How to get the $$$ to start a business: a new business needs one year of cash in the bank to have a chance [part III in a series on the startup challenges of Wiesner Publishing].

• Author: Wiesner, Pat

It was the hardest job I ever had, then or since.

I worked for a small publishing company a couple of years before I started my own. I was president and just one aspect of it made it really tough. Like everyone else, we got checks in the mail every day, but we got most of our incoming money on Monday and Tuesday. So we would decide every Tuesday who got paid.

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We would, as I remember, get something like $50K to $60K on the average each week. The problem was that in that same time period we would receive $70K to $80K of bills. My job, along with the controller, was to decide who got paid and who didn't.

It kept us awake at night and made us feel awful when we had to tell the truth to those who were being put off.

During the time this was going on I couldn't have cared less about profit. All I wanted was to have enough cash to pay the bills. Yet it was profit, hard work and good management that finally got us ahead of the game.

I will never forget the feeling, and I also decided at the time that I would never hire an accountant who had not shared my experience. It teaches you to carefully take care of cash. There are basically five places to be considered when you need money for a business: a commercial bank, an investment bank, a venture capitalist, a bigger company and an angel.

Of course, these assume you don't have the money yourself. Most entrepreneurs begin by mortgaging their homes, cars, boats, etc. and then maxing out their credit cards. If this isn't enough, then you go back to the banks and the angel.

Commercial banks are the best place to borrow money because their interest rates are lowest. But the rate is lowest because the rules the banks play by require that you have enough collateral for the bank to completely recover should you default. It's not true that banks will not lend unless you don't need it. But they will not lend if they can't collateralize your loan.

After my first year in business, I tried to get a loan for expansion from a bank in Littleton. They denied me because my story was all about what I was going to do and not what I had already done.

Investment banks are not interested in small. Their range starts from about $5 million on up. They prefer the "on up." They invest from funds put together by groups of investors. They will take more risk than a bank if they like an idea, but they need in excess of a 20 percent return on their money, and they take a share of the stock in your company. If...