Entrepreneur turned Dragon’s Den star Rachel Elnaugh has lifted the lid on how she created a multi-million pound leisure business – before it was forced into administration and later bought out by two of her fellow ‘dragons.’
The mother-of-five is the brainchild behind the market-leading experience brand Red Letter Days – a company which she created at the age of just 24.
During her keynote speech at this year’s Let’s Do Business Expo 2019 – which took place at Uttoxeter Racecourse, in Staffordshire, yesterday – Rachel told how she was inspired to follow in her father’s footsteps and set up her own business at a young age.
But she also gave an honest insight into the harsh realities of running a small business, including how her own company was eventually forced into administration in 2005 and later taken over by fellow Dragon’s Den stars Peter Jones and Theo Paphitis.
She said: “My story starts at a very young age, growing up above my father’s electrical retail business. He was so busy with work that the only way I could get more of his attention was to be down in the business with him. I loved my dad and that way I could spend time with him. That was what sowed the seed.
“I didn’t get into university but I did a lot of accountancy work for my dad and I eventually got a job with Arthur Andersen, a large accounting company in London. It was the era of Thatcher and the rise of the power woman and I think a lot of females at that time were getting swept up in it.”
When Rachel was 24 years old she decided to set up her own business after researching the concept of ‘experience days.’ She admits she had played around with the idea for a number of years – including getting her dad some tickets to watch England play cricket at Lord’s.
But she decided to take the risk and eventually founded Red Letter Days on July 5, 1989.
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She said: “Back then, I thought it was as simple as turning on a tap, playing a few adverts and watching the money flow in, but I very quickly hit the pit. We were finding it very difficult to get retailers and customers on board because it was such a new concept.
“About 12 months in, people were telling me that I should just give up and at one point I considered it, but then I decided to ask for help – and that is how I survived.”
With a new marketing campaign and a brand re-launch in 1990, Rachel was able to turn around the fortunes of her business which, at its peak, employed 150 staff, turned over £18 million and was making £1.4 million profit.
Rachel said: “It was a great business and a strong business, we were doing retail deals and we were driving turnover but we weren’t very strong financially or operationally.”
Over the next few years, Rachel admits she struggled to keep Red Letter Days on track after a disastrous over-expansion in 2002, and despite the business being back in profit and having £3.3 million cash in the bank it was forced into administration by Barclays in August 2005.
She added: “When I look back at that time in my life, it was insanity. I was pregnant with my fourth son, I was struggling to get into meetings with Debenhams to try and persuade them to help me and that’s when I went to Peter and Theo and asked them to please help me.”
Peter and Theo bought the business out of administration for £250,000 and in the first year they posted a loss of £10 million.
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It took the pair no less than a decade to turn the company around before eventually selling it to Buyagift.
Rachel added: “It was tragic when I sold the business but at the same time it was also a relief. I felt like a huge weight had been lifted.
“What I didn’t realise at the time was that that experience actually created a whole new business opportunity for me and now I am able to inspire, mentor and help other businesses.
“I always tell people that if everything is a struggle, just stop swimming and see where the tide takes you – and always ask for help.”