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What Would You Do with a 'Small Loan' of £1 Million? David Cooper, Coopers Coffee

Donald Trump claimed in late 2015 that his father gave him a "small loan of $1 million" to start his real estate business. We wanted to ask local business owners in the UK for their thoughts, and to ask how a loan of £1 million may have changed things when they first started out.  

We speak to David Cooper of Coopers Coffee in Huddersfield, who also does business coaching with us here at Equilibrium.

  

If you were given a loan of £1 million when setting up the business, would you have done anything differently?

I'm sure I'd have done almost everything differently. I was 23 years old when I started my company, Coopers Coffee. It was a fascinating 20-year journey full of lessons and painful pitfalls. Especially in the earlier years when rapid growth and poor cash flow nearly bust me twice. In summary to this question; I'd have invested more quickly in the things I needed and no doubt spent way more than was really necessary.  

What difference would the loan have made? Would it have made things a lot easier? Why?

It would have changed everything and not for the better. I dreamt of being a millionaire from the age of around seven years old so to have this amount of cash at my disposal despite any repayment terms would have subdued my desire and hunger to succeed on my own merits. When things are easy, little is learned.  

How would you have used the money? Would you have spent it on specific purchases, or perhaps invested it?

My first delivery van was a Yorkshire Electricity Board bright yellow wreck. It cost £200 and I had it hand-painted in beige with hand-painted sign writing. It was shocking and I'm sure people bought from me in sympathy. It eventually blew up on the M62 and three fire engines doused it in foam to finally lay it to rest. To store my coffee I rented three single garages for £5 per week each on a local housing complex where old ladies had unused garages. I was eventually evicted for running a business in a private complex. Even though I was evidently frugal I still made a loss of £9,000 in my first year. I suspect with new vans and swanky premises bought with my uncle's huge loan I'd have made a far greater loss in year one, possibly unrecoverable.  

How did you start your business? What financial help, if any, did you receive?

Seat of my pants. I lost my job and had monthly outgoings of around £800. I decided it was time to make my fortune so I started a business with no business plan and little experience of how to run a business or what was involved. I had a £3,000 overdraft and a Barclays small business loan for £5,000. I had no savings and literally lived hand to mouth. It was sheer passion for my products and the thrill of selling them that got me through each month. Working on my own I achieved a turnover of £133,000 in year two with an average order value of £60; I was very busy and slowly killing myself. The journey had well and truly begun and there was no turning back. The business doubled in size the year after and made its first £1m in sales in year seven. It became a national business with around 1,200 customers when I sold it and we still had loans to banks and institutions after 20 years of trade. Cash flow is a constant challenge for any business, particularly one that is growing and banks serve as a perfect partner in this challenge, providing the necessary funding requirements of SME businesses. Or at least they used to. I sold my business in 2011 at a time when my bankers were behaving dreadfully towards us and at times I wished I had a rich uncle to bail me out so I could sleep at night! 

Are you pleased you did things the way you did, or would you have preferred to have received a huge loan instead?

My journey was really tough at times. So many mistakes were made with employees, suppliers and customers alike, but all were invaluable life lessons. A loan of this magnitude would have made it way too easy and I've absolutely no doubt I'd have wasted money, overspent and inevitably gone bust. I have a great sense of pride by doing it the way we did.  

What are your opinions on Donald Trump's comments suggesting he considers a $1 million loan small? Would you agree that it is 'small', or would you consider it a significant advantage when trying to get ahead?

It would have greatly disadvantaged me personally at that age as I was naive and inexperienced in business. Of course $1m is not a small amount but it's relative to Donald's world and clearly he has the ability to 'think big'

Success is mainly about attitude, drive and determination and Donald has plenty of the above.  

What size loan, if any, would you recommend prospective entrepreneurs and business owners seek when setting up a business?

I'd suggest that the terms and conditions of any loan are way more important than the loan itself. It has to be fit for purpose. Any loan of any size is an additional debt. Therefore, the attitude should be to put it to the best possible use in the business that provides the quickest and best results and enables you to repay the loan comfortably whilst retaining a profit.  

What advice would you give to other would-be entrepreneurs and business owners just starting out? What would you advise if they were presented with a loan of £1 million?

That depends. Every business start-up is as different as the person starting it. I'd ask: Do you really need it? Is your plan robust enough to repay it easily? And finally I'd ask: Once you have this £1m loan, how will you behave differently?