VICTORIA BARNSLEY was in no great rush to become an entrepreneur. After graduating from university with a degree in English literature, she spent four years travelling around China and South America.

She said: “I hadn’t a clue what I wanted to do, so I decided to go travelling. It was a very indulgent time. My father was tearing his hair out.”

She returned to London at the age of 27 and got her first job in a small publishing house in Clapham, south London. But after Barnsley had been there two years it went bust. So in 1984 she decided to start her own publishing company, raising £80,000 from four backers via the Business Expansion Scheme, which provided investors with tax incentives.

She used the money to buy some of the titles she’d commissioned from the receivers of her previous employer, rented a one-room office in Notting Hill and hired an assistant to do the typing three afternoons a week.

“I didn’t know what the hell I was doing,” she said. “I knew absolutely nothing about running a company and I didn’t know much about publishing either. My father was terribly worried and kept saying, ‘this is completely mad, you are going to ruin us.’ But a lack of knowledge can be a huge advantage because you don’t actually know the risks you’re taking and the potential problems.”

Barnsley started by publishing non-fiction books written by journalists, hence the name Fourth Estate. However, she soon realised it was a misguided strategy.

She said: “The idea was to do books on current affairs, but it was very difficult to organise a business round that because it’s very unpredictable. So within a couple of years I realised that if I wanted to get anywhere I had to do fiction.”

It was a sound move. Within weeks she had unearthed a novel, The 13th House by an unknown Indian writer, Adam Zameenzad, in the pile of unsolicited manuscripts sent to her. She published it and the book won a prestigious prize for a best first novel.

Despite this, the first few years were a struggle. Barnsley said: “There were many moments when we couldn’t pay salaries at the end of the month and many moments when we had to avoid taking phone calls from creditors. It was pretty much hand-to-mouth.”

But there were some advantages to being an outsider in the tightly knit world of publishing. She said: “When I produced a book with a white cover, everyone said, you can’t sell books with white covers. But the book sold very well and was a great success. To start with we broke rules because we didn’t know the rules. Then we got a bit cheeky and we enjoyed breaking them. I learnt that there is no one way of doing things.”

At last, when The Sunday Times named Fourth Estate best small publisher in 1988, Barnsley’s company found itself admitted to the club. “It really put us on the map,” she said. “Suddenly agents started to notice us and every unpublished author in the land realised we were another publisher to try.”

Then Fourth Estate published a little book called Margaret Thatcher’s History of the World, a humorous collection of readers’ views, in conjunction with The Guardian. It went so well that the newspaper decided to invest in the company, taking a 50% stake.

Barnsley spent part of the money creating a dedicated salesforce for Fourth Estate instead of relying on other publishers to sell its books. She said: “It was a big overhead to take on and quite a risk. But we felt we were never really going to make it unless we controlled our own selling.”

Earlier she had taken another risk with the decision to keep the rights to Fourth Estate’s paperbacks.

“Traditionally, many publishing houses publish a book in hardback and then license the paperback rights to another publisher. This would seriously help their cashflow,” she explained. “But the paperback list is where the value is.”

Fourth Estate’s biggest success came when Barnsley published an unlikely little book called Longitude by Dava Sobel. It went straight to No 1 in the bestseller list. Barnsley said: “The book had been turned down by a lot of publishers, but I had a brilliant editor working for me and he spotted it. We won book of the year and publisher of the year and then everything went bananas.”

Nevertheless, Barnsley admits to making mistakes along the way, notably turning down Arundhati Roy’s book, The God of Small Things, which went on to win the Booker Prize in 1997.

By 1999 the company had reached a crossroads. Barnsley wanted to open an office in New York, but The Guardian wasn’t happy about putting up the necessary investment. So she decided to sell Fourth Estate to HarperCollins for a figure believed to be about £10.2m, and as part of the deal joined the company as chief executive and publisher of its UK arm.

Now 49, Barnsley said: “I hadn’t set out with a dream to be in publishing and it was all rather accidental. But I think that when opportunities come along you have to grab them. And I discovered that it was fun and I liked it. I get an adrenalin buzz from taking risks. I enjoy playing poker and it’s exactly the same feeling.”