6 Reasons To Reconsider Your Planned Corporate Escape

The grass is always greener on the other side. It seems that everyone I know who works in a corporate environment dreams of escaping to become an entrepreneur, and every entrepreneur wishes he or she had the security of a regular paycheck.

As someone who has experience on both sides of this fence, I’m convinced that the move from employee to entrepreneur is far more risky.

Many good entrepreneurs I know have found that corporate roles are “recovery and recharge” positions between startups, since experienced entrepreneurs usually have a broad range of skills, and the flexibility and confidence to adapt. On the other hand, employees who have lived in highly structured and narrow corporate roles often don’t have a realistic view of the world outside:

1. A lack of focus on the business side of an idea. Technical professionals, in particular, often forget that an innovative product is necessary, but not sufficient, to make a business. Their prior narrow focus in a corporate job gives little insight into the challenges of a winning business model, cash flow and marketing. Customers can be very tough bosses.

2. Pay from a startup takes longer than you expect. Startup-marketing guru Seth Godin once said “it takes about six years of hard work to become an overnight success,” and he is an optimist. Professionals who leave corporate roles for more money are usually disappointed. Startups cost money for a long time before they pay.

3. Startup challenges can be more painful then corporate frustrations. Professionals who are currently unfulfilled at a corporate job may not be ready for the startup roller coaster. Entrepreneurs consider vacations, training classes and administrative staff a luxury they rarely see. Make sure your passion is running to a startup, not away from corporate.

4. A self-centered view of performance. In your corporate role, success is often measured by personal performance, independent of business growth. In a startup, a customer-centric view is required, and business success or failure overrides all personal measurements. There is no room in a startup for the egotistical Lone Ranger.

5. Unprepared for the loneliness at the top of a startup. Running a startup is tough, since you are really on your own, with no peer support. If your personality already leans toward narcissism, being the boss can bring out the worst in you, leading to intimidation, deception and the use of coercive power. Of course, that leads to further isolation.

6. Thinking that a startup is a job vs. a lifestyle. A corporate business role may be a short-term job, but the entrepreneur role is a lifestyle commitment. It’s not a job promotion to the next level, nor an escape from too much stress or responsibility. A lifestyle requires a passion for the journey, more than the destination.

Every employee needs to understand these challenges, since the days are gone when people commit early to a lifetime career with one company, or a lifetime of entrepreneurship. Even the average baby boomer today will have switched jobs more than 10 times, according to the U.S. Bureau of Labor Statistics, and Gen-Yers are already switching much more frequently.

If you are planning a corporate escape as your next move, it pays to think hard about a plan B, just in case this one doesn’t work out. Don’t blow up your bridges as you exit, just in case you want to return. Jumping randomly from one bad situation to another is not very smart. Maintaining good connections and good relationships in both worlds is always valuable.

Many corporate employees seem to think all jobs are a necessary evil, and are always looking to minimize the pain. Successful entrepreneurs don’t think of their roles as work, and tend to approach it with passion and excitement. Making that mental transition is the key to any escape, and it needs to happen before you make the move, not after.

Remember, we all spend most of our lives at work contributing something to others, and getting something in return. It’s up to you to make it a satisfying and productive experience, rather than a prison that you dream of escaping from. Maybe it’s time to reset your mindset before hoping that a career change will do it for you.

Marty Zwilling

*** First published on Entrepreneur.com on 8/21/2015 ***

4 Strategies That Must Be Part of Customer Marketing

With the advent of social media and the pervasive move to smartphones, even customers who still prefer to purchase in brick-and-mortar stores have dramatically changed their shopping habits. Many people don’t post about their experiences, but still routinely check first to see what others are saying about the brand and the product online.

This new customer paradigm is no longer a homogeneous group driven by traditional media, but a network of unique individuals who interact with each other to develop buying criteria and expect businesses to interact with them in a visible way. If you refuse to play by their rules, they have the power to easily find alternatives, and actively pull other potential customers away.

For example, mobile now has become the formidable new communication channel, posting a year-over-year growth rate of 47 percent in 2014, according to WBR Digital Research. That means your marketing must now include shopping apps, location-based services and mobile wallets. Customers expect personalized messages, delivered to them wherever they are.

Here are four new strategies that every entrepreneur must now include in their marketing platforms to survive and thrive in this digital and highly mobile age, ranked by effort and cost on your part:

1. Frequent new content on the web, social media and via mobile. I still see too many websites that look like they have had no updates or blogs in months or even years. Today’s customers ignore these sites in favor of ones with dynamic daily specials, promotions and positive reviews easily accessible on their mobile devices.

2. Get beyond push messages to real customer engagement. Interaction with customers is usually started by responding dynamically to customer-service requests, but must be extended to online chats, comments and social media. Blogs must provide value to customers.

3. Provide personalized solutions through customer interaction. Today’s customers expect to be able to quickly find what they need with powerful search capabilities on your site, or even the ability to customize your solution to fit their unique needs. One example of this is Nike’s shoe size page. The best sites engage customers more deeply and add more value.

4. Engage customers to support shared cultural and societal causes. Motivate your customers to support you by helping them support a common social cause, such as feeding the hungry or saving the environment. See this Business News Daily article for some great examples that have benefited the customer as well as the business.

While most entrepreneurs I know would agree with these initiatives, and profess to understand the new customer paradigm, I still see some common pitfalls, usually brought on by too much ego and passion for their new ideas:

• Assume that everyone loves hot new tools. Most startup founders are early adopters, so they love the latest and greatest technology. The great majority of customers, however, are wary and frustrated by new technology. The best tools, if expensive or hard to use, won’t fit the new customer paradigm you seek.

• Assume that customers are all like you. Entrepreneurs sometimes minimize customer interaction under the mistaken notion that their personal passion will be shared by everyone in their market segment or generation. In fact, customers are all different, and want to be treated uniquely. In addition, trends change rapidly and you need to keep up.

• Assume that more options are better. Focus is critical. More features only confuse your customers and complicate your message. Trying to do too many things as a startup usually means that all are done poorly. Start with a clear vision, and focus your measurements and communication around this goal.

Connecting and interacting with the new customer is everything today. These actions will help you drive sales, reduce costs and find better ways to compete, whether your business is online or on the ground. The old customer paradigm is rapidly going away, and so will your business, if you don’t change. In today’s business, maintaining the status quo is a losing strategy.

Marty Zwilling

*** First published on Entrepreneur.com on 8/19/2015 ***

Smart Startups Learn How To Create And Manage Hype

Creating a successful startup is all about marketing these days, no matter how compelling your solution. Technologists have long believed that marketing is only required when selling the next pet rock, but in this age of information overload, even the most exciting solutions will be lost from view or assumed to have no value unless they are surrounded by hype.

According to Urban Dictionary, hype is “a clever marketing strategy where a product is advertised as the thing everyone must have, to the point where people begin to feel they need to consume it.”

Even technology solutions with a large intuitive value, such as a cure for cancer, need hype for visibility, education, side-effect considerations and to avoid a scam label. What most entrepreneurs fail to appreciate is that even the most basic marketing takes time, money and creativity, and even the best still may not succeed in winning over competitive approaches or the status quo.

Marketing acceptance, especially for new technologies, actually goes through several predictable stages, called the hype cycle, as outlined by Gartner research. This cycle is actually an evolution to total acceptance of a specific solution or technology, based on the effectiveness of the marketing and hype and on the feedback of early users.

Progress through these phases is unpredictable in time, often takes many years, and can only be measured by customer surveys and market penetration analyses. Here are the five key phases:

1. Innovation trigger. Every new startup rolling out an innovative solution is the start of a new cycle. Early hype actually should precede the final product, and consists of proof-of-concept stories, media events and industry exposure. Every entrepreneur in stealth mode who insists on waiting for their product runs the risk of being a non-starter.

2. Peak of inflated expectations. This is the phase where the marketing hype has fully kicked in, often creating unrealistic expectations which the solution can’t yet deliver. Many startup solutions flame out at this point. According to Gartner's Hype Cycle Special Report for 2014, wearable user interfaces such as Google Glass are now in this stage.

3. Trough of disillusionment/ Solutions and startups that stumble under inflated expectations quickly lose their allure, and enter a long period of slow growth or even a big downturn. Technologies used in these solutions are then seen as red flags by investors. Examples include mobile health monitoring, NFC (near field communication) and virtual-reality systems.

4. Slope of enlightenment. Over time, with more marketing, and with further enhancements, customers begin to understand and accept the practical benefits of a given solution. This is the phase where strategic partnerships and new markets are key. Investors seek out startups at this point that are well positioned for rapid scaling.

5. Plateau of productivity. This phase more specifically applies to technologies that have evolved through multiple generations and are widely accepted. Multiple startups can now spawn solutions from the technology, and position themselves for rapid customer growth and early seed-stage support from investors.

I have intentionally broadened the hype-cycle definitions from their traditional hard-technology application to include soft technologies, such as social networks and entertainment. The rules for technology startups are no longer unique -- marketing and hype are now as critical for business-to-business solutions as for business-to-consumer solutions.

There is evidence that the elapsed time of each phase is getting shorter, which just means that every entrepreneur needs to start earlier, and measure feedback more carefully, or risk failure by working on the wrong problem. As an angel investor, I often hear startups touting inflated expectations, or refusing to pivot in the face of disillusionment for their technologies.

The days are gone for those who believe that “If we build it, they will come!” Growing a business in this highly connected and information-intensive world requires a total focus on marketing and evolving customer perceptions. The best startups start early, and put as much focus on the hype as they do on the product. Where is your solution in the hype cycle?

Marty Zwilling

*** First published on Entrepreneur.com on 8/14/2015 ***

7 Ways Founders Demonstrate They Can Run A Startup

When starting a new business, an entrepreneur has to take a “hands-on” role. Because there are so many unknowns, and things are happening so fast, this is no time to delegate or hire outside consultants to handle core functions. That fact eludes most executives from mature companies who have long depended on their staffs for real work, while their focus stays on strategy.

Thus I don’t see many startups run in absentia or by big company executives. Startup founders need to see, touch and feel all the key elements of a new business as it evolves, much like an artist renders a new painting or sculpture. Once the outline and core of a new sculpture is complete, assistants and experts can step in, even under contract, to finish the piece.

In the context of a startup, there are many “hands-on” attributes that every entrepreneur must demonstrate and enjoy if he or she hopes to succeed in building a new business. In my experience, these include the following:

1. Be recognized for innovative actions as well as ideas. The best startup founders are ready and able to roll up their sleeves and jump into any issue and contribute, whether it's business related or technical, no matter how much expertise team members may possess. The best founders know how to pull the best out of others.

2. Communicate a clear vision, as well as a path to the destination. This means a founder needs the ability to attract the right people to a team and motivate them. Then the vision must be translated into a set of tasks to match the skills of the people who can make the vision real. The founder needs to be a mentor and advisor, as well as a leader.

3. Capitalize on relationships inside and outside the company. Startup founders who are lone rangers or autocrats usually burn out or make big mistakes. The ability to nurture relationships, and know when and how to use them, is paramount to success. Relationships only work if they are win-win, so understanding constituent needs is key.

4. Track and measure both long-term and short-term objectives. Translating vision into a plan, milestones and metrics is a key responsibility of every entrepreneur. All of these must be updated at least quarterly, based on feedback and results from customers, and communicated to the team on a regular basis.

5. Able to adapt or pivot the business to respond to the market. Every startup I'm aware of has had to pivot, no matter how elegant the initial plan. Did you know that both Facebook and YouTube started out as dating sites? Founders who are close enough to the front lines are required to listen to market feedback and be savvy enough to respond.

6. Provide constructive feedback and growth opportunities for the team. Individual team member reviews cannot be delegated or moved to the bottom of your priority list. Founders who are consistent and predictable in managing accountability across the team, including hiring and firing, consistently generate the most loyalty and results.

7. Accept accountability for all decisions, with no excuses. The best entrepreneurs give everyone around them credit for the successes, and take full responsibility for all the failures. They learn to delegate effectively, hire people smarter than they are, and put processes in place so that the business is able to run independently of their presence.

The best startup founders actually relish their “hands-on” role in building and selling their solutions, but don’t back away from the business decisions and administrative responsibilities either. They enjoy the camaraderie of the team, but are normally tough taskmasters. They build relationships that often last a lifetime, even with competitors and investors.

Running a startup can be an intense and stressful experience, so rolling up your sleeves should be seen as a way to diffuse the pressure, build your skills and avoid the loneliness at the top. Investors and major customers are quick to spot and support the startup founder who is clearly working in and on the business and having fun at the same time. Do you fit that mold?

Marty Zwilling

*** First published on Entrepreneur.com on 8/12/2015 ***

6 Keys To A Positive Online Presence And Reputation

Most entrepreneurs assume that a lack of an online reputation is a good thing. In reality, it’s negative, because people who can’t find you or any mention of your startup anywhere on the Internet assume you are not savvy or have something to hide. At the very least, with no positives for balance, it’s very risky, since the first negative mention of you or your company will kill your reputation.

The simple solution is for you to define your online identity early with positive content, starting with a business website with the right domain name, and an "about me" page with pictures that paint a positive image of your background, accomplishments and current mission. In addition, there are many other proactive ways to expand that positive presence, including the following:

1. Claim your identity on social media before someone else does. You may not think it’s important to have a Facebook or Twitter account, but once you and your business get some traction, others with less scruples will be quick to grab your name and use it against you. Identity theft can be as devastating to a business as it is to a person.

2. Actively contribute to common business and personal profile sites. Just the act of registering on these sites sets a positive reputation. Occasional engagement and visibility in forum discussions and industry activities establishes positive content to offset the random negative comment that every passionate entrepreneur is sure to generate.

3. Add new blog content to your site on a regular basis. Blogging is an ideal way to express your positive values, show your expertise and establish yourself as an influencer. If done well, this will get you a wealth of positive comments, as well as provide real “Google juice” to push negative content out of view on any search engine results.

4. Monitor the web for negative comments and address them directly. Any not-so-positive reviews or comments can be found with Google Alerts or a similar free tool, and should be answered quickly in a non-defensive manner, ideally pointing to other previous positive content. Don’t make the mistake of ignoring negative comments or reviews, hoping no one will notice.

5. Actively work to remove irrelevant and unwanted content. It is always worth contacting a site owner to remove unflattering content, but you may not have much leverage. You can delete comments on your own site, or articles you have contributed. Expert sites, such as BrandYourself, have proprietary techniques to help remove bad content.

6. Live the reputation you want to see online. These days, everything you do or say, even in a moment of weakness or in private, ends up online. It’s impossible to live one life and project another, so remember your current or future business before posting that provocative picture on Facebook. The Internet sees the good, the bad and the ugly.

If you have slipped a couple of times in the past, it can be helpful to reach out to friends and supporters to attest online to your newfound focus on the business. They can provide links to additional positive or neutral content, which will help to displace and minimize the offending content.

In case you are not yet convinced that these efforts are worthwhile, note that online reputation damage now heads the list of top 10 business risks in Aon's 2015 Global Risk Management Risk Ranking, from a survey of 1,400 risk-management professionals in 60 countries. They project an 80 percent chance that your company will lose value within five years due to this problem.

The good news is that a positive online reputation is the best lead-generation approach you don’t have to buy, if you are proactive and do it right. Don’t assume that it will happen by default. It pays to be street smart, stay out of the back alleys and be prepared for the road ahead. Your reputation follows you, and can be your salvation or the cause of your downfall.

Marty Zwilling

*** First published on Entrepreneur.com on 8/7/2015 ***

8 Ways To Prepare Your Startup For Obstacles Ahead

Too many entrepreneurs tackle starting a business as a random walk into a business minefield, and they count on their street smarts, thick skin and pure determination to get them to their destinations alive. That does work once in a while, usually with some serious collateral damage, but a less painful approach is to prepare and plan for each step along the way.

One preparation example is the value of building a business plan before you start. A popular startup myth claims you don’t need one, since investors never read them. The reality is that if you are only doing a business plan for investors, you are already in trouble. You need the business plan for yourself, to force you to draw a detailed roadmap through the obstacles ahead, and be able to measure your progress along the way.

In my perspective as an advisor and mentor to many entrepreneurs, there are a set of basic strategies that can be applied to every startup to dramatically improve the odds of success, no matter what the business domain. These include the following:

1. Take inventory of your resources before you start. Funding is only one of the critical resources you need to start a business. Maybe more important, you need domain knowledge, relationships and lots of potential customers. Some entrepreneurs run with passion into the minefield, only to find it’s harder to recover than to plan ahead.

2. Define success as it relates to this startup. For some entrepreneurs, the end goal is a social one, such as saving the environment or feeding the hungry. For others, it’s all about making money. The path to each of these destinations is quite different. If you and your team don’t know where you are going, the obstacles will loom large and endless.

3. Prepare a startup vignette to highlight value. Every startup needs a simple elevator pitch, quantifying the value of its journey, that can be communicated in less than a minute to new team members, potential investors and customers. As an investor, I’ve heard people talk for many minutes, and I still had no idea where they were going or why.

4. Calculate and manage your financials. Even non-profits require money to operate, so every startup needs a business model with plans to bring in income. Manage expenses and measure success by profitability, as well as social value delivered. Pace yourself to avoid financial dead ends that can kill your startup.

5. Scaling the business requires repeatable processes. Plan ahead to add more structure, people and financial resources to convert initial success into long-term growth. This means delegating tasks and not micro-managing, as well as more time spent working on the business, rather than in the business.

6. Define metrics to keep on track for the journey. Common financial metrics include burn rate, gross margin, revenue growth and net profit. You also need a sales pipeline, customer acquisition costs and marketing costs as a percent of revenue. These measurements should be driven by your values and your company culture.

7. Continually motivate and reward your team. Team loyalty and positive motivation is a powerful force for overcoming unforeseen obstacles. Reward systems should focus on progress and results, rather than time worked or entitlement. Celebrate every small milestone and success to keep the momentum growing.

8. Maintain your own strength and drive. You won’t survive the journey if you try to run the business 24 hours a day. Be sure to schedule time away from work for physical and mental rejuvenation, including for hobbies and family. Mentors, advisors and business peer support groups are also key to a better perspective on the road ahead.

The best entrepreneurs I know use these strategies to prepare themselves before the assault and to prevent being surprised by the obstacles they will likely encounter. Prepared entrepreneurs are ready and able to dodge and pivot quickly, and not burn themselves out before they reach the finish line. The alternative is to endure a hard road and a painful beating along the way that I wouldn’t wish on anyone.

Marty Zwilling

*** First published on Entrepreneur.com on 8/5/2015 ***

Why You Must Really Know Yourself Before A Startup

If you're an aspiring entrepreneur, you need to take a hard look at yourself before leaving that regular paycheck. Don't assume you will be happier and make more money starting the business of your dreams.

The good and the bad news is that as an entrepreneur, you won’t have a manager charged with directing your efforts or peers helping you implement, and your new team will be quick to tell you only what you want to hear. Thus the burden is on you to capitalize on your strengths, find co-founders and team members to fill the gaps and find mentors and advisors you trust.

Very few people are superhuman, with all the skills, creativity, business acumen, knowledge and personality to succeed alone at any business they tackle. For the rest of us, taking a realistic view of our individual limitations, and acting with them in mind, is the only way to succeed, for the following reasons:

1. Starting the right business requires knowing yourself. If you know your strengths and what you enjoy, you are more likely to tackle a business problem that is best suited to your skills and interests and is less sensitive to your shortcomings. Too many people fail working on someone else’s problem. You won’t be happy in the wrong business.

2. Attracting the right team requires knowing what you don’t know. You need to surround yourself with the best people to complement your strengths and fill your gaps, so together you will be able to see the real opportunity, set the right objectives and execute to success. Many entrepreneurs fail because they seek out the wrong team.

3. Building a business requires confidence in yourself. As an entrepreneur, you will have no place and no one to hide behind. Knowledge of yourself is the key to confidence, and confidence builds leadership. Building a new business requires good leadership to develop the market, attract customers, motivate the team and conquer the unknowns.

4. Being authentic and genuine gets the best from others. To be effective as a leader and respected by your team, they must see that you like who you are. Customers and outside business partners also respond to this vibe and give you the respect and trust you need to keep going. It’s painful and ineffective to continually be someone you are not.

5. Make better business decisions by playing to your strengths. Capitalize on your strengths, and accept input from advisors and the team on decisions outside your range. Everyone will see you as a better listener and a stronger leader who is not autocratic, and knows how to tackle the many unknowns of a new business.

6. Know when to say "no" without guilt. Knowing your limits, and not taking on tasks that you can’t deliver on or are not priorities, is the only way to survive in a modern business world that demands your attention 24 hours a day. Entrepreneurs who know themselves are not afraid to delegate, and never use the “too busy” excuse.

7. You won’t improve if you don’t know what needs fixing. Every entrepreneur and every business needs continuous improvement. Understanding yourself will help you set the right priorities for self-improvement, including working on your health, balancing family life, changing bad habits and joining business peer groups.

If these observations make no sense to you, it may not yet be the time for you to start down the path of an entrepreneurial lifestyle. Many people are happier to stick with the familiar, even if not totally satisfied and happy, rather than deal with the stress and likely failures of starting their own businesses.

Marty Zwilling

*** First published on Entrepreneur.com on 7/31/2015 ***

8 Ways An Investor Pitch Differs From A Product Pitch

When pitching to investors, entrepreneurs always seem to start with a customer pitch, then add a slide or two about the business. In reality, they need a separate pitch about the business, carrying over only a slide or two about the solution. Remember, investors are buying into the business, not the product. Investors are business experts, while the entrepreneur is more likely the product expert.

In every case, the relevant pitch needs to start by highlighting a real customer problem, then outlining a new solution, with all the features and disruptive technology. One of the most common red flags I hear from my fellow investors, and even customers, is that they hear yet another “solution looking for a problem.” These don’t get funded, nor bought by customers.

Beyond that common starting point, the why and how of the business are more important to investors than the what. Attracting business investors is as tough as attracting customers, but it’s a different challenge. Investors have business motives, so using customer motivations to attract investors won’t work. Here are the motivation elements that investors expect to hear:

1. Size and growth potential of the market opportunity. Your customers don’t care if you are targeting a billion-dollar market and growing at double-digit rates, but investors will skip small or shrinking opportunities. Large and growing markets imply a high startup growth potential, with high odds of scaling and success.

2. How the solution and business model work to fund the business. Every customer understands that your solution has to generate more revenue than cost, but you should not put that data in a customer pitch. Investors will impatiently expect a winning business model, customer segment definitions and volume projections.

3. Competitor positioning and sustainable competitive advantage. How you intend to beat specific competitors (business model, intellectual property) is a key investor decision criteria. Your solution may be a technological marvel, but if it is vulnerable to competitors, potential investors will likely walk away. “First to market” is not sustainable by a startup.

4. Startup team strengths and domain experience. Customers may be attracted to your marketing message, but investors look harder at the startup team, seeking superior expertise in the key areas of growing a business, product domain, financial, marketing and sales. In my experience, the team's credentials are more important than the product.

5. Specific elements of your marketing and sales plans. Of course, these should never be in a customer pitch, but investors expect an overall strategy with specific budgets, milestones and metrics. Partnerships, distribution channels and pricing models should be included. “If we build it they will come” is not a marketing and sales strategy.

6. Projected revenues and expenses over the strategic period. Typically, investors want to see five-year financial projections to check your commitment and understanding of the business's potential. This allows them to calculate burn rates, break-even points and forecast the company valuation over time.

7. Immediate investment requirements and use of funds. No investor pitch should end without asking for a specific amount of money, providing some details on how that money will be used and what equity in the company you are offering in return. Investors are also interested in future investment requirements, time frames and long-term strategy.

8. Potential investor return calculation and exit strategy. Startup investments are extremely risky, primarily because the stock has no value until a future liquidity event, such as an acquisition or public offering. The entrepreneur needs to show a strategy for such an event, and a projected value and return to the investor.

Putting together a good investor pitch is hard work. It requires the same level of understanding of your business that you probably have already put into developing your product or service, over a period of months. A great product can’t exist without a business, just like a great business can’t exist without a product. A great entrepreneur has both, with the ability to tell the difference.

Marty Zwilling

*** First published on Entrepreneur.com on 7/29/2015 ***

7 Strategies To Reduce The Cost Of Finding Investors

Most new entrepreneurs assume that great investors will find their startups based on the compelling solution the founders have created. It does happen once in a while, but usually only for entrepreneurs who have already spent money promoting their efforts, and a large amount of precious time connecting with their peers and the investment community.

Others spend money on mailing lists and investor contacts and “cold calling” a few thousand people, hoping to find someone willing to take a risk on an unknown company. As an angel investor, I believe this approach is a waste of time, since no honest investor is likely to seriously consider a request for money from a stranger. There are just too many scams.

Thus it behooves every entrepreneur to optimize their investment strategies early, based on time and dollar costs, as well as odds of success. In all cases, due diligence is recommended on every potential investor and angel group before spending money you don’t have, looking for money you need. Here are some key recommendations to get you started:

1. Plan for adequate time to find an investment. Don’t wait until your startup is out of money before looking for an investor. Potential investors can sense a desperate entrepreneur, and see it as an indication of poor planning, more than an opportunity for a great bargain. Count on the investment process to take three to four months.

2. Use initial feedback wisely to improve your case. Investors are buying your business, not your product. The right investor will have specific feedback on pricing models, distribution and market positioning to improve scalability. Listen and ask for that feedback, rather than debating it. Update your materials and message after every pitch.

3. Don’t be discouraged if your first try is not a success. Finding the right investor is a bit like finding a spouse. Look for someone with the right chemistry and complementary insights. It’s unlikely to be the first investor you encounter, no matter how beautiful your story. In my experience, finding the right investor will take several months and rejections.

4. Practice with advisors and friendly investors before tackling the big guns. As they say, you only get one chance to make a great first impression, so don’t pitch to a key angel group or venture capital team for practice. Investors are not interested in “mulligans” at this stage, since they don’t expect to provide money for restarts later.

5. Don’t be a total unknown to every investor in a meeting. Through peers, social media or connections, make every effort to meet one or more of the investors before the actual pitch. Entrepreneurs who are not known by at least one investor are presumed to have not done their homework.

6. Weigh the cost of every pitch against the potential return. You can’t pitch to every investor or group, so consider the odds, travel expenses and fees of every opportunity. Don’t be afraid to ask an investor group leader for its track record, sweet spot and connections to startups funded. Follow up to learn expected terms and process time.

7. Temper your approach based on the stage of your startup.  If your startup has a proven revenue model, real customers and is ready to scale, approach the best investors even if it costs you more money. For new entrepreneurs looking for seed-stage help, concentrate on investors who know you or organizations with a vested interest.

In addition to the indirect costs, entrepreneurs are often surprised to learn that they may be asked to pay a direct fee to investor groups to cover research and meeting expenses, just for the slot to present their case. This practice has caused a rousing debate among both entrepreneurs and investors, with some calling it a scam, and others defending it as filter for serious businesses.

According to the Angel Capital Association (ACA), only about a third of its member groups charge any fee, and in all cases less than $500. Other well-positioned groups outside the ACA, such as Keiretsu Forum in Silicon Valley, charge up to $1,500. Registered investment brokers, who assist in business plan and presentation preparation, as well as sourcing investors, may expect a $10,000 retainer per month, as well as 5 percent of investor money raised.

Thus it always costs money to raise money, so plan ahead. I would recommend a budget of at least $10,000 to prepare documents for pitching, legal fees for term sheets and contracts, travel expenses and assistance fees.

Don’t believe the myth that finding outside investors is easy, an entitlement or even necessary. Even today, more than 90 percent of new businesses are bootstrapped. For determined entrepreneurs, there is always a way to earn the money and retain control, rather than face the biggest costs of finding investors: giving away part of your business.

Marty Zwilling

*** First published on Entrepreneur.com on 7/24/2015 ***