“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,” says Sara Davies.
While the rest of the UK population was picking up turkeys, preparing for Christmas and looking forward to a festive break, the well known TV Dragon and entrepreneur was facing a very different predicament.
Just three days before Christmas, the County Durham businesswoman had been told that the business she launched as a student – papercraft company Crafter’s Companion – was to be placed it into administration by its financial backers. With the clock ticking, Sara faced a race against time to put together a rescue package.
Those plans came to fruition this week when, as soon as Crafter’s Companion was put into administration, Sara bought it from administrators. She said she is now intent on getting the business she describes as her “third child” back on track and thriving, but admits the last few weeks have been tumultuous.
She said: “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!
Crafters Companion craft shop in Newton Aycliffe
“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.
“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.
However, accounts for the last two years show how the cost-of-living crisis and inflation have hammered the business. Operating profit of around £485,000 in 2021 fell to a loss in £1.24m in 2022, and the year after saw revenue tumble 21% and pre-tax losses widen from £1.3m to £5.1m.
As part of the funding deal with Growth Partner, a new management team was brought in. Sara’s husband Simon, who had been CEO, left the business and Sara remained as a figurehead and minority shareholder but hadn’t been involved in the firm’s day-to-day operations or strategy for almost a year.
Despite the multimillion-pound investment, however, the firm continued to be loss-making.
Sara said: “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.”
That prompted the call on December 22 telling Sara that the firm was to be put into administration. She saw this could be her chance to save the business.
She said: “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.
“If they were going to sell the company I’d be going along with the company, so I was working with them to pursue different options to selling the company.”
Sara says she feels grateful for the support from Growth Partner, saying she personally reached out to the firm’s founder, HomeServe CEO Richard Harpin, to thank him for 10 years of “incredible” support.
She said: “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.”
Together with a silent business partner on board, Sara cannot wait to get cracking with her plan to turn around the business. A handful of job roles will potentially be redundant but the majority of the 100-plus workforce will stay on with the company. Other changes will also be made in the business, including cost-savings on the way products are shipped, on warehousing overseas, and on agencies the firm uses, for example.
Looking ahead, she said: “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.
“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.
Sara Davies and her husband Simon run Crafter’s Companion
“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 said she and the staff will be spending the coming weeks and months knuckling down to put her strategy in place, and the hard work that lies ahead means that her regular TV appearances will likely have to be scaled back.
She said: “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.
“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.”
The entrepreneur and former Strictly Come Dancing star, who also regularly appears on Morning Live, has appeared as a panellist on Dragons’ Den for the last six years and fans will see her on the BBS show again when the new series starts this Thursday.
Despite saying work outside the business will have to be curtailed she must surely hope that her tenure will continue?
She smiled: “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.”