When high-profile experiences company Red Letter Days went under, its founder decided to explode the myth that business is all plain sailing. With the help of some leading entrepreneurs, Rachel Elnaugh tells Growing Business about the value of failure 

Most entrepreneurs hit a crisis at some point or another. Situations arise that can threaten the very existence of their companies, whether the result of strategic flaws or circumstances beyond their control. Sometimes the problems are overcome and the business moves on, but in certain instances the injuries prove fatal. However, regardless of the outcome, there is always something to be learned from a business nightmare.

When serial entrepreneur William Berry set up online venue-finding agency, ConferenceVenues.com, the start-up period was fraught with crises. Operating solely online relies on good data back-up, which is what Berry had. Or at least he would be forgiven for thinking he had, with a database server hosted by a third-party providing two mirrored hard drives (so if one fails, the other is there) and daily tape back-up.Nevertheless, in 2006, the scenario that most companies dread was played out.

“Our site simply disappeared and no attempt to get it back up would work,” recalls Berry. “The staff at the data centre explained that both hard drives had failed.” The following day it transpired that the tape back-up had failed too.

Facing bankruptcy, Berry threatened legal action, only to find that this would be unlikely to stand up due to the terms and conditions of the contract he had happily signed without reading. “In desperation I made a few calls and found a data expert that could recover failed drives,” he says. “The cost was £12,000 and there was no guarantee, but it was my only hope.

“After getting past security at the data centre – when they said I couldn’t have the drives, I pointed out that I was very close to the edge, and they relented – I took the drives to the data guru.”

Berry likens the following 24 hours to waiting for the results of a major operation. “I spent most of the time down the pub with my business partner,” he remembers. “Eventually, they found the data and we managed to get the site back online two days later. Now we have offsite backups as well to ensure it never happens again.”

Inspiration

It just goes to show that even some of the most seasoned entrepreneurs have faced near-terminal crises. But through sharing the experience of how they learned the hard way, it may well mean that others don’t have to. This was the inspiration behind the new book Business Nightmares, by Rachel Elnaugh, and it’s something that the former Dragon knows a thing or two about herself. The book outlines in frank, painful detail the collapse of her business, Red Letter Days, before sharing the stories of other high-profile entrepreneurs as a warning of the bear traps that lie in wait for business owners.

“I was inspired to write this book by the many entrepreneurs who confided in me about their own business problems after the meltdown of Red Letter Days in 2005,” says Elnaugh.

She was surprised by how many of the UK’s most successful entrepreneurs had faced their own business demons. “I decided to write this book to explode the myth that business is a breeze,” she says. “I asked some of the biggest names in business to share their experiences with me, and how they overcame the nightmares they encountered.”

The aim, she says, was to remind those who are currently going through hard times and experiencing those “sleepless, 3am ‘dark nights of the soul’ moments” that they are not alone. In fact, they are in the majority, and overcoming adversity is often what leads to feats of entrepreneurial genius.

In particular, she wants to change the way that business failure is perceived in the UK. “There is still a deep-seated dislike and even disgrace attached to failure,” she says, “and, unlike in the USA, where failure is ‘de rigueur’, people are still ashamed to talk about any mistakes they may have made on their business journey.”

However, she believes it is key that entrepreneurs talk about the problems, “if only to give hope and insight to
those entrepreneurs who are at the earlier stages of their business journey and find themselves struggling”.

So here are two examples of entrepreneurs that feature in Elnaugh’s book, along with her own story in her own words. Reading how some of enterprise’s leading figures ran aground, and managed to get back on course, might one day help some of you to see the light that’s flickering at the end of the tunnel.