42 Degrees - Business from a different angle

Pleasure in the misfortune of others is never an attractive activity, but there was an awful lot of it about when Rachel Elnaugh's business Red Letter Days went into administration last year.

One of the original judges on BBC2's Dragons' Den, Elnaugh was pitched as a business guru, one of those rare people with ability, drive and the acumen to make a multimillion-pound business out of nothing. As, indeed, she had. She pioneered the experiences industry, selling adventures such as skydiving and driving round Brands Hatch packaged in the same way as holidays – or baked beans. The business is now worth some £200m a year.

There was, however, a but, and it was a big one: her business had never really recovered from its annus horribilis in 2002.

When her crash came, the press pounced and a gleeful feeding frenzy ensued. "Well, it was a great opportunity wasn't it?" says Elnaugh. "There I was on Dragon's Den sitting in judgement of entrepreneurs and then having this huge public disaster. It was an opportunity too good to miss."

"Every successful entrepreneur has had failures, it is par for the course," she sighs. "Every one of the dragons has had a problem at some point, but theirs didn't occur at the time the series went out."

She says there have been many decisive moments in her career, beginning with her decision in 1989 to abandon her career as a tax consultant with Arthur Andersen to set up Red Letter Days at the tender age of 24. "When you are in a job and earning good money, it is quite a challenge to step away from it and start out on your own," she observes.

"When things took off it was a real roller coaster ride. We were growing exponentially and it went on like that for 12 years," she recalls.

The next moment of truth came in 2001. The company was making £1m profit on £11m turnover and Elnaugh decided to 'step change' the business, bring in a chief executive and step back into a non executive chairman role. It's a move she was soon to regret. Spending spiralled and the company's performance couldn't keep pace.

"Looking back, I shouldn't have made that decision. I should've stayed at the helm. I may have just chosen the wrong chief executive, but I don't think I'd make that same decision again. I think I'd prefer to stay smaller and keep control," she comments.

Less than two years later Elnaugh had no choice but to take back control of the business. "We spent six months working through the financials to discover that we had made a £4.6m loss. At the time people said: 'Just walk away,' but I had to do everything I could to save it. If I hadn't tried everything I would always have thought, 'What if?' Now I can look back and know that I did everything I could possibly have done," she says.

It was a grim time but, even as she struggled to put things right, help came from a completely unexpected source. It was a phone call from the BBC asking if she'd like to take part in a new business show. "At the time it just seemed like a good PR opportunity, none of the dragons realised what a cult show it would become," she comments. "Saying yes to it proved to be a huge boost for me."

Elnaugh says that watching people's often hapless attempts at winkling money out of potential backers has taught her an enormous amount and has changed her whole approach to business.

Her previous experience was based on setting up a business in her front room and doing everything herself. Now she understands that entrepreneurialism is about assembling resources – "Having an idea and making it happen by pulling in and coordinating the right resources."

A good example is The Life Changers, a joint venture with hypnotherapist Glenn Harrold, which released its first title, Escape the Rat Race, in June. The double CD is designed to foster the positive mental attitude, self belief, drive and determination people need to succeed in setting up their own businesses. "In the old days, I might have thought that I needed to qualify in hypnotherapy to do something like this. Now I think: 'Who can I do a joint venture with?' I bring my brand together with someone who is an expert in his field."

The other crucial thing Elnaugh got from Dragons' Den is fame. Red Letter Days had few assets other than its brand name, so the publicity was a real boon. It turned Elnaugh into a brand in her own right and a celebrity female entrepreneur – a very rare breed indeed. Fame has led to 'all sorts of opportunities and offers' and she now has a portfolio of interests rather than just one.

She mentors budding entrepreneurs, does speaking engagements, is appearing at the Tory party conference, is a judge for various business awards. She is shortly to announce the launch of a new business – although she won't say what it is just yet.

The defining moment of her career to date was in 2005 when her company went into administration, taking 16 years of hard work with it. It may have been a nightmare but it was also a relief. "The crash was the biggest turning point and, looking back, it was the best thing that could have happened to me. I was a bit like a woman sliding down the side of a ship with her nails dug in screaming, ‘No, no, don't let me sink'."

Mind you, at the time she thought failure was the worst possible thing that could happen. "Sometimes in life you have to let go, have faith and see what happens. It was only when I let go that lots of fantastic stuff started to flow into my life," Elnaugh concludes. "When things aren't working sometimes you cling on to them. It is the same with relationships – you just desperately try to make them work and sometimes the best thing you can do is say, ‘Enough'. So much positive stuff has happened since, which wouldn't have happened otherwise."