The Vest Pocket Consultant:

Like most entrepreneurs, I’m usually too busy to spend much time thinking about opportunities that I coulda, woulda or shoulda pursued.

Oh, sure, I still kick myself from time to time for not investing in the Google IPO (I didn’t think that a company that sold ads on a per-click basis could be viable long term) and for not jumping on Research in Motion stock back in February 2000 when I bought my first BlackBerry (I figured that big telecoms like AT&T would try to crush the little company from Canada, not sign up as channel partners).

But, for the most part, the choices that I made back then are still the choices that I’d make today. And there’s a reason — there’s only so much downside risk I can tolerate without a Xanax.

Back in 1982 when I was a reporter at The Wall Street Transcript, my editor assigned me to cover the art and antiques market. With double-digit inflation and the economy in the tank, investors started pouring their cash into collectibles and the smart money moved uptown to Sotheby’s and Christie’s. Records were being set on a weekly basis in everything from Old Masters to Inuit carvings.

As a 22-year-old reporter making $200 a week and struggling to pay the rent on a Brooklyn apartment, I couldn’t help thinking that there must be a better way to make a living than banging out stories about other people’s financial success. But, lacking the capital to buy Oriental rugs or Impressionist paintings, I decided to sign up for a night course in commodity futures trading, an activity in which a small investment and a lot of leverage lets you rake in big profits in a very short time.

Now, I don’t remember exactly where I took the course, but I do remember standing on a trading floor with a group of 25 or 30 other aspiring commodities traders listening attentively to an instructor teaching us the hand signals we needed to know to trade futures contracts. Back in the days before online trading, you had to stand in a trading pit and scream your lungs out to find a buyer or seller willing to take the other side of the trade. Motioning forward meant “I want to buy;” motioning away meant “Sell, sell, sell!”

This can’t be too hard, I remember thinking to myself. In less than a day, I can make more than I make at my newspaper job in an entire month.

Then, on the third night of training, a commodities trader came in to talk to us about a typical day on the job. Like most traders in those days, he worked for a brokerage firm but he also traded for his own account, putting his own capital on the line. He told us about the excitement of the trading pits and the big money he had made there, but he also warned us about the downside. One morning, he said, he was up $100,000 and decided to break for lunch. Half an hour later, he came back to the trading pit and his $100,000 was gone — and then some. (When you trade commodities, you can actually lose more money than you invested. I guess the trader was at lunch when he got the margin call. )

Let’s just say I decided to keep my day job.

Over the years, I’ve put money into a lot of risky things but commodity futures has never been one of them. (I leave that to my hedge fund managers.) And, even with oil, gold and corn at record highs, I haven’t once been tempted to open an online account or pick up the phone and call my broker.

Because what goes up that fast can just as quickly come down. And I’d rather leave the roller coaster riding to the professionals than lose my lunch the next time the market plunges.

Anybody who goes to a casino expecting to win is making a sucker’s bet.

That’s why, when my boyfriend, Ray, dragged me to the Mohegan Sun on Saturday, I resigned myself to losing the $500 I brought with me, and then some. It’s not that my boyfriend and I are compulsive gamblers–we don’t gamble very often and, when we do, we generally stick to blackjack, where at least we’ve got a shot. It’s just that there are more ways to lose money at the Mohegan Sun than just the slots and the tables. Before we walked in the door, the Connecticut casino had already dinged my Amex card for $529. The Mohegan Sun also boasts dozens of restaurants and shops.

After settling into our room, we took the escalator down to the casino around 4 p.m. to check out the action at the blackjack tables. Ray likes the $25 tables because he can stay and play all night. I prefer the $100 tables because I can find out within minutes whether I’ve won or lost.

At the first table we picked, I won three hands and $200. Not bad–a 40 percent return for five minutes’ work. After that, we headed over to the $25 tables, where Ray immediately lost the $200 I’d just won. After a few more hands with less than stellar results (Ray had thrown $700 of his own money into the pot), we headed off to dinner to lick our wounds.

Over dinner, we talked about the many reasons why gamblers stay at the table long past the point at which any sane and rational person would have cut his or her losses and walked away.

1. My luck has got to change.
This kind of magical thinking violates the first rule of statistics. The reality is that you have exactly the same chance of winning or losing each time you roll the dice or draw a card.

2. I’m going to battle back until I win.
While everybody likes a happy ending, comeback victories are more common in movies and novels than they are in real life. If only George Bush would confine his battling to the Mohegan Sun!

3. The dealer’s just getting lucky.
There’s a reason the house generally wins, and it’s because the odds are stacked in the casino’s favor. (Even with blackjack, where the dealer and the players are on an equal footing, you won’t win for long unless you know how to count cards–yet another Hollywood fantasy.) The longer you stay at the casino, the greater the odds that you’re going to lose.

4. I’ve lost so much money already, I may as well go for broke.
This is another statistical fallacy. If you wouldn’t risk all your chips in the beginning, what sense does it make to bet them all now? Your chances of winning aren’t any greater and, if you decide to double down or bet your remaining chips on one hand, you may find yourself taking the walk of shame to the ATM machine.

5. What’s the difference? It’s all random anyway.
Actually, that’s true. But if you really believed it, you should’ve stayed home and saved yourself the trip.

Now at this point, you’re probably thinking we headed upstairs and called it a night. After all, we were only down $200. But that’s not how our story ended. After I went back to the room to watch a movie, Ray took our $1,000 chip and headed back to the blackjack tables to try his luck again.

When I came downstairs two hours later to check how he was doing, he greeted me with a big smile and a hug. Not a good sign. Turned out our $1,000 chip had shrunk to $600, which meant that we were now down 50 percent from where we started.

Therefore, Ray said, it was up to me to make up the money he’d lost. Now I know how irrational that must sound, but when you’re standing in the middle of a bustling casino surrounded by the lights, the crowds, the music and everything else that’s going on, it’s hard to resist the temptation to go for it.

The next thing I knew I was sitting at a $50 table with $600 in chips, two Asian guys to my right and a big, brassy blonde  telling me to try the “perfect match” that paid 4-to-1 if I matched the dealer’s card with one of my own.

“Why not?” I said, putting a $100 chip inside the Perfect Match circle, violating all five of my rules simultaneously. “You never know what might happen.”

When the dealer pulled an ace, my tablemates gasped in amazement. There was an ace in front of me as well. On my first try, I had won the Perfect Match. Clearly, this was a sign that we should keep going. Several hands later, I hit blackjack on a $100 bet and then, at my boyfriend’s urging, I decided to let it ride, betting $250 on the next hand.

I’m ashamed to admit what happened next–because the gamble that I took flew in the face of logic, statistics and any proven theory of risk management (except perhaps the one employed by Bear Stearns when it bet big on subprime mortgages). After getting a nine and a two, I decided to double down, risking $500 on the next card.

The table went silent as the dealer drew his card. He had a six showing and, according to the house rules, had to keep drawing until he hit 17. He turned over his bottom card–a face card–which gave him 16. Then he drew a seven and busted with 23. He pushed $500 in chips in my direction.

“Let’s get out of here!” I told Ray as I pocketed our chips and tossed the dealer a $50 tip.

By that time, it was around 10 p.m. We returned to our room triumphant, prepared to call it a night (Though I had a sneaking suspicion that Ray would hit the tables again before we left).

The next morning, as I was preparing to write about our adventure in this week’s newsletter, Ray told me he was going back downstairs with the $700 he’d brought with him plus his $200 in winnings from the night before. My money, by contrast, was stored safely in my wallet.

When he returned to the room half an hour later, he was sporting a sheepish grin. “Did you lose it all?” I asked him. “Every last dollar,” he told me. “Yeah, right,” I said. “Show me the money.”

And then he did–all $1,600 of it–a $1,000 gain, which pretty much paid for our weekend in Connecticut. Then we showered, dressed and got the heck out of there.

The moral of the story: It’s better to be lucky than good!

When clients come to me for advice on raising capital, I always tell them this: It was a helluva lot easier for me to raise $43 million in three weeks when I took my company public than it’s going to be for you to raise the first $200,000 you need to get your business off the ground.

Turns out that Michael Bloomberg has been listening.

Last week, New York’s mayor announced the formation of NYC Seed, a $2 million venture fund for cash-strapped tech entrepreneurs looking to make their dreams a reality. Bloomberg announced the launch of the new fund at the kickoff event for New York’s first-ever Internet Week.

NYC Seed is a public-private joint venture that taps resources from six city agencies and organizations–the New York City Economic Development Corp; the New York City Investment Fund; the economic development arm of the Partnership for New York City; Polytechnic University; the New York State Foundation for Science, Technology and Innovation; and the Industrial and Technology Assistance Corp. The $2 million fund will invest up to $200,000 per company.

“New York City has always been a place where aspiring actors, artists and musicians have come to live out their dreams and ambitions, and we want to make sure it is the place where aspiring technology entrepreneurs come as well,” Bloomberg said.

The fund, which will be headquartered at Polytechnic’s incubator in downtown Brooklyn, will be overseen by an all-star board including Union Square Ventures’ Fred Wilson, Milestone Venture Partners’ Todd Pietri, DFJ Gotham Ventures’ Daniel Schultz and Greycroft’s Drew Lipsher.

Owen Davis, the fund’s managing director, said that NYC Seed will invest in pre-revenue companies founded by tech-savvy people with innovative ideas and a working prototype.

According to the fund’s website, “No idea is too early for consideration for NYC Seed. We fund small teams that want to express their original ideas through software and web-oriented technologies. We encourage first-time founders. There is no set formula for why we invest in a company, but there are some qualities we would like to see. We are looking for a team (2-plus people) with a compelling idea that makes sense today. Your team should be technically savvy, with members [who] possess a proven record of completing complex technology projects.”

The catch: Your company must be based in New York City, or be prepared to move here.

Though the fund’s size may be tiny compared with private venture capital funds such as Union Square Ventures and Greenhill-SAVP that have raised $100 million or more, Maria Gotsch, New York City Investment Fund’s president and chief executive, told Crain’s New York Business, “There is a strong demand for smaller amounts of capital for early-stage companies. NYC Seed will address that demand.”

But is $2 million really enough to jump-start New York’s internet/digital media industry? On Friday, several friends of mine in the internet business weren’t sure. Unlike Silicon Valley, where venture capital seems to flow like water, finding seed capital for New York startups often requires psychic powers and a divining rod. Couldn’t Bloomberg have ponied up a little more cash, they wondered.

As an entrepreneur and consultant, I’d certainly like to see New York put more money in the pot. A fund that invests $200,000 apiece in 10 early-stage companies is going to leave a lot of promising ventures behind–and, unless one of those 10 companies turns out to be the next DoubleClick, 24/7 Media or NetCreations, it won’t do much to create jobs in this town.

As a New York City taxpayer, on the other hand, I share the concerns that were posted on the Crain’s website after the news came out.

“This is [the] twilight zone,” the reader wrote. “Are we in 2000???? Why is taxpayers’ money invested in ventures which have a 1 in 30 chance of succeeding?? Return the taxes to individual taxpayers (shareholders) and let them make their decisions.”

The bottom line: Investing in startup companies is always a crapshoot, but I’m glad to see New York City finally putting some skin in the game. While our motto may be “If You Can Make It Here, You Can Make It Anywhere,” it’s nice to get a little help from our friends.

A couple of weeks ago, I was having lunch with an attorney friend when the conversation turned to the rising cost of fuel and commodities.

Things had gotten so bad, he told me, that a client of his–a landscaper who specializes in installing roof gardens on top of fancy Manhattan apartment buildings–had just started hitting his customers with a surcharge to cover the rising price of copper.

Unfortunately, not every business is in the enviable position of being able to raise prices in order to cover rising costs.

Here are five easy ways you can keep more money in your pocket and put less money in OPEC’s.

1. Open your windows. Less A/C means lower electric bills ,whether you’re working from home or out of an office. There’s no reason to share your hard-earned profits with Con Ed if you don’t have to!

2. Take the subway. Even if you don’t live in New York City like I do, public transportation is a cost-effective option available to people in most parts of the country. Whether you travel by bus, train or carpool with friends, you’ll see an immediate savings–and have a chance to network with potential clients along the way.

3. Save your receipts. However you choose to get from Point A to Point B, remember to save your receipts so you can write off your travel expenses at tax time. Now that New York City taxis have started taking credit cards, you can get American Express Membership Rewards points, too.

4. Order online. Sure, Costco has some great deals on toner cartridges, but how much gas are you going to have to burn to get there? You’ll save more money by ordering online at sites such as Staples, where delivery is free on all orders above $50, excluding custom products like coffee mugs with your company’s logo.

5. Buy in bulk. While you’re ordering online, you might as well buy in bulk. As my mom would say, you’re going to use all those toner cartridges and all that paper anyway–it’s not going to spoil!

I could easily go on. By switching to online banking, you save on postage. By e-mailing instead of faxing, you save on paper. These are all minor cost savings, I know, but a couple of pennies here and there can add up to big dollars down the road.

For all that I love the virtual world, there are some things you’ve just got to do in person.

That’s why, instead of sitting down at my computer on Saturday morning and banging out the rough draft of this newsletter as I usually do, I got on a plane with my daughter, Caroline, and flew to my aunt’s wedding in Minneapolis. (I was the flower girl at her first wedding when I was 7, and I’ve got the pictures to prove it.)

The following 24 hours were a blur of parties, dinners, brunches, shopping, amusement parks (Caroline and I made a pit stop at The Mall of the Americas to hang out with my brothers and their kids before we raced to the hotel to throw on our wedding clothes) and, of course, the ceremony itself. Guests came from as far away as Sweden to celebrate the event.

The next day, Caroline and I got back on the plane (two hours delayed, of course!) and finally arrived at our apartment around 9 p.m. We ordered some takeout, then collapsed, completely exhausted.

I’m sure it would have been more convenient if my aunt had held the ceremony on Second Life and we could have sent our avatars instead. Yet even in a world where stepping in and out of a relationship is as easy as changing your profile settings on Facebook, I’m beginning to sense a craving for something real–the kind of physical community that existed before texting and IM-ing took the place of chatting over a cup of coffee.

Oh, Mom! I hear Caroline saying. You’re such a dinosaur.

Well, maybe I am, but I don’t think I’m the only one.

For example, there’s a new book called In Defense of Food: An Eater’s Manifesto by journalist Michael Pollan, who rails against America’s nutritional industrial complex, which has been poisoning our minds for years with half-baked ideas about what’s good for us. Pollan’s prescription: “Eat food. Not too much. Mostly plants.” It’s No. 56 on Amazon.

Then, last week, The Wall Street Journal ran a story about a 46-year-old billionaire named Nicolas Berggruen who made a fortune in the stock market and is now investing in rice farms in Cambodia, wind farms in Turkey, an ethanol plant in Oregon and skyscrapers in inner cities in poverty-stricken nations. “Now I’m investing in the real world,” he told The Journal. “I’m investing in the ground, in things that will last for generations and improve people’s lives.”

Now, I’ve been in journalism long enough to know that you can’t connect two dots and call it a trend. But I’ve felt the backlash coming for a while. Now that the housing bubble has burst, the dollar has cratered and the price of gas has topped $4 a gallon, a lot of smart people have begun asking themselves whether the boom times and productivity gains of the last 10 years were really just an illusion financed with cheap goods and consumer credit.

As the British architect who sat next to me on the flight to London asked a few months ago when I took my daughters there for spring vacation, “What does America make any more?”

I didn’t really have an answer. The truth is that we Americans, for all our fabled ingenuity, have spent the past decade shuffling assets back and forth and living well beyond our means. And despite the fact that technology has given us more ways to communicate than ever before, we’re more disconnected than ever.

The good news is that skyrocketing oil and commodities prices are now giving us the kick in the butt we’ve been waiting for. Smart money that once went into private equity, real estate and hedge funds in search of easy profits is now pouring into “green” technology and alternative-energy solutions. I’m sure we’ll also figure out a way to grow more food more cost-effectively with less land and fertilizer. The net effect of all this innovation will be to bring up the standard of living worldwide so that, in the future, no single country will gain at the expense of others.

My prescription: Build something. Build it for a reason. Build it with people you enjoy building it with.

When you’ve been a small business consultant as long as I have (six years now and counting), you start to see the world in a very different way.

Back when I was CEO of NetCreations, I often grew impatient with what I saw as the laziness and incompetence of the people around me. After all, if I could leap tall buildings, why couldn’t my employees? Today, I see management problems waiting to be solved and business models in need of an overhaul.

While I’m still not the most patient person in the world, I’ve become a lot more understanding now that I know how business really works. But while I’ve learned to control my temper, I can’t always stop myself from doling out unsolicited management advice to unsuspecting servers and sales clerks. (”I realize it’s only 10 a.m. and your restaurant generally doesn’t get busy until noon, but if you brought in another server between breakfast and lunch, that might bring in some extra business.”)

I also find it difficult not to applaud good management practices when I see small businesses adopting them. Last week, I was finishing breakfast with a local VC at The French Roast (the West Village coffee shop that serves as my office away from the office) when the server came over with the check. But before she put it down on the table, she asked me whether I would mind filling out a card with my name and e-mail address. She seemed embarrassed that her manager had asked her to do this.

“Wow, that’s great!” I told her. “I’ve been coming to The French Roast for years, and finally you’re going to put me in your database. Now you can e-mail me about special offers and promotions any time you want!”

She must have thought I was insane.

The downside to being a business consultant is that sometimes you see problems that aren’t there. Also last week, a contractor who was supposed to begin repainting the ceiling of my apartment on Monday morning didn’t send over his painter to start the job until Wednesday afternoon. Sure, his project manager gave me the usual grab bag of excuses, but I began to suspect that, like so many other contractors I’ve hired in the past, the firm had put my small residential job on the back burner while it finished some big commercial project. After speaking to the painter, I discovered that my hypothesis was wrong, and all was forgiven.

My point is this: After six years of playing family doctor to hundreds of startups and small businesses, I have a hard time getting mad at small companies that drop the ball because it’s so obvious to me what their problems are (I still have zero tolerance for large corporations that screw up my payroll, however).

On the other hand, it’s still frustrating to deal with companies like my old car service from Brooklyn that would promise me a car in five minutes in the middle of a rainstorm when it was clear that the car hadn’t even left the base.

The solution: Honest communication. How much better would our world be if every service provider (doctor, lawyer, plumber and electrician) would simply lay his or her cards face up on the table and tell the truth about what was really going on with his or her business?

Instead of conversations like this:

Homeowner: How soon can you start work on my bathroom?

Contractor: Just give me a deposit and we’ll get started next week.

We’d have conversations like this:

Homeowner: How soon can you start work on my bathroom?

Contractor: Can I get back to you on that? My best guy just called in sick and, because the order from the manufacturer got screwed up, we still haven’t finished the bathroom renovation on the Upper West Side we started three months ago.

Replace contractor with software developer or web design firm, and you get my drift.

Of course, clients don’t always win awards for honesty, either. That’s why contractors and other service providers often must jump through hoops of fire to collect their final payment. It’s a whole lot easier for customers to hold back money for what they claim is shoddy workmanship than it is to come clean and admit that they maxed out their credit card taking their kids on vacation.

That’s why I’ve gone out of my way over the past six years to build a network of reliable contractors and other service providers to help me with the host of business, investment and real estate projects I’ve embarked on since leaving NetCreations. On the rare occasion that a service provider does drop the ball, I try to put my anger on the shelf and give him or her the benefit of the doubt. The last thing I want is to tear somebody’s head off only to find out that he’s in the hospital with his dying mother.

That’s why, when I told Dominick, my appliance repair technician, that I understood that it might take a couple of days before Viking shipped the parts for my dishwasher and a few more days before he could come by to install them, he paid me the ultimate compliment.

“It’s a pleasure,” he said, “to work for somebody who gets it.”

We can scale the heights of Everest, but we still can’t crack the glass ceiling of corporate America.

That was the theme of a widely forwarded article in USA Today last week that was sent to me by my friend Rieva Lesonsky, formerly editor-in- chief of Entrepreneur magazine and now CEO of her own startup company, SMB Connects.

The story asks a question that’s always perplexed me: Where are the Starbucks, Nikes, Amazons, Home Depots and Genentechs founded by women?

Now don’t get me wrong. Few male-owned businesses ever get to the top, either. Most startup businesses fail within their first five years, and more than 90 percent of small businesses that go the distance never get past $1 million a year in sales.

Still, with twice as many women launching businesses as men, you’d think that a growing percentage of businesses started by women entrepreneurs would be breaking into the major leagues by now.

Unfortunately, the statistics tell a different story. According to the article, only 43 women have climbed the ladder to become CEOs of Fortune 1000 companies over the past 35 years. The number of women-founded businesses that have grown into Fortune 1000 companies is even smaller–three, to be exact. And those companies (Golden West Financial, Software Spectrum and PC Connection) were co-founded by men.

So what’s the explanation? Well, it’s tempting to speculate that little saplings don’t grow into billion-dollar oaks overnight, but that doesn’t explain why today’s crop of fast-growing, technology-enabled startups–think Google, Yahoo and Facebook–could not have just as easily been founded by women.

That’s why USA Today asked David Thomson, a former McKinsey & Co. consultant and author of Blueprint to a Billion: 7 Essentials to Achieve Exponential Growth, to re-examine his data and go back and speak to the women entrepreneurs he interviewed for his book.

His discoveries were not encouraging. The odds of an early-stage startup with a big idea eventually hitting $1 billion in annual revenue are 1-in-20,000, he found, which is why in the 22 years from 1985 to 2007, only 387 new publicly traded companies achieved $1 billion in sales. Thomson estimates that the odds of a woman starting a company that reaches $1 billion, whether she stays with the company or leaves, are roughly 1 in 500,000.

So the odds are stacked against us–although that’s not exactly headline news. Back when I was CEO of NetCreations, I was often interviewed for stories about why women-owned businesses tend to start at the kitchen table and stay there. Explanations seemed to fall into two camps–outright discrimination (by banks and investors) and women’s avoidance of risk. Then there’s women’s tendency to start “lifestyle businesses” that make it possible for them to pick up their sick kids from school while their husband commutes to an office.

Based on my experience as an entrepreneur and consultant, I think the two biggest reasons why there are so few large companies founded by women are lack of confidence and lack of financial literacy, which often go hand in hand. Think about it: Many male entrepreneurs–even those with no experience starting a business–are willing to step up to the plate and swing for the fences even if they risk going down in flames. Women, for the most part, tend to be more cautious. I see this with our clients all the time–the guys think they can ring up $40 million in sales in year one while the women doubt they can break $10 million in sales by year five.

But big dreams don’t guarantee big results. Growing a startup company to a billion-dollar business takes capital–and if you can’t communicate your vision to banks and investors, you’re never going to be able to raise the kind of money you need to make it to the Fortune 1000. That’s why I believe that financial literacy is mission critical for anyone who wants to grow his or her business, no matter what gender.

Will women business owners ever scale the heights of the Fortune 1000? I believe one day we will–but not until we learn to speak the language of money.

Last week I spent a lot of time running from one VC conference to another to get a handle on the state of the market for early-stage deals–especially for deals in the New York City area.

The news was decidedly mixed. While fewer VC deals are getting done nationwide, the local market seems to be holding up–at least for now. Last week, Crain’s New York Business reported that New York area technology firms continued to attract venture capital in the first quarter, bucking the national decline. Sixty-six area companies received $526 million in venture funding during the quarter, according to a report released by PricewaterhouseCoopers and the National Venture Capital Association. Funding was up 12 percent from the previous quarter and 35 percent from the same quarter a year ago. While most of the money went to expansion-stage companies ($200 million) and later-stage ventures ($171 million), early-stage ventures landed $121 million, unchanged from the previous period.

Still, the froth seems to have come off pre-money valuations (the price at which companies are valued before the VCs put their money in), peaking in the third quarter of 2007 and slumping in Q4, according to Dow Jones VentureSource and Thomson Financial. Venture-backed liquidity events (that’s VC talk for mergers and IPOs) are also way down this year.

The reason? VCs are trying to get into deals at lower valuations in order to cover their downside if the market slides further and to maximize their upside when the market rebounds. And while every VC would love to back the next MySpace or Facebook, traditional metrics such as ROI and cash flow have reappeared on VCs’ checklists.

So what’s an early-stage company to do? Here’s the scoop according to Ryan Ziegler, investment manager at Edison Venture Group, a New Jersey-based investor in mid-Atlantic information technology companies. Speaking at K&L Gates’ Innovation 2 Exit conference in Newark last Thursday, Ziegler said the key is to be prepared for what the VC is going to ask you and to understand the process that VCs go through in picking their portfolio companies.

Here are some of his pointers:

1. Present your executive summary in no more than a couple of pages. What’s the business problem and how does your company plan to solve it? Present a case study of a specific client implementation, if possible.

2. Map your business plan to the VC’s strategy. Align your plan with an investment thesis the VC believes in. Be flexible and open to the VC’s suggestions.

3. Make the first meeting count. Deliver a concise and compelling presentation (roughly six to 10 slides) in 30 minutes or less. Show the VC that your model is scalable–in other words, that you can grow the business to $30 million-plus in sales and give the investors a fivefold to tenfold return on their money.

4. Keep the dialogue going. Just because one of the VC firm’s partners likes your deal, don’t assume that the rest of the firm is sold on it. Even if you don’t make the cut the first time around, keep the firm updated on your company’s progress. Once you gain traction, the VC may come back to the table.

5. Be realistic about valuation. When the VC finally offers you a term sheet and it’s time to talk turkey, show that you’re a reasonable person the VC can do business with. Don’t get hung up on simplistic valuation formulas or big-dollar deals.

And what does Edison itself look for in the deals it funds? Recurring revenue, high gross margins and a founder who believes that a little dilution today will lead to a far more valuable company in the future.

If GE can’t make a buck, who can?

Last week, General Electric, widely seen by investors as an economic bellwether because of its diverse operations, missed its numbers for the first quarter and signaled trouble ahead for other major U.S. corporations.

But what’s bad for GE may be a blessing in disguise for smaller companies scrambling to keep pace with larger competitors. Last week, I met with a client from the digital printing industry who came to me for help with his business plan. After 9/11, he told me, things were so bad that he ended up putting $1 million of his own money into his company. The good news: Five of his competitors went out of business. Last year, his company posted its best year ever, and now he’s looking for expansion capital.

Now don’t get me wrong. I’m not blind to what’s going on in the marketplace–especially the market for early-stage deals. In 2007, angel investors who specialize in investing in early-stage companies sank $26 billion into startups, according to The Center for Venture Research at the University of New Hampshire. While that’s a pretty impressive number, the figure was flat from the year before, a sharp contrast to the yearly increases that had been piling up since 2003 when the tech community began to bounce back from the dotcom bust. During the first three months of the year, only five VC-backed companies went public on Wall Street, the National Venture Capital Association reported, down from 31 in the fourth quarter of 2007.

But despite professional investors’ hesitance to place bets on companies that may not have an exit any time soon, entrepreneurs who believe in their own businesses are continuing to double down. And companies with great products and experienced management teams are continuing to get funded.

But even if you’re the kind of company that checks all the investors’ boxes, it’s important to maintain a healthy sense of paranoia in times like these. Here are five road-tested strategies to help you weather the the storm:

1. Liquidity: The all-important L-word. Make sure you’ve got enough cash and/or credit to survive a temporary downturn in your business. But don’t put all your eggs in one basket: Credit card companies such as American Express are scaling back credit lines to small businesses, and gun-shy mortgage lenders are freezing home equity lines in areas hardest hit by declines in housing prices.

2. Communication: Don’t hide the facts from your employees, no matter how painful those facts may be. By practicing “open book” management and giving your employees an opportunity to share in your company’s profits when the economy recovers, you’ll give your staff the incentive to work together to cut costs and make smarter decisions.

3. Cash Flow: Now’s the time to increase your cash flow in any way you can. Whether that means cutting costs, deferring trips or raising prices (if you can), boosting cash flow will show your bankers that you’re a rock-solid business whose credit line should be increased, not eliminated.

4. Suppliers: Pay your suppliers on time, every time. The last thing you need is to fall behind on your payments and have your suppliers start billing you COD. If you see your sales slowing, sell some inventory and place a smaller order next time.

5. Margins: Be sure to make a profit on every sale no matter how large or small that sale might be. Now is not the time to sell your products or services at a loss in the hope of landing a more profitable piece of business down the road.

The moral of the story: It takes a small tree to survive a mighty wind. Stay flexible, and you’ll stay in the game.

Keep Your Temper. Nobody Else Wants It.

That’s what it said on the plaque that hung in my grandmother’s kitchen for as long as I can remember. As a hot-headed 10-year-old, it was a constant reminder to take a deep breath and cool my jets no matter what some schoolyard bully or faithless friend had done to me. Today, that plaque sits above the stove in my kitchen in Long Island as a warning to the next generation of entrepreneurs.

Even as an adult, I still have a bad temper–though I usually manage to keep it under control. As a CEO and business owner, I’ve learned the hard way that five minutes of venting at an employee or a vendor can cost you time, money and litigation–no matter how justified you think you may be.

And that’s a tough thing for most entrepreneurs to learn. Because, like me, entrepreneurs are typically A players who are prepared to sacrifice everything for their goals, and to work nights, weekends and holidays to get the job done. So why can’t the people who work for us be that way? Well, because if they were, they wouldn’t be working for us–they’d be running their own companies.

What’s the solution? Well, there are always yoga and medication–though I’m too busy for yoga and too much of a control freak for Prozac. The techniques that work best for me are coping strategies rather than long-term solutions. While they may not make your human resources problems go away, they’ll help you keep your sanity.

For example,

1. Plan B

One thing I’ve learned in business is that nobody’s 100 percent reliable. But if you fire everybody who lets you down, you’ll soon be doing all the work yourself. So whenever somebody I’m counting on messes up or drops the ball, I start making a mental list of whom I can bring in to replace them. Many of these people are already in my database. Plan B, Plan C, Plan D–sure beats counting sheep or popping Xanax.

2. The Talk

Back at NetCreations, when an executive or key employee wasn’t measuring up, I’d take him out to lunch for “the talk.” Instead of confronting the person with a long list of his mistakes and failings, I’d look at him earnestly and ask him in a sweet and sympathetic voice, “Are you happy here at NetCreations? Because you don’t look very happy.” At that point, we both knew it was over. No fuss, no muss, no lawsuits.

3. Play-Doh

When I go to my house in Long Island on Sunday, one of the first things I do is take out my plastic tubs of Crayola Model Magic (a lightweight modeling material that feels like foam when it dries) and sculpt some colorful animals, flowers and planets. It’s great therapy–at least until my cell phone rings with another crisis.

When we build financial models here at Axxess, we calculate to the penny how much our clients will need to spend before their companies turn a profit.

If only our clients were that meticulous about their finances on the personal side. (Did I mention that we are in a recession?)

The truth is that few entrepreneurs–or many other people, for that matter–bother to think about their personal break-even, especially if their entrepreneurial ventures are being bankrolled by their husbands, wives, parents, home-equity credit lines or their friends at Visa, MasterCard and American Express.

And, ultimately, that becomes a problem. Because no matter how passionately you believe in your dream and how much sweat equity you’re prepared to put in before you draw a salary, Con Ed and your landlord want their money now. So while I’m all in favor of debt financing if you’ve got the cash flow to cover it, borrowing money to make your payments is just digging yourself deeper into the hole.

Last week, I sat down with a client of mine (he’s a database consultant by trade) who’s building a billing software application for self-employed professionals. Based on his calculations, he told me, he would have to bill 90 hours of consulting services a month in order to break even on his monthly nut (rent, electric, food, etc.) At this point, he’s billing only 60.

Now don’t get me wrong. While I love the concept of calculating one’s personal break-even, it’s not as if I walk into Bergdorf’s thinking, “That’s a two-consulting-sessions pair of shoes” or “All I need to do is sell one more business plan and I can afford that designer dress.” The truth is that I buy most of my clothes at Ann Taylor and Banana Republic anyway.

What I like about knowing your personal break-even is that it gives you options. One way to boost your cash flow is obvious: Find more clients and bill more hours. You can also raise your hourly rate if your clients allow it. And if Plans A and B don’t work, you can lower your overhead (i.e., move to the suburbs).

Back in 1995, I had a mortgage, a car, two little kids and a startup company called NetCreations that wasn’t making a whole lot of money. It wasn’t until our company celebrated its third anniversary that I was able to completely walk away from the writing, consulting and publishing that I’d been doing to pay the bills and live off my salary as NetCreations’ CEO.

So, while I don’t claim to be Suze Orman, I think the message is clear: When it comes to building a business, you’ve got to do the math–and that means crunching your personal numbers, too.

Back when I was at NetCreations, it used to really burn me to see employees IM-ing each other, checking their personal e-mail and surfing the web for what I assumed were better-paying jobs. In today’s world, I’m sure they’d be checking  Facebook and playing Scrabulous.

Now that I’m older and wiser, however, I’ve come to realize that you can’t expect an employee to walk in the door, sit down at his desk and put his nose to the grindstone for the next 10 hours. We humans are social creatures, and the desire to goof off is hard-wired into our DNA (Which is why I now hire only independent contractors).

But last Sunday, while I was waiting in the Newark airport for a flight that was delayed for three hours, I read an article in The New York Times magazine that changed my point of view.

The article told the story of a website called FreeRice.com, an interactive vocabulary game that donates 20 grains of rice to the United Nations’ World Food Program every time you pick the correct definition of the word flashed on your screen. Each time you get one right, the program raises the bar until you’re stumped trying to guess the definition of a word that means something like sea slug in Bulgarian. Then, just as you think your brain is going to explode, the program lowers the bar and shows you some mercy. For closet intellectuals like me, FreeRice.com is about as unaddictive as heroin.

And I’m not the only one who’s hooked. According to the article, some 300,000 to 500,000 people now play FreeRice.com every day–generally during office hours when they’re supposed to be working. Apparently it’s also popular among college kids who are supposed to be studying.

In its first three months, FreeRice.com has generated $250,000 in donations to the World Food Program, thanks to advertisers such as Regent International Hotels, Alibris books and Shutterfly that pay for the banners that appear every time you click on an answer.

In case you’re wondering, FreeRice.com is not one more “free” Big Brother app from Microsoft or Google on a secret mission to collect behavioral or demographic data. It’s the brainchild of John Breen, a self-employed computer programmer from Bloomington, Ind., who originally designed the game to help his son study for the SAT. A few years ago, he created TheHungerSite.com, which raised about $3 million for the World Food Program. According to the article, Breen makes no money from his project and sends the checks he gets from his advertisers straight to the WFP.

As someone who’s chaired many a fundraising dinner and sat on numerous not-for-profit boards, I think there’s a lot to like about FreeRice.com’s approach to charitable giving. For one, you don’t have to pull teeth or trade favors to get people to go there. For another, both the players and the sponsors know exactly where the money is going. And unlike those fancy dinners and charity balls, you can raise money for a good cause without dressing up in uncomfortable clothes and spending the evening away from your family.

Now, I swear I haven’t been playing FreeRice.com during those hours when I’m supposed to be meeting with clients or drumming up business for Axxess, but I did spend some serious time on the site last Sunday and Monday nights. Let’s just say that a lot of rice got donated in my quest to get to Level 49. (Level 55 is the apparently the highest you can go, and, knowing my own competitive nature, I’m sure I’ll eventually get there, no matter how much rice the site’s advertisers have to donate along the way!)

Free rice, anyone?