When three colleagues from the beauty business got together three years ago to form their own company, CGI Beauty, Britain’s high streets were booming.

Co-founder Colin Gordon said: “We have all had careers with other companies who supply cosmetics and toiletries to retailers like Marks & Spencer and Tesco. Having made lots of money for other people, we decided that it was time that we became entrepreneurs ourselves.

“We could see there was a huge gap in the market for own-label toiletry products and we knew we could make good-quality products overseas at a competitive price. By paying close attention to design, we managed to persuade major retailers that we could provide what they wanted.”

Their confidence paid off, and by last year, they had orders for 2009 Christmas gift packs from major names such as Next, Superdrug and Sainsbury’s. But then came the credit crunch.

They had designed the Christmas gifts in their studio in an old barn at Wicklesham Lodge, near Faringdon, and ordered them from manufacturers in the Far East. But when they went to their bank for an overdraft to cover the cost of raw materials and payments to suppliers, the answer was ‘no’.

“It was frustrating that the bank would not simply increase our overdraft facility, but it was a time of unparallelled financial turmoil. We demonstrated that we had contracts with triple A-rated retailers. It seemed crazy when our turnover had grown to four times what it was.”

He believes the company — which is now booming — could have failed earlier this year, had it not been for a £175,000 loan from the Government-backed Enterprise Finance Guarantee Scheme, suggested by their bank’s business manager, Andy White.

The scheme was introduced in January, at the height of the credit crunch, to encourage the banks to support viable companies who found themselves at the margins of commercial lending.

The Government guarantees 75 per cent of the loan's value to UK businesses with a turnover of up to £25m who are not easily able to access the finance they need, enabling them to secure loans of up to £1m.

Mr Gordon said: “It was very difficult to get — we had to jump through many hoops, and it took months.

“We looked at various routes when we were desperate for finance to continue trading, and there were a lot of options that we could have taken. One was venture capital, but we would have had to give up equity, which we didn't want to do.”

He added: “In normal circumstances we would have been able to get an overdraft. There was huge pressure on banks to improve their balances and a lot of small businesses went to the wall. If we hadn't got a loan, we might have been one of them.”

With the cash to tide the business over until the retailers paid up, CGI was able to place its Christmas orders, which started arriving in May so that they could be in the shops well before the seasonal rush.

Mr Gordon said the company was now bucking the recession.

“Now we have the cash, we are doing very well. It is not all doom and gloom on the high street. Where we have a certain underlying strength is that you cannot cancel Christmas. People do still want to buy presents, and the sort of things we produce are extremely attractive and high quality.

“You can buy something for £2.99 or £5.99 and get a gift product which is very satisfying to give to people,” he said.

Retail analysts talk of the ‘lipstick index’, supposedly coined by Leonard Lauder of cosmetics company Estée Lauder, during the recession of the 1980s.

The theory is that lipstick sales could be an economic indicator because people tend to buy cosmetics as a cheap, cheerful pick-me-up when times are hard.

Mr Gordon was sceptical that his company's success is due to this.

He said: “There are all sorts of things that people can do without in a recession, but they can't do without toiletries like soap and shampoo.

“You also get a move from branded products to own-label products, because they are the same quality and ten to 15 per cent cheaper to buy. I would bet that people are looking more carefully at the products they buy.”

Now the company is recruiting an extra member for its four-strong design team at Faringdon, and Mr Gordon believes expansion is on the cards. However, he is adamant that growth must happen alongside tight cost-control.

“Our objective is to continue to grow our business. We have grown very fast up until now and we would like to do that over the next few years. The prospects of increasing our growth look reasonably good — we are already talking about next season's gift business.

“However, one of the successes of our business has been that we have been able to control our costs by making our resources stretch, with long hours and very high workload; maximising the amount we can achieve with the resources that we have got.

“It will always be ‘Get the business first, then get the resources to do it’.”

Name: CGI Beauty Established: 2006 Founders: Derek Irving, Colin Gordon and Chris Black.

Number of staff: Four Annual turnover: £3m

Contact: 01367 243957