An Essex girl became a punkish rebel, a British business success story, a dragon in her den, and then a vilified Aunt Sally. Steven Russell finds out what 'the naughtiest girl in the school' did next.

Steven Russell

An Essex girl became a punkish rebel, a British business success story, a dragon in her den, and then a vilified Aunt Sally. Steven Russell finds out what 'the naughtiest girl in the school' did next

RACHEL Elnaugh has some free words of advice: No matter how terrible things seem, there is always hope on the horizon.

She knows.

Armed with just a telephone and a bright idea, the former office junior started a company that, after the inevitable early struggles, had 16 years later turned over more than £100million. Success also brought adulation - an Ernst & Young Entrepreneur of the Year award in 2002 - and then a high-profile role as one of the original experts on the BBC's business show Dragons' Den.

As the sole woman on the panel of would-be investors she stood out, and milked the exposure to promote Red Letter Days, her company that sold “experiences” such as parachuting drops, hot-air balloon flights and motor-racing days. Its early success was built on a memorable strong brand that co-ordinated everything from the logo to the red paperclips staff used.

There was also a cute story at its heart. The first “experience gift”, pretty much, had been when Rachel wanted to give her dad tickets for an England v India match at Lord's. Tickets weren't issued until after his actual birthday, so she put together a box of cryptic clues: a jar of English mustard, a pot of curry powder, a cricket ball.

Trouble is, when you dance with the devil he calls the tune.

Red Letter Days slid into administration on August 1, 2005, days after she became a mum for the fourth time, and then it became open season. She'd become the Entrepreneur Who'd Failed. Worse, she was the failed judge of other people's business ideas. Just as she'd ridden in the media bubble during the good days, so she fell to earth when it popped.

Some ex-employees sold their stories - one article was headlined Red Letter Monster - business commentators pitched in with their views, and there was a critical TV programme suggesting where the blame lay. People she'd thought of as friends enjoyed dinner party gossip at her expense.

She's still surprised by the intensity of the vitriol, which has been revived by the publication of her new book. Only a few days ago her blog bemoaned a “rather nasty review” of Business Nightmares, which looks at what happens when entrepreneurs hit crisis point, and how they haul themselves back up from the pit of despair. It features contributions from the likes of Jeffrey Archer and Gerald Ratner. It's also a mini-biography of her rise and fall.

“And so it begins . . . (again),” she posted on the web. The reviewer “has used the book as an excuse to slag me off (yet again) for being that business failure who is now simply a whining bitch”.

Rachel Elnaugh doesn't sound like a whiner; or, come to that, a bluff, unsmiling female version of Alan Sugar, or overbearing like Lady Thatcher, still her greatest idol. Nor is she one of those self-obsessed screeching harridans from The Apprentice TV show whom you wouldn't even trust to care for your houseplants while you're on holiday.

It's true that in her book the 43-year-old does apportion a significant degree of blame to some other people for Red Letter Days' collapse, but she doesn't let herself off the hook as captain of the ship.

She concedes that Dragons' Den, and the projects she backed as part of the format, did divert huge amounts of energy from her own business. She was also laying the foundations for Rachel Elnaugh Ltd, an enterprise that would concentrate on working with entrepreneurs in the small business sector.

The Dragons' Den celebrity experience had become more fun than the day-job, which was becoming more and more stressful. Heavily pregnant, she was also working on refinancing deal after refinancing deal.

“I think the reality was that I had actually lost my passion for Red Letter Days, probably around early 2002,” she admits. “I moved from running something with great creative energy and enthusiasm to spending my days just struggling to control a big, uncontrollable machine.”

While the company's collapse was sad and painful, it also didn't take Rachel long to realise it was one of the best things that could have happened in the circumstances. She goes so far as to call it liberating, since going into battle for the previous two-and-a-half years had been nightmarish.

“I'd just had my fourth son - so he was only a week old - it was August and the sun was shining, and suddenly I had my life back. And then all sorts of new opportunities started to flow,” she tells the EADT.

“I think in life one has the tendency to hang on far too long to things that aren't working. When life finally forces you to let go of them, it can move you on to the next thing. Maybe I should have said 'yes' to it a lot sooner. I think you have to have a bit of trust and faith there's something better the other side of it. I think that's the key thing: having a bit of faith.”

If all this softer-focus talk doesn't sit neatly with the image of a fire-breathing dragon whose eyes see only the bottom line, that's because she's not a rampaging beast, she says.

“The thing is, and I know this from going out to speak at events, that the Dragons' Den persona, which was obviously heavily edited” - about 100 hours of filming were whittled down to five hours of screen time - “basically paints me as a bit of a bitch. Whenever I go to speak at an event, without fail people say to me afterwards 'Oh gosh, you're such a nice person. We were expecting you to be really nasty, like you were on Dragons' Den.'

“I've had to do quite a lot of work on my personal brand to move away from that persona so people can see me in a much more positive light.”

Her outlook on business has also shifted.

Rachel's entrepreneurial teeth were cut in the 1980s, when the City was overflowing with cash and champagne. Working for the giant Arthur Andersen accountancy firm, she learned the value of thinking big and was introduced to the world of some fabulously wealthy clients, such as Sir Terence Conran. For an Essex girl in awe of celebrities it was a real thrill getting into a lift and finding herself alongside stars such as Bryan Ferry and Joan Collins.

Today, though, the lustre of money and celebrity seems to have worn thin - either, and you can take your pick, through gradual evolution or a Damascene conversion following RLD's crash.

In a presentation to the Aberdeen Business Women's Network, for instance, she talked about the future being female: businesses dominated by an alpha male approach (defining characteristics money, power and ego) wouldn't do so well. A zeta female approach - more ethically and environmentally aware, with a social conscience and treating employees and customers in a more transparent way - will triumph.

“I think for a long time business has been very alpha, which is all about money, power, greed, and actually the world is paying the price,” she says. “Now we're waking up to the fact we've got huge problems with so much wealth residing with so few people . . . millions of people starving.

“The world has been on harvest for so long and no-one's sowed any seeds, if you know what I mean.

“We're seeing an end to it, where we shift towards a different way of organising the world which is more collaborative. It is already starting to happen. If you look at the great businesses of the last few years, like Facebook and Google and YouTube, they're much more collaborative. The old corporate businesses are starting to die out, aren't they, or at least starting to 'fail', like the banks and British Airways, and some of the big retailers.

“The whole economy is basically suffering because everyone's been peddling materialism for so long, and encouraging people to go out and buy all this stuff with money that never really existed, and it's now coming home to roost.

“And we're (still) not happy! We've got all the Prada handbags and all the shiny stuff, but still haven't found happiness. We are shifting away from materialism, and I say to people who go into business 'Please do not just manufacture useless stuff.'

“I think businesses that are much more about wellbeing, which are collaborative and which can actually do some good in the world, are the ones that are going to be the successes of the next decade.”

Rachel nowadays spends little time dealing with monolithic companies, concentrating instead on the small business sector - motivating and helping entrepreneurs by speaking at business events, and through consultancy and mentoring.

Does she ever regret Dragons' Den?

“Oh, not at all. It's a very rare opportunity, isn't it, being on a TV series, and although it is a double-edged sword, and maybe I wouldn't have lost the company if I hadn't been in the spotlight and hadn't been so media-worthy, it's led to so many opportunities and taken my life in a completely new direction. So many positive things have come out of it I can't possibly regret it at all.”

But some of the stunts were naïve hostages to fortune, surely? Like posing for a dominatrix picture seven or eight months before the company crashed. That would inevitably be dredged up as evidence of frivolity, or taking her eye off the deteriorating business situation . . .

She laughs.

“The thing is, the whole of the Red Letter Days brand was based on PR and publicity. In the 16 years I ran it we spent less than £10million on marketing, which for a company turning over £100m is a phenomenally small amount. And we did it through PR and publicity; so when I had the opportunity to go on Dragons' Den the sheer value of that was probably about a million pounds. So, actually, it was a bit of a no-brainer.

“That photo was taken as part of a larger photoshoot where we hired a large studio and a professional photographer and stylist for a whole day and were doing lots of different pictures and treatments. Just for fun, we did that as part of it. There were lots more serious shots; it wasn't that for the whole day we decided to do dominatrix pictures!”

Business Nightmares is published by Crimson at £17.99.

RACHEL Elnaugh's entrepreneurial spirit was nurtured in her father's Chelmsford electrical business, Elnaugh and Son Ltd, where she was born above the shop. While other girls were out playing with their friends during the school holidays, she sat at the cashier's desk, counting the money, folding invoices, or sorting out light-bulbs.

Every Christmas she and her mum - a bit of a dynamo who ran charity events and was always making things - would set up a little charity table in the shop, selling homemade crackers and gift-tags made from old Christmas cards.

The shop is still there in Baddow Road. One of her brothers still owns the property, but nowadays someone else runs the business.

Rachel went to St Cedd's, the independent prep school in Maltese Road, and on to Chelmsford County High School for Girls in Broomfield Road - where, she says, she was “a bit rebellious”.

By being a bit cheeky?

“Oh, I was a punk girl, and then I cut all my hair off and was a skinhead girl,” she laughs. “But I suppose that's the entrepreneurial spirit, wanting to be different and wanting to stand out.”

Oddly enough, she wanted to study art history at university, but couldn't seem to get in anywhere.

“AFter I'd failed all these interviews and got rejections from everywhere I went to the headmistress and said 'I demand to see what you've written about me on the UCCA form!' She wouldn't let me see it, but she read it out to me: 'Rachel excels at mathematics.' I didn't think that was very helpful, actually!”

She did receive an offer via the clearing system to study maths at Keele, “but I just thought 'Gosh, that's really boring. I really don't want to do that!'”

Eventually, in desperation, she replied to an ad in the paper and got a £2,750-a-year office junior's job at a local firm of accountants, working her way up from making the coffee and doing the filing to doing tax returns.

She took taxation exams by correspondence course and moved on to the City of London, later getting that key job at Arthur Andersen. After a spot of travelling, Rachel worked as a freelance before thoughts of starting her own business. Red Letter Days was born in the summer of 1989.

Nowadays Rachel, second husband Chris and five sons live in Bakewell, Derbyshire, close to his family. They moved there six months after the business went into administration and feel the lifestyle benefits of moving away from the south-east, although they didn't travel north with a pot of gold.

When her house in Sandhurst was eventually sold, £735,000 dropped into her bank account. It didn't stay long: once the mortgage had been paid off, along with loans and an overdraft, there was precisely £3,184 left.

Rachel went back to her old school in the summer of 2006, less than a year after her business very publicly imploded, to give a speech as part of Chelmsford County High's centenary celebrations. Quite brave, in the circumstances, perhaps?

She laughs. “For the naughtiest girl in the school to be asked back as one of the most successful pupils is quite a turnaround!”

Rachel Elnaugh has a book-signing on May 13 at Waterstone's in Chelmsford High Street, starting at 12.30pm.