In her new book, Business Nightmares, former Dragons' Den star Rachel Elnaugh talks to some of the world's most famous entrepreneurs about their business nightmares and discusses her own business tragedy - the collapse of Red Letter Days, the business she founded.
Heading in the wrong direction
The biggest business crisis of Nick Wheeler, creator of the Charles Tyrwhitt mail-order shirts brand, was deciding to step back from running the business and hand over to a ''proper" managing director. He chose the wrong person and paid the price 18 months later.
Nick had started in 1986, building his mail-order database and expanding into nine retail shops. After 19 years, he had a crisis of confidence.
''If you start something young, where you don't have any other experience, you just feel your way the whole time, just using your common sense," he says.
"By September 2005 we had a £40m turnover and I felt we needed to take it to £100m. I just felt I wasn't the right person to take it there. I thought I needed someone with bigger company experience.
''I started to compare myself with Michael Dell; he is the same age as me and he started his business Dell Computers at the same time. Everything was the same - except that he now has a $60bn turnover business!
''You get to a certain stage in the growth of the business and think, "Am I the right person?" and feel a complete idiot because you've got there by using common sense, whereas all these other bright guys have been to Harvard Business School.'
Nick approached a headhunter who recommended someone straight away.
''I met him and I just thought he was damned good," he says. ''I am a very instinctive judge of people and I tend to make snap decisions.
''This was a very big decision: this was the guy who was either going to cock things up or he was going to take it to £100m and beyond.'
This new managing director was involved for 18 months, allowing Nick to step back.
''With hindsight you can look back and see the mistakes you made," he says. ''This guy had been at Ralph Lauren for 15 years but he wasn't md; he didn't actually run Ralph Lauren.
''You don't want someone who has run a business with just five people, but equally you don't want someone who has run a corporation with all the back-up and support.
''He came from Ralph Lauren and he wanted to make us into Ralph Lauren and I went along with it.
''I thought it would broaden the product range, but I had been in the business 20 years and should have understood what made us tick.
''Mail order is like a super tanker because you're working on products a year in advance, and so it takes time to discover that things aren't working out. So the fact that it did not work out put us back two years.
''In business, there is a circle of managing directors who just move from the business to the next.
''They move on and you're not going to give them a bad reference; you don't want them to take you to tribunal, you just want to end it amicably, and so you tell people they were 'fine' and off they go to another job.
''We are still friends. He is a great guy and very talented; just not right for Charles Tyrwhitt. It is quite fun to be back in the business running things. As long as entrepreneurs still have a passion for the business they created, they will always have more value to add.'
The over-expansion trap
Simon Woodroffe was a rock'n'roll roadie and a stage designer before setting up restaurant chain Yo! Sushi in 1997 at 45.
It took him two years to bring the idea to reality. He put in all his savings, as well as money from friends and family.
''I'm not quite sure how I pulled it off," he says. ''It was incredibly high risk but I knew that I was doing it right."
Simon says the opening of the first Yo! Sushi in Soho was ''like having a hit record", but adds: "It didn't feel secure - not for three or four years.
''I always thought it was like a house of cards, and a fairly precarious one at that. Every new site that we opened could easily have gone wrong."
Over time, Yo! Sushi's ambitious expansion started to run into serious problems. It was not generating enough cash to fund its growth, and the business desperately needed an injection of cash.
Simon tried to get investment from 3i but the deal collapsed. He went back to Primary Capital, which had made an offer, but Primary reduced its terms.
While Yo! Sushi's overexpansion lost Simon his controlling stake, he negotiated a multi-million pound pay-off, and retained a minority shareholding in the refinanced business and the rights to roll out the Yo! brand into other sectors. ''I was a bit tipsy," he recalls. ''There was a cash machine and I couldn't resist going to check my balance. Up came all these zeros; for the first time in my life, I had a few million quid. There was a bloke behind me and I turned and said to him 'Cop a look at this mate!' If people tell you money doesn't make you happy, they are lying."
Yo! Sushi has since been sold for £51m, netting him about £10m for his 22pc stake, but he says he has learned a valuable lesson from the over-expansion.
''I think you've got to go through the highs and lows of business at some time in your life," he says. ''For me I have come out of that, and now just being OK is good enough."
Copyright Speakers Corner 2017