Dragons' Den star Sara Davies investing significant sum of own money to save business
"I honestly thought the bottom was going to fall out of my world when the news came through that they wanted to put the company into administration," Sara Davies has said.
Amidst the festive season where the rest of the nation was gearing up for holiday celebrations, the prominent TV Dragon and entrepreneur found herself in dire straits just before the yuletide cheer hit its peak. Merely three days prior to Christmas, the business mogul from Wynyard discovered alarming news regarding her brainchild, the papercraft enterprise Crafter's Companion, which she began as a student—its financial supporters intended to thrust it into administration.
Faced with a ticking clock, Davies embarked on an urgent quest to devise a salvage plan. Success dawned this week when, immediately after its transition into administration, Sara reacquired Crafter's Companion from the administrators.
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Emphasising her resolve to revive what she affectionately refers to as her "third child" she acknowledged the whirlwind of challenges recently encountered. "This rescue package that I've been putting together has been done in the last two weeks - from the Sunday before Christmas. It's been quite the Christmas I can tell you! " she confessed.
Her comments further detailed the hectic personal life amid the crucial business dealings: "Christmas Eve I thought it would be lovely to have the grandparents stay over – in fact we had three sets of grandparents, my sister and her husband and my little niece staying over. And at half past midnight on Christmas Eve I was receiving deal memos. It's been literally non-stop.", reports Chronicle Live.
"Being married to an accountant has its perks - poor Simon lost his holiday as well, spending the whole time sense checking business plans and building cash flow forecasts, balance sheets and scenario planning. I had a few hours off on Christmas Day to cook the dinner with my sister. I didn't want the staff to lose their jobs - these are staff who have worked for me for nearly 20 years, and they had no idea that the company was trading like this."
"But I've managed to find a partner to back me financially – it's their choice not to be named – and I'm investing a significant sum of my own money, on the acquisition of the company and the working capital that's needed to trade the company out of this."
The events leading to the company's fall into administration began last year, when existing finance partner, York-based Growth Partner, stepped in with a funding package and became the major shareholder, after two years of downward trading at Crafter's Companion. Launched in 2005 with a single envelope making tool, the Newton Aycliffe company has grown to employ more than 100 staff, exporting products to more than 40 countries across Europe, Asia, Australia and North and South America.
The craft business sells its products online, through retailer partners and through its own retail stores and on TV shopping channels, and it has thousands of regular viewers across the world of its own digital channel, Crafter's TV.
The recent accounts illustrate the financial struggles faced by the business amid the cost-of-living crisis and soaring inflation rates. Reports indicate a stark decrease, with an operating profit of roughly £485,000 in 2021 plummeting to a £1.24m loss in 2022 and subsequent revenue dropping by 21%, resulting in pre-tax losses expanding from £1.3m to a substantial £5.1m.
Following a financing agreement with Growth Partner, the company introduced a fresh management team—Sara's husband Simon withdrew as CEO, leaving Sara as a public presence and minority stakeholder, albeit removed from the daily management and strategic planning of the company for nearly a year. In spite of the significant investment, the enterprise continued to incur losses.
On the difficulties faced, Sara commented, "With rising costs, the cost of living crisis, the crafting market is a luxury spend market, so for all the demand is there, it doesn't mean it's any easier for businesses to trade profitably."
The situation escalated on December 22, when Sara received notification that the company was heading into administration—a moment she perceived as an opportunity to rescue the venture. Reflecting on this period, Sara expressed, "It was hard to see your baby that you've built up over 18 years struggle, and to not be in a position to do anything about that. That's the most upsetting thing. And staff who have been with me 15, 18 years, really loyal and hard-working, were looking to me as if to say 'what are you doing Sara? ' and I couldn't do anything because I wasn't in control."
Sara expressed her deep appreciation for the support from Growth Partner, recalling how she personally reached out to the firm's founder, HomeServe CEO Richard Harpin, to express her gratitude for a decade of "incredible" backing. She shared: "They have been a fantastic partner. They didn't want to make this decision, and they were genuinely really sad when they had to phone and tell me the news. For me, it was an emotional decision because this is my third child. For them it's a financial decision and I had to respect that because it's the right thing for their company. I can't say if I wasn't in their shoes, I wouldn't have made the same decision."
With a silent business partner now on board, Sara is eager to implement her strategy to revitalise the business. Although a few job roles may become redundant, the vast majority of the over 100 employees will remain with the company.
The business will also see other changes, such as cost-saving measures in product shipping, overseas warehousing, and agency usage.
Looking to the future with optimism, Sara added: "I am really really confident in the go-forward plan that we have. I know the staff. It's not me that's turning this business around - it's the staff. I'm just leading them.
"We've got the right skills and the right people. We're just going right back to our roots, going back to a strategy that's worked for years and doubling down on what we're the best in the world at - making fantastic innovative papercraft products for an enthusiast consumer.
"I remember when this was significantly smaller company 10 years ago, when we were far more agile and that mentality that you trade the business in. As you get bigger you lose that, I'm going right back to basics and getting into the nitty gritty of every cost and if we don't need to spend a penny we ain't spending a penny."
Staff – and customers – have been relieved by the pre-pack deal news and Sara said "we had tears" when she made the announcement to staff at its Newton Aycliffe head office. She also has thousands of followers on a number of social media platforms who have sent her personal messages.
She says she feels more confident for the future than ever.
"I was not letting this company go," she said: "Now I am in control I actually feel more confident because it's within my gift to deliver it.
"In all honesty you don't realise how valuable something is until you think you've lost it - and I guess last year I lost it. For all the business hadn't gone under I'd lost control of it and so I essentially lost it."
Reflecting on her multifaceted career, Sara highlighted: "Being honest I've got a great life now, a fantastic career outside of the business, my TV career is taking off. I didn't need to do this. I don't need to run Crafter's Companion to earn a living. I've got plenty else going on in my life that's way less stressful than running a business and having all of those staff mortgages to pay. But I believe in the business, I believe in my staff. I don't want to let my staff down."
She also expressed her commitment to her clientele: "I also don't want to let my customers down. For a lot of our customers the crafting isn't just a hobby, it's a way of life, a community, an outreach. So many customers would panic if we didn't exist anymore, and didn't have our craft TV shows. It might sound big-headed to think of your brand this way, but to our craft community it's more than a company that sells things to people."
Sara mentioned the future workload and a potential shift in her schedule, stating: "I will probably have to cut down on the number of commitments outside of the business. I scaled it up last year because I wasn't required as much in the business, and have been doing much more with the BBC. I will just have to be selective about the projects I'm doing. I need to be smart because you spend a lot of time travelling to do the filming."
Sara Davies has hinted she may have to scale back her TV commitments, stating: "Last year I filmed a new series for the BBC in Newcastle which airs in February - if they want to make another series of that then absolutely, it's just up the road. But going down to London to do a six-minute interview? Those are the things I'm going to have to cut down on."
As a panellist on Dragons' Den for the past six years, and also a regular on Morning Live, Davies expressed uncertainty about her future on the BBC show, which returns this Thursday: "We never know until we get there. So I don't know until the BBC gives me that contract. I always just wait and pray and hope."