there and then for 100,000 units and Sugar went on to complete the deal to buy Sinclair in the following weeks.

Growing a company is a risky business, with many different types of risky decisions being made every day.

In the past we’ve risked thousands of pounds to secure volume supplies of printer technology at the right price, and I’m sure like Lord Sugar, there’s a limit we’d be prepared to risk.

…what’s the biggest risk you’ve ever taken in business?