Rachel Elnaugh: On life after Red Letter Days
Her career post Red Letter Days continues apace
The last time you heard from Rachel Elnaugh in these pages she was providing a full and frank account of the events that led to her business, Red Letter Days, going into administration.
A film of dust has now settled on her high profile and painful public exit from the business she had grown from nothing into an £18m turnover market-leading experiences company. Predictably, she’s moving on. Her fi rst real foray back into business was to take the role of chief executive of online art house Easyart.com at the tail-end of last year. She announced ambitious plans to take the company founded by Simon Matthews six years ago to AIM.
She took centre stage in what she presumably hoped would be a Phoenix-like return. Unfortunately, it soon transpired that wasn’t going to be the case – or at least not yet. After presenting her threepoint strategy for the business, which involved re-branding, switching the marketing strategy and changing the company culture, majority shareholder Matthews decided on three separate occasions to veto it outright, preferring to stick with his pre-Elnaugh plans.
The third time – only three months after taking the post – she walked and decided against taking her option of a 20% equity investment. “I said: ‘If you want the business to fly you’ve got to let me get on with it’,” she remembers. “I can’t dance to someone else’s tune and I’m not interested in a half-baked approach.
“It’s been running for six years and never made a profi t. If Simon was going to make a go of it he’d have done that. The deal’s not dead in the water though; I just won’t complete as is.” There will come a point when the business needs external investment, she believes, pointing out that original investor Brainspark, which invested £1.8m in 2000, is still awaiting an exit.
The latest venture
While Elnaugh’s public resurrection has stalled somewhat, it hasn’t put her off. She’s been busily working on her latest venture – motivational CDs for start-up entrepreneurs – since January. She approached Glenn Harrold, the UK’s best-selling audio hypnotherapist, to create a series of titles under the theme ‘The Life Changers’. In the joint 50-50 partnership with Harrold’s company Diviniti Publishing, the pair’s fi rst double-CD, ‘Escape the Rat Race’ hits shelves of WH Smith, Waterstones and online at Amazon.com on May 2, costing £14.95. When we caught up she was negotiating an exclusive promotion through WH Smith Travel – encompassing key commuter sites, airports and train stations.
Unsurprisingly, she’s taking nothing for granted and will rollout the concept and increase the print run on an on-demand basis, only launching a second CD set if the fi rst proves a success. Alone Harrold has sold more than half a million copies of his titles since setting up Diviniti in 1997, when a chain of chemists offered to sell his CDs, and he’s now selling in the US too. “If you’re looking at creating a business it’s much easier to partner with someone who already has a distribution network,” she says.
To support the launch they’ll be co-hosting a series of two-hour stage shows in commuter-belt towns. “I’ve done a lot of speaking stuff,” she says, “but it’s a new departure for Glenn.” The format is simple and much like the CDs. Elnaugh gives an inspirational talk, Harrold does a hypno-session.
As a partnership though she believes it’s fairly original. “It empowers people to make a break and get into business, with this acting as a catalyst,” she says. “People are timid about taking the plunge and are stuck in jobs they hate – stuck in the security trap. A lot of it is psychological.”
Elnaugh herself is a great fan of hypnotherapy and has used CDs since the late 1990s, which was when she came across Harrold. “I started using his ‘Guided Meditation’ back in the late 1990s. There was loads of positive affirmations and it would take me into a meditative state where your brain is at a frequency that absorbs messages at a deep subconscious level. At that point you don’t have critical questioning which would otherwise tell you you’re not clever enough or confi dent enough to achieve your aims. Business can be quite lonely and you can make decisions for the wrong reasons.”
She says it particularly helped her during the last years of Red Letter Days. “I could’ve thrown in the towel in 2003 when I realised things were bad, but I didn’t want to think ‘if only’. By the end I knew I’d exhausted every available option and believe there was a positive reason for it happening, that I will go on to do things bigger and better. I hadn’t realised the stress I’d been under and was surprised I didn’t have a complete mental breakdown. It shows nothing can destroy you.”
Maximising the brand
Asked whether there’s a danger the collaboration could destroy Harrold, given the antipathy some sections of the press reserve for Elnaugh, she says the public support has outweighed the press criticism. “I read the Daily Mail to see how my personal brand is doing. Flowing in behind the media bashing was a lot of support. I’m asked all the time to speak at events – people want to hear from those who have experienced the other side of the coin.”
Her ‘failure’ should also be viewed in context. While ultimately the business went to the wall, for many years Red Letter Days had a good record of profi table trading and turned over more than £100m in the years she ran it. “That’s quite an achievement and I would love to see one of those journalists do something like that. I’d be surprised if they could find their way out of a paper bag.”
She adds that when you scratch the surface you’ll find failure everywhere. “On average every multi-millionaire entrepreneur experiences 3.2 failures for every major success. It’s a shame the media doesn’t encourage entrepreneurialism. Two thirds of women would go into business if it wasn’t for fear of failure.”
She points out that even Peter Jones, who, along with Theo Paphitis, bought Red Letter Days out of administration, has experienced it. “He had a computer-based company that went into liquidation from an almighty cock-up, so he went back to Siemens, rose up and saw an opportunity in the mobile phone industry,” she says. “But the mobile phone market is not a one-way street either. Its margins are wafer thin – it doesn’t take much to knock a business off course, which is why I’m not surprised he’s trying to diversify. He’s made a lot of money, but the good times don’t last forever.”
She’s referring not only to what he’s doing with Red Letter Days and Dragons’ Den but the US TV venture he’ll be fronting this year in collaboration with X-Factor’s Simon Cowell. Jones’ redesigned website, www.peterjones.tv, has not escaped her attention either and she’s amused by descriptions of the site’s video clips of Jones extolling his business maxims as well as the fact Max Clifford now handles his PR. “The Mail said ‘his ego’s gone out of control’. I think they’re probably right. I appeal to the opposite end of the spectrum – real people.”
Rolling out the concept
While Elnaugh’s non-committal about fi gures, she’s confi dent her venture will prove successful in her terms. “It doesn’t matter if it sells 1,000 or 100,000,” she says. “We’ll see how the market responds. I’m not about money any more. I want to help people and if it helps 10 people we’ll have been successful.”
Asked how she thinks that would wash with her Dragons’ Den persona and that of the others on the show, she points out that she could pitch it if she wanted to but as she’s not reliant on external investors she doesn’t feel the pressure. “If I was going to pitch to Dragons’ Den I’d tell them how much I’d make and how quickly. This project will sell X and we’ll produce X more titles. Here’s the P&L and recurring revenues.”
Nevertheless, she’s not committed any of this to paper or spreadsheet. “I’ve not got something as ridiculous as a business plan,” she says, “I’m not a great fan of them. I’ve never seen one that remotely resembled the business as it unfolded.”
What she does know is that her and Harrold will incorporate it if the idea takes off and she’ll potentially take the concept onto TV. “You could take six people that are tough to crack, such as a Big Issue seller, someone fresh out of prison and a woman recently divorced and empower them to create their own wealth. Entrepreneurship is more than just setting up a company.”