The Vest Pocket Consultant:

It’s tough to lose weight when you do most of your business in restaurants.

That’s why, after stepping on the scale at my doctor’s office back in April, I decided to stop making excuses and get back in shape. But, as a time-pressed New Yorker who loves her carbs, I knew that wasn’t going to be easy. After all, who has the self-discipline to eat a low-cal salad while everybody else is having pasta or steak? And who’s got time to go to the gym every morning when your clients need you now?

Knowing myself as I do, I knew I wouldn’t last a day on Weight Watchers, Jenny Craig, Master Cleanse or The Zone Diet. Because, when it comes to following rules, the only rules I can stick to are my own. Which is probably why I dropped out of corporate America 20 years ago and have been working for myself ever since.

So what’s a self-employed, self-motivated, self-confessed non-dieter to do if she wants to lose 40 pounds and slim down to her fighting weight of 155 by the end of 2010?

Here are five rules I came up with, and they seem to be working for me:

Rule No. 1: Run toward restaurants, not away from them.

While this may seem counterintuitive, it actually makes sense. After all, you can’t reach your goal if you don’t have a destination and, unless you’re a confirmed masochist (which fortunately I am not), the prospect of depriving yourself of the joy of eating just doesn’t seem like a goal worth striving for. So instead of condemning myself to a lifetime of protein shakes and nukable entrees, I decided to set a goal that would really motivate me–a nice big plate of linguine topped with seafood and marinara sauce. The catch: I’ve got to earn that high-calorie meal by walking three miles a day and/or exercising for at least an hour. Will I work for food? You’d better believe it.

Rule No. 2: Ask yourself if that Milky Way bar is worth the hike.

While I gave up McDonald’s a long time ago, I couldn’t seem to kick my addiction to Coke. Any time I needed something quick to pick me up before a big meeting, I’d reach for a can and tell myself that this would be the last one. Then there were those early-morning espressos with three (or even four) packets of sugar that I told myself I needed to wake up my brain. And yes, there were the Milky Way Bars I grabbed because I didn’t have time for lunch. Anyway, I dropped those “friends” two months ago and–surprise!–found that I didn’t even miss them. Now I drink unsweetened iced tea with Splenda when I go out and wolf down an 8-oz. bottle of Poland Spring after a workout or a hike. Sure, I’ll treat myself to something sweet once in a while (like the amazing gelato at that ice cream store on Bleeker Street)–as long as I’m prepared to walk it off.

Rule No. 3: Put on your shoes one sneaker at a time.

Like most New Yorkers, I love to walk. But how fast was I really going in low heels and Birkenstocks? Not very. And those casual strolls from Restaurant A to Restaurant B just weren’t burning all the carbs I was consuming. So a month ago when I got serious about walking, I fished out an old pair of New Balance sneakers from the closet of my house in Long Island and laced them up. It’s amazing how much faster you can walk with a little ankle support and some spring in your step. Recently, I walked the 1.3 miles from my apartment in the Village to Penn Station in 22 minutes–and that was with a backpack that contained a pretty heavy purse. Not bad for an out-of-shape Girl Scout leader who’s pushing 50!

Rule No. 4: Eat only food that your grandmother would recognize.

I never paid much attention to where my food came from or what was inside it. As long as it tasted good, I ate it. But then I read an eye-opening book by nutrition writer Michael Pollan called In Defense of Food. Rather than eat the processed foods that have made the agro-industrial complex rich, Pollan believes that the best diet is one that our grandparents would have recognized–mostly fruits and vegetables with some healthy fish, meats and oils thrown in. Some of my favorites: Bananas, green apples, seafood salad and hard-boiled eggs. I’m getting hungry already.

Rule No. 5: Don’t do anything that you can’t do tomorrow, next week and every day for the rest of your life.

My last rule (though I’m sure I’ll come up with more) is not to deny myself any food or put myself on any exercise regimen that I can’t realistically sustain. The last thing I want to do is lose 40 pounds, brag about it on this blog, then land on the cover of People magazine like poor Kirstie Alley. Would I lose more weight a lot faster if I spent six hours a day at the gym and went cold turkey on carbs? Probably. Am I likely to do that every day for the rest of my life? You gotta be kidding me.

Remember: The best rules are the rules that work for you. Don’t let anyone take away your God-given right to eat a hot fudge sundae any time, anywhere you want!

As a small business consultant and investor, I get invited to a lot of entrepreneurship conferences, many more than I have time to attend.

But when I got the e-mail from Ken Shapiro, vice president/investments at the Livaccari Shapiro Wealth Management Group of UBS Financial Services in New York City, I couldn’t say no. On the panel were Kevin Ryan, former DoubleClick CEO and now chairman and CEO of AlleyCorp LLC; Glenn Laumeister, CEO and chairman of PartSearch Technologies; and David Kidder, an internet advertising pioneer and now CEO and founder of Clickable. All three panelists represent Silicon Alley’s elite–serial entrepreneurs who raised millions of dollars from VCs and staged successful exits as well.

The theme of the Media and Technology Leadership Roundtable Spring CEO Summit was “No Excuses: Driving Business Growth Despite Today’s Economic Environment,” and the panelists delivered, sharing advice and war stories with the roomful of entrepreneurs and investors.

Here’s a sampling of what they said:

Kevin Ryan: After leaving DoubleClick, Ryan went and out started half a dozen companies in order to diversify his risk. The company that he spends the most time on these days is Gilt Groupe, which runs a site that provides invitation-only access to designer brands at up to 70 percent off. “The key to success is hiring great people,” said  Ryan, who recently recruited former Martha Stewart Living Omnimedia CEO Susan Lyne to build the 200-person company to a $1 billion business. “I interview people every day.”

Glenn Laumeister: Laumeister founded PartSearch with the vision of building a consumer electronics replacement parts e-tailer that could sell “any part to any buyer” over the internet. “In the beginning, it’s life or death,” he said. “You either raise money or you die.” Like Ryan, Laumeister believes it’s not enough to have the best technology to win the game. “Client relationships are the key,” he said. “You have to be easy to work with.” His favorite technique for gauging the flexibility of prospective salespeople: Asking them to sell him a No. 2 pencil. If they can’t do it, he won’t hire them–no matter how impressive their resume is.

David Kidder: Kidder believes that the key to building a successful business is targeting the customer’s pain point. “You want to be in the business of selling painkillers, not vitamins,” he said. It’s also important to focus on sales and fundraising and, as CEO, to lead by example. On the other hand, you need to manage growth and recognize that there will be setbacks along the way. Kidder’s strategy is to try to have his company do seven things right for every one failure, then learn from his mistakes and move on.

The bottom line: Be a solutions company, not a technology company. And make sure your team is a winner.

Back when I was a business writer at The Miami Herald in the 1980s, I once complained to my editor that, at the ripe old age of 27, I still hadn’t written The Great American Novel. Sure, I had started at least a dozen of them, yet somehow I’d never managed to go the distance.

My editor gave me that world-weary look that editors typically give young reporters who are just a tad too full of themselves.

“People don’t write novels because they want to,” my editor told me. “They write novels because they have to.”

Twenty-plus years later, I still haven’t written that novel–and I probably never will. In the meantime, I’ve authored countless articles, columns and blog posts and five nonfiction business books. As an entrepreneur, though, it’s a different story. Somehow, when it comes to building a business, I’ve got the stamina to keep going until I reach the very top–and I’ve got the IPO to prove it.

That’s why, when a client told me last week that she had decided to scale back her plans to create the next big thing in web publishing, I found myself getting a little angry. Just last year when we first sat down together, she had told me that her goal was to build a gazillion-dollar business and sell it to Google. Seems that the uphill battle of raising capital in this recessionary market had taken its toll.

When I asked her what would motivate her to start thinking big again, she smiled and said, “I’d do it if an investor gave me $1 million.”

Of course, that’s not the way it works in the real world. Except in unusual times, like the dotcom boom of the late 1990s, an entrepreneur must first spend his or her own money proving the concept, then pitch it to investors with all the passion and persuasiveness he or she has got.

That’s why, in times as tough as these, many entrepreneurs are deciding that they’d rather go it alone.

Recently, I picked up a book called Young Guns: The Fearless Entrepreneur’s Guide to Chasing Your Dreams and Breaking Out on Your Own by Robert Tuchman, a young New York City stock broker who quit his job on Wall Street to start a successful sports-marketing business.

“The reason I recommend self-financing for people who are just starting out is that fixating on some outside source of capital is a great way to make launching the business someone else’s responsibility,” Tuchman writes. “If you spend the entire first year talking about presentations so that someone else can take action or make decisions, your mind-set is wrong.”

So does that mean you should scrap your dreams to grow big fast?

Absolutely not, Tuchman says.

“You may reach a point, after the first year, where you decide that, for strategic reasons, it makes sense to bring in some outside funding. But that’s a later stage. Don’t spend your first year looking for funding instead of finding customers and delivering great results. During that first year, be the business. Do everything you can to fund it yourself and use the inevitable cash-flow pressures as motivation to track down customers.”

Do or die. Now, that’s the spirit!

Lately, there’s been a lot of talk about mom-and-pop retailers pulling the plug on their physical storefronts and running their businesses from home.

It’s easy to see the appeal: No more rent, no more utilities, no more sales staff, no more fines from the city for putting out your trash on the wrong day.

The downside: No more customers.

For all that I love the internet and all things virtual, I can tell you that getting people to shop at your online store is not nearly as easy as getting people to poke their heads inside your store at the mall or on a busy street corner. And it’s not free, either. It takes time, marketing savvy and, in many cases, the willingness to spend thousands of dollars on web design, software development, public relations and search engine sponsorships to drive traffic to your site.

Earlier this week, The Wall Street Journal ran a story that profiled a California couple who decided to pack up their children’s clothing boutique and move it into their home. The bottom line: Sales are in the dumps, and the husband has taken a second job coaching high school tennis to pay the bills. He’s also started offering free local delivery in the hopes of keeping past customers loyal.

“Before, we could put a sign with ’sale’ on it outside our door, and it would drive traffic directly into our front door,” the husband told The Journal. “Now, we place ads on other websites and send out e-mail campaigns and wish on a star that people will click through.”

Back in September 2002 when I started my consulting firm, Axxess Business Centers, I opened a storefront in Lower Manhattan offering walk-in consulting services for small business owners and entrepreneurs. While the storefront attracted hundreds of customers and rang up lots of sales, we were never able to break even after paying the landlord, the light bill and our eight-person staff.

Two years later, I shut down the storefront and took Axxess virtual, hoping that optimizing our site for the search engines would bring in enough business to keep us afloat. My gamble paid off–but only because I supplemented our online marketing strategy with a heavy dose of networking, writing and public speaking.

So take it from me: Before you close your doors and kiss your storefront goodbye, put a plan in place that will keep customers coming in the door. Place a fishbowl at your checkout counter to collect business cards, send out an e-mail newsletter once a month, do your homework on search engine marketing and ask your kids to clue you in about Facebook and Twitter.

You’ll be glad you did.

Sending your business plan to an investor in the hope of getting funded is a lot like sending your novel to Random House in the hope that your book will become the next DaVinci Code.

If you’re lucky, you’ll get a curt e-mail telling you “thanks but no thanks.” Most of the time you won’t get any response at all.

That’s why, on the rare occasion that a leading investor in early-stage companies takes you into his confidence and tells you exactly what he’s looking for in a startup, it’s time to pull out your BlackBerry and take note–lots of notes, actually.

Recently, my friend and colleague, Noah Goodhart, a managing member of WGI Group, posted an article on his blog listing the eight qualities that his firm looks for in a startup it’s willing to back. Noah knows what it takes to launch a successful business. Not only did he and his brother, Jonah, run one of our biggest affiliate sites in the 1990s when I was CEO of NetCreations, my e-mail marketing company, but Noah then went on to become an angel investor in Right Media, an online advertising exchange that was acquired by Yahoo! in 2007 for a boatload of money.

“Over the past few years, I’ve made investments along with my partners in over a dozen internet companies through our seed investment firm, WGI Group,” Noah says. “During this time, I’ve started to develop a good sense of the factors that contribute to an entrepreneur’s success in raising money.”

And what’s on Noah’s list?

1. Have a technical co-founder. “Sometimes entrepreneurs opt to hire a consultant and outsource the development,” Noah says. “To investors, this often signals that you weren’t able to convince a talented engineer to join your cause.”
2. Start with your own money. “If you have come up with the greatest idea since sliced bread, you’ll want to start by putting your own savings to work. You’ll be sending a positive signal to investors down the road that you aren’t just looking to take risks with other people’s money.”
3. Build a prototype first, raise money after. “Use whatever personal capital you can scrounge together to develop an initial version of your product or service, and then seek capital when are ready to move from prototype to launch.”
4. Seek investors in a related field. “My background is in online advertising, and thus I’m often much more receptive to businesses in this space. This approach is good for at least two reasons: 1. Investors with a background in your chosen area will be able to provide a lot of advice and strategic value beyond just the dollars they bring and 2. The typical career path of entrepreneurs is often to spend at least part of their time seed investing after a successful exit, so you’ll generally be approaching a receptive audience.”
5. Network with seed investors. “With great online networking tools such as LinkedIn, networking is dramatically easier than it was in the past. But if you aren’t able to network with someone and you need to initiate a cold contact, be sure to research the potential person and approach them smartly and with knowledge of their general investment interests.”
6. Focus on execution. “One of the biggest misconceptions about startups is that it is all about coming up with a great idea. My firm is more likely to back an entrepreneur with an average idea but who is a great executor because we know that, through superior execution, the entrepreneur will evolve the idea and business into something great.”
7. Solve a problem where you have a unique insight. “The best businesses tend to emerge when you experience a problem firsthand and say to yourself, ‘there must be a better way.’ Simply solving a problem generally isn’t enough. You need to solve a problem where you have a unique or special insight and can offer a solution that isn’t obvious to others.”

Bootstrap. “It is very important to figure out ways to make a big impact with every dollar spent by your company. Demonstrating to angels that you can stretch your funds is often a critical deciding factor.”

Got it? Now, go for it! Investors like Noah Goodhart don’t share their playbooks every day!

As an entrepreneur and investor, I’ve always been a contrarian–the kind of person who veers left when everybody else is going right.

That’s why I’ve got to hand it to Jonah Staw, co-founder and CEO of LittleMissMatched, a fast-growing consumer startup that sells mismatched socks, pajamas, flip flops, furniture and other bits of brightly colored fun. The company’s motto: “Nothing matches, but anything goes.”

With joblessness nearing 9 percent and shoppers cutting back on everything but bargains and necessities, you’d think that a company that peddles colorful socks would be struggling to keep the lights on.

But you’d be wrong.

With the backing of Catterton Partners, the $2 billion private equity powerhouse behind top-selling consumer brands such as Build-a-Bear, Frederick Fekkai and PF Chang’s Chinese Bistro, LittleMissMatched is about to open its flagship retail store in New York’s Grand Central Terminal, a tourist and transportation hub that attracts more than 30 million people a year. Two more stores are set to open within the next few weeks. And that’s on top of the 85 stores-within-a-store that the company has rolled out in Macy’s department stores across the country. LittleMissMatched products are also available on the web and through 3,000 retail outlets nationwide, including FAO Schwartz, Bed, Bath & Beyond and J.C. Penney.

“The world is incredibly depressed right now, and we are providing people with a little piece of happiness,” Staw says about his company’s decision to move forward despite the recession. “And from a retail perspective, the world’s best real estate is available to us now.

So while large, debt-ridden retailers are going Chapter 11, LittleMissMatched–with the $17.3 million in capital commitments it raised in June 2008–is going shopping. “Every day, I get at least five calls from landlords offering me great deals,” Staw says. “We’re not interested in the cheapest locations. We’re concentrating on the places where we can get the best exposure.”

Staw, 33, an innovation expert and former marketing executive, can afford to be choosy. Launched in 2004 with money from friends, family and angel investors, LittleMissMatched rang up $32 million in retail sales last year, up from $25 million in 2007. Staw predicts “substantial growth” this year as well.

What’s the lesson for other entrepreneurs? First, raise money while you can. It may not be available later. “We made a decision last year to build the business and not worry about funding,” Staw says. Second, when a great location opens up, grab it–even if the landlord’s asking $250 a square foot. Once the economy rebounds, there won’t be too many vacancies in places like Grand Central.

Third, chart your own destiny. Partner with the big boys, but follow your own path.

“There’s not a day that goes by that I don’t wear mismatched socks,” says Staw, who’s getting married May 24 to a woman he believes is his perfect match. And, yes, “we share a sock drawer.”

Now that the new and improved employment numbers have hit the street, there’s been lots of buzz about the economy turning the corner–and soon.

At my consulting firm, Axxess Business Centers, I definitely sense that change is in the air. Not only are new clients coming out of the woodwork for help with their business plans, but existing clients–the companies that hired us before the market tanked–are starting to raise capital from investors who hid their money under their mattresses when the market froze up last fall.

One client of ours, a New York City restaurateur who’s opening an Italian restaurant in Harlem, just closed on $650,000–$400,000 from investors, the rest from a local economic empowerment zone. Now that the hammers are swinging and her space is nearing completion, our client is thinking about raising more capital just in case.

And she’s not the only entrepreneur who’s feeling bullish about her prospects. We just started working with another New York restaurateur to open an American-style bistro and pizzeria across the street from his Italian restaurant in midtown. Turns out the landlord gave him a sweetheart deal on the space. And we’re also helping two contractors from Staten Island who’ve assembled a portfolio of 12 residential properties figure out how to take their real estate business to the next level.

And all this is happening in New York City, epicenter of the financial meltdown.

So here’s what I want to know: Are you feeling more bullish about starting a business these days? Are investors finally opening up their checkbooks to you? Is “risk” no longer a dirty word in your town?

If you, too, think that change is in the air, I want to know!

Even in good times, it’s never easy to get an investor to hand over a check.

But, in times like these, persuading an angel investor to risk even $50,000 on a startup can be like pulling teeth. While the credit markets have begun to thaw and the economy is showing signs of life, shell-shocked investors are taking longer than ever to make up their minds and demanding debt instead of equity in order to cover their downside.

That said, several of our clients here at Axxess have recently succeeded in raising some pretty serious capital. One client just closed a $500,000 round – though it took him six months to do it and he had to pay some hefty interest.

That’s why my colleague Lawrence Rosenbloom, a corporate and securities lawyer at New York’s Ellenoff Grossman & Schole, believes that entrepreneurs are going to have to seek out new types of financing structures if they want to get their ventures off the ground.

Here are some of the trends that Rosenbloom is seeing in the marketplace:

1. Doubling down. “Given the relative scarcity of new investors, we have seen an increase in insiders loaning funds to their firms to bridge the gap to better times and also offering investment opportunities to existing investors through rights offerings,” he says.

2. Debt and Preferred. “Given their seniority in the capital stack, backers of small businesses have been and are expected to continue to invest in debt or preferred stock structures that protect their investments,” he notes. Convertible debt, which pays investors interest and gives them the option of converting their debt to equity when the business takes off, is popular among early-stage companies, too.

3. Strategic Partners. “Sometimes your best financing partner is right in front of your nose — the operational partners that understand the business best and are already ‘investing’ in doing business with you,” Rosenbloom says. “Extending payables or other negotiated financial accommodations can have a material impact on cash flows.”

While I’ve heard clients complain about the tough terms they’ve been getting from investors lately, the truth is that they’re usually happy just to get the money. Let’s face it: It’s a tough market out there. And, as long as the check clears and the cash is green, there’s no sense singing the blues.

You wouldn’t think the life of a small-business consultant would be all that taxing.

But after the week I’ve had, I’m starting to feel like Simon Cowell after taping too many episodes of American Idol.

It started last Wednesday when I moderated the digital media panel at Richie Hecker’s Bootstrapper Summit in Times Square and listened to four startups pitch the panel of VCs and angel investors. (My favorite was the 22-year-old kid from USC with the comparison shopping/cash-back rebate site.) Then it was off to Baltimore on Friday to judge Johns Hopkins‘ 10th annual business plan contest at my alma mater. (The winner was the company that had reinvented the combustion engine and held the patents to prove it.) Then on Sunday, it was back to New York to coach three business plan finalists at NYU Stern School’s annual competition.

What do judges look for in a business plan?

Now that I’ve recovered, I’ll clue you in.

1. A well-crafted executive summary

Most judges are busy people like VCs, executives and entrepreneurs who may not have time to read your business plan ahead of time. That’s why you need a one-page executive summary that shows that your company has what it takes to be a winner.

2. A killer presentation

When it’s your turn to step up to the podium, you’ve got 15 minutes to sell the judges on your deal, so your pitch had better be perfect. “Your presentation is a TV commercial,” Jay Rubin, a marketing communications consultant and a coach at the NYU contest, told the contestants. “Your job is to persuade [the judges] to like you.”

3. Passion

No matter how sleek your PowerPoint presentation or how cool your video, you’ve got to show the judges how passionate you are about your business and its potential for success. Reading the slides just won’t cut it. “You have to be able to look the judges in the eye and say ‘This is what I want,’ ” said Susan Stehlik, a professor in NYU’s management communication program.

4. A realistic assessment of your competition

One of the NYU teams I coached was a clean-tech company marketing a consumer appliance to monitor home electrical use. Trouble was, the company was competing in a crowded space with VC-backed players who were already signing deals with major utilities. My advice? Re-frame the pitch as a David-and-Goliath battle and get the product to market first.

5. Numbers that add up

Judges like business models that scale quickly and profitably, preferably ones with recurring revenue streams and proprietary technology. Another NYU team that I coached wanted to raise $500,000 to roll out a nationwide network of 30 retail locations in 26 markets. Ambitious? Highly. Realistic? Not very.

Too old to enter a business plan contest? Think again! While most university-sponsored contests require you to be a current or former student, most contests also let you partner with someone who is. Not only will you get some valuable feedback from the judges, but you may walk away with a pocketful of cash that you won’t have to pay back.

As they say in the lotto biz, you gotta be in it to win it!

After going to see the movie He’s Just Not That Into You with my daughter not long ago, I couldn’t resist picking up the best-selling relationship guide to get the inside scoop.

Let’s just say that I wolfed down that dating guide faster than a bucket of popcorn at a teen movie. It’s not that I’m looking for dating advice–thanks to my boyfriend, I haven’t had to scramble for a date in almost eight years–it’s just that so much of the advice dished out in the book also applies to selling, an activity that exposes those of us who run our own businesses to rejection and humiliation on an almost-daily basis.

I think we’ve all experienced the frustration of pursuing that elusive client or customer whose lips said “yes, yes” while his checkbook said “no, no.” And who hasn’t felt burned by that client who hired us once and never came back–only to see him a few months later at a networking event chatting it up with the competition? After everything we did to make him happy.

The bottom line: Some clients, for reasons known only to themselves, are just not that into us. And instead of calling them, e-mailing them, inviting them to lunch and making idiots of ourselves, we should accept it and move on.

But hold on, I hear you saying. Sometimes it takes awhile to build a relationship with a prospective customer. After all, if you’ve only met the person at a networking event the night before, you can’t expect him to whip out his checkbook and make a commitment on the spot. Nobody likes a pushy salesperson. You’ve got to play it cool.

OK, that’s fine as far as it goes. But if several weeks have passed (or worse, several months) and that big fish still hasn’t taken the bait, you’re wasting your time if you’re standing around hoping to reel him in. He’s probably still out there in the ocean, swimming along commitment-free.

What’s the solution? Without further ado, I present:

Rosalind’s Five Ways to Tell If Your Prospective Customer or Client Is Just Not That Into You.

1. He’s not returning your calls.

If a prospective client really wants to do business with you, he’ll call you back the same day. Any client who promises to call you back after consulting with his partner, his wife, his cat or his armadillo–and never does–is trying to spare your feelings. Get over it and move on.

2. He hasn’t actually hired you.

Some clients can be pretty sneaky. Under the pretext of doing their homework on you and your company, they’ll spend hours on the phone asking you all sorts of questions, requesting proposals and giving every indication that they’re about to hire you. Don’t be fooled. Until that client actually signs on the dotted line, it’s no more than a midnight booty call.

3. He hasn’t actually paid you.

Many service providers (especially consultants) like to offer a little free advice in the hope the prospective client will hire them once the prospect sees how amazing their work really is. Sometimes this courtship can stretch out for months, even years. Well, guess what? That prospect is not a client until he actually pays you. And if he won’t make a commitment within a reasonable period of time, it’s time to move on to a prospect who will.

4. He still hasn’t broken it off with his old provider.

Who hasn’t gotten a call from a prospective client who’s unhappy with his current law firm, accounting firm, web designer, etc.? I know I’ve heard from plenty of people who’ve had bad experiences with their business plan writer. But if they’re still committed to their current service provider (and still working off the retainer they paid him), there’s nothing in it for you until they decide to break off that relationship and move on.

5. He only wants to see you if you’re picking up the tab.

Mooching off you for free advice is one thing; soaking you for free meals and drinks when you can barely make payroll is unacceptable. If you’re that desperate, go on a date.

I know, I know. It’s tough to give up on a prospective client or customer–especially in today’s economy, but you’ve got to show you mean business if you want to bring business in the door. Otherwise you’re going to waste your time fooling around with prospects who, sad to say, are just not that into you.

If banks won’t lend to small businesses, why should you?

That might seem like an odd question. But lately, I’ve heard from a number of Axxess clients who’ve been burned by clients or customers who spend big but don’t pay their bills. While collections can be a challenge in any economic environment, it’s especially difficult now.

I’m talking about extending trade credit, the practice of delivering a product or service to your customers and giving them 30, 60 or 90 days to pay. Bigger than bank loans, credit lines, equipment leases or any other form of commercial credit, trade credit is the grease that makes the wheels of our economy go ’round.

Back when I was starting NetCreations in the mid-1990s, I remember filling out an application for trade credit from DM News, the bible of the direct-marketing industry, where we had recently started to advertise. Since we were still a home- based business, it wasn’t easy coming up with the names of three vendors who’d extended us credit in the past. In fact, I think I put down our accountant as one of them. But somehow we managed to squeak through.

As our company grew, we began to extend trade credit to our customers as well. Even though we required the customer’s first order to be prepaid (a standard practice in the list-rental business), we typically gave established customers 30 days to pay, even though some of our corporate customers took 60 days or longer. Everything went fine until the dotcom bubble burst, and we were left holding the bag for roughly half a million dollars in bad debt.

How could I have let that happen? Well, even though I’m a financially responsible businessperson who watches my accounts receivable like a hawk, there was no way that we could demand upfront payment from companies that were spending hundreds of thousands of dollars with us–not unless we wanted them defect to our competitors. So even though we reduced the credit limit of some customers whose financial health we thought was questionable, we still ended up getting burned.

What’s the solution? For starters, it’s important to know your customer. It’s one thing to extend trade credit to a Fortune 1000 company (unless its name is General Motors or AIG); it’s another to give credit to a pre-revenue startup or faltering condo developer.

It’s also important to set limits. No matter how big the customer is, it’s always a good idea to require the first order to be prepaid (or, if you’re a professional services provider, to require a retainer). After that, depending on the customer’s size, industry, credit-worthiness and the amount of money the customer plans to spend with you, you’ll want to establish a credit limit–that is, the size of the bill the customer can have outstanding at any given time before he’s got to send you a check.

While I realize it’s not easy to exercise financial discipline at a time like this, you’ve got to bite the bullet and do it. Otherwise, you may find yourself standing at the back of the line along with other unsecured creditors when your customer goes Chapter 7.

There’s also another reason it’s important to draw the line on trade credit. Since commercial banks are hoarding the government’s bailout money for fear of incurring losses on consumer mortgages and small-business loans, many small-business owners are turning to factors and other asset-based lenders for financing. Without receivables that can readily be turned into cash, if your customer has credit problems, they may soon become your own.

So the next time an over-extended customer or client asks for more credit before he’ll buy, ask yourself how you’ll feel 90 days from now when you’re chasing him around town for a check.

In a volatile world where banks collapse, markets crumble and scheming money managers prey on even the most sophisticated investors, it’s reassuring to know that there’s still one financial institution we can believe in.

That’s right. I’m talking about American Express Membership Rewards points. And Starwood Preferred Guest Starpoints, Continental Airlines’ OnePass program and the countless other loyalty rewards programs run by our nation’s hotels, airlines and travel companies. As a frequent flyer who spends many hours on planes and many nights in hotel rooms, it’s nice to know that the companies that I spend money with throughout the year are willing to kick some of that cash back to me to thank me for being a customer.

That’s why, if the government really wants to stem the tide of unemployment and throw small businesses a lifeline, it’s going to have to do more than cut payroll taxes, subsidize COBRA payments and guarantee a higher percentage of SBA loans. It’s got to step up and let consumers know that Uncle Sam is prepared to reward them for every dollar they spend to boost the economy.

I’m suggesting that we blanket the country with gift cards–millions of them, in fact.

Consider these stats:

• More than 60 percent of U.S. households say that loyalty card programs were important in their shopping decisions (A.C. Nielson).

• Consumer spending is 46 percent higher with companies that offer loyalty card programs (Total Research Corp. and Custom Marketing Corp.).

• Fifty-five percent of gift card recipients require more than one trip to the store (Standard Register).

Here’s the best part: Although most gift card recipients spend the full value of their cards within the first month of receiving them (good news for retailers), fewer than 86 percent of gift card holders ever redeem the full value of their cards (good news for the taxpayers), consumer research shows.

Here’s my plan: Give every taxpayer who’s eligible for a 2008 income tax refund a $100 gift card that’s redeemable at any store, restaurant, gas station or small business willing to accept them. We could call them B Cards in honor of the bailout. (Note to Congress: My plan wouldn’t cost the taxpayers a penny. Since the average taxpayer who gets a refund receives close to $3,000, the $100 gift card would be paid out as part of the refund the taxpayer’s getting already.)

Think about it: If the government gave a $100 B Card to each of the roughly 100 million Americans who are likely to get refunds this year, that would inject $10 billion into the U.S. economy, benefiting not only struggling businesses but the cities and states that collect sales tax as well. China, which has half its assets invested in U.S. Treasuries, could stop worrying about the safety of its money and go back to exporting large quantities of low-cost products to the United States. And the stock market would go crazy once those retail sales numbers came out.

If we wanted to stimulate the economy to bounce back even faster, we could make it a use-it-or-lose-it proposition. If you don’t redeem your B Card by Dec. 31, 2009, the card expires and the money goes back to the U.S. Treasury. Retailers could match the B Card with offers of their own–either now or during the holiday shopping season. Taxpayers could also use the B Card to shop online.

What’s the downside? I’m not sure. We may have to tweak a few rules and regulations but, since nothing else has worked so far, I don’t see any reason not to give it a try. There are a lot of smart direct marketers who are out of work right now, many of whom would probably jump at the chance for a steady government job.

Kidding aside, the government needs to get consumers on board before the economy can recover. What better way to win their hearts and wallets than to reward them for the trust they’ve placed in our financial system.