The Vest Pocket Consultant:

With retailers closing their doors in record numbers, the news for commercial landlords is bad–and, in many parts of the country, getting worse.

Last week, Smith & Hawken, an upscale garden-supply chain, announced that it would close all 56 stores and liquidate its inventory. The same day, Ritz Camera, which filed for Chapter 11 bankruptcy protection in February, announced that it would sell its remaining 400 store locations by the end of July.

But for entrepreneurs willing to take a risk, there’s a sunnier side to the story–and some great deals to be had on commercial space.

Two years ago, our consulting firm was flooded with startup tech companies looking to become the next Facebook or MySpace. Today, the tech startups have been replaced by startup restaurants and retail stores looking to take advantage of cheap rents in New York City.

Who in their right mind would open a store or restaurant in New York these days? Experienced business owners who’ve done it before and feel confident that they can do it again. Two of our clients–one in Manhattan, the other in Brooklyn–came to us for help with their business plans after neighboring landlords approached them with long-term leases and sweetheart deals on rent. An, because these two restaurateurs already have successful businesses and proven track records, they’ve got investors salivating to put money in their deals.

Now, I’m not saying it’s going to be easy for clients like ours to make it in this economy. The recession is far from over, and many people are bringing bag lunches to work and making dinner at home. And unemployment looks like it’s going to get worse before it gets better.

But retailers and restaurant owners who are willing to take the plunge and lock in long-term leases at today’s low, low rents will be way ahead of the game when the economy turns around.

Last week, I got my monthly bill from the landscaper who takes care of my house in Long Island.

Inside the envelope was a letter addressed to his customers. Apparently he’s having some cash-flow problems. Because he has to lay out money for seed, fertilizer and other supplies before getting paid for his work, my landscaper informed me, any customer who fails to pay his bill by the 15th of the month will receive a collections call and, if the bill is not paid immediately, have his lawn service cut off.

Now I know that times are tough, and I can certainly understand my landscaper’s frustration. But personally, I think he’s barking up the wrong tree. Having made many a collections call in my day, I can tell you that you get a lot farther with carrots than with sticks. So instead of putting the squeeze on cash-strapped homeowners who may not have the money, he’d be better off giving prompt payers like me an incentive to pay early and often.

For example, my landscaper could offer me a 2 percent discount on my bill if I paid within 10 days instead of the normal 30–a standard practice in the business world. He might also want to offer me a “level billing plan” like the utility companies do that lets me make equal payments all year ’round instead of sending me no bill in January and a big bill in July. That would help even out his cash flow and mine as well.

And what about those late payers? One option is to let them pay by credit card instead of waiting for their check to arrive in the mail. While credit card companies typically take a 2 percent to 3 percent bite out of every transaction, accepting credit cards makes more sense than running after homeowners who may have fallen behind on their mortgages, too. He could also offer his customers an automatic billing plan that lets him charge their cards every month for as long as they use his service.

At the end of the day, collections–like everything else in business–is about communication. If your customers start paying late, it’s not necessarily because they don’t have the cash. It may be because they’re unhappy with you or the service you provide. Don’t assume that, just because they haven’t called to complain, your relationship is still in good working order. Otherwise, the next time you pull up to their house to mow their lawn, you may see your competitor’s truck in their driveway.

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!

Hundreds, if not thousands, of business self-help books have been written about getting prospective customers to say “yes.”

And that makes sense. After all, no company can stay in business very long if it can’t make sales. And nobody wants to pick up the phone and strike out again and again.

Yet, in my nearly 20 years as a business owner, I’ve found it’s just as important to get prospective customers to say “no” or “not yet.”

To be honest, I’m a little afraid of a customer who says “yes” too quickly because it usually means that either a) he hasn’t done his homework about my product or service or b) he’s going to try to renegotiate the deal after he’s already signed the contract.

Now, I like to think that I’m a pretty persuasive salesperson (most of you readers are also my clients, so I must be doing something right), but I’ve learned the hard way that not every customer is right for me–and vice versa. At Axxess, we like working with clients who enjoy having their assumptions challenged. If the Socratic method’s not for you, then you’re probably not for us.

That’s why, if a prospective client tells me that he needs to talk to his partner, his wife, his best friend, his cat or his dog before making the decision to hire Axxess to write his business plan, I always encourage him to think it over and take as much time as he needs. The last thing I want is for the prospect to say “yes” before he’s ready and wake up with a case of buyer’s remorse.

So, while I do eventually want to get to “yes,” I’d rather wait until the prospect gets comfortable with me and my company before taking the leap of faith and investing his time and money. That’s why I’m always happy to provide client references, sample business plans and any other information the prospect needs to make his decision. To paraphrase that old Syms discount clothing store commercial, an educated client is my best customer.

Back when I was building NetCreations, I spent six months trying to win Dell as a customer. It was 1997, and just getting a big company like that to try our opt-in e-mail lists was an uphill battle. Opt-in e-mail marketing was brand new back then, and the guys in Dell’s marketing department were afraid of being tarred as spammers.

Finally, after mutiple calls, e-mails, voice mail messages and a long drive from Dallas to Austin with my partner to make our pitch in person, I finally closed the sale–a $1,000 test order for 5,000 e-mail addresses placed through Dell’s list broker.

Six months of work to make a $1,000 sale? I was ecstatic! Thanks to the success of that initial campaign, Dell went on to become a big customer of ours, spending many times the amount of the initial order. What’s more, Dell’s broker, American List Counsel, a big player in the direct-marketing industry, became a major reseller of our lists.

The point of my story is this: While we all need to make sales in order to survive, it pays to invest the time and effort to help prospective customers get to know you and your company before asking them to sign on the dotted line and hand over their check. You’ll be glad you did.

Until next time!

Rosalind