Learn to succeed with investors–from a guy who failed.

Shortly after my college graduation, a few friends and I started a new media company. Within a few weeks we fleshed out the concept, wrote a business plan and set out to seek financing. With a little hustle, I managed to get us a meeting with a well-known investment firm to discuss the opportunity. Even though our business had yet to bring in a single dollar, and none of us had ever been the CEO of coffee shop let alone a multi-million dollar enterprise, we were all confident that we had a sure thing on our hands. After all, our financial projections forecasted gross revenues of $200 million. What investor could say no to that?

We’d be rich. All we needed to do was raise a small amount of capital–$15 million.

I remember thinking, “How hard could it be?” We were obviously, naïve, foolish and delusional.

There was one small problem with our plan. None of us had any idea how to pitch an investor. So I did what any clueless entrepreneurial upstart would do: Google searched “how to pitch an investor”.

Nothing that I read online could have prepared me for what was to come. We would quickly find out that our presentation was doomed before we ever set foot into the meeting. In reality, it was doomed before we started writing the business plan.

At the beginning of the meeting one of the investors asked me to hand him a one-page executive summary review. I hadn’t prepared a summary, so I handed him the first 11 pages out of the binder encasing my 95-page business plan. Strike one.

Less than four slides into my 32-slide presentation, the second investor interrupted me and said, “OK. Stop. I get it. You definitely don’t need $15 million.”

Defending our business plan, I overconfidently replied: “It can’t be done for less.”

“Really? It can’t be done, huh?” he responded with a smirk masking a hint of laughter. Strike two.

Both of the investors then proceeded to hit us with a barrage of questions:

“How much money have you personally put into your business? Anywhere near $15 million?”

“How can you possibly substantiate gross revenues of $200 million in year three?”

“Why are you trying to produce, market and distribute 10 products at the same time before you see if a single one sells at all?”

The questions went on and on. None of our answers were favorable. Strike three.

As you might have guessed, I didn’t walk out of that meeting with a $15 million check. I later realized, however, that this was one of the greatest educational experiences of my young career. I learned more about real-world fundraising in 30 minutes than many entrepreneurs learn in a lifetime. To this day, whenever I pitch investors for capital, I always remember these six hard-learned lessons:

1. Less is always more.

An elevator pitch is vital. Verbose presentations and lengthy explanations will not impress investors, and most likely will turn them off. Present your business in a manner that’s short, sweet and to the point. Investors need to be confident that your business will attract and retain customers. If they don’t grasp your concept in a short time span, they may presume that customers won’t understand it either.

2. Never hypothesize. Execute, execute, execute.

Inspire confidence with facts, not fiction. Most investors seek out low-risk businesses with proven managers that are as close to guarantees as possible. A company with cash flow, a track record and real-world experience has a better chance of getting investors than a business plan forecasting large returns. Find ways to test your business’s viability on a shoestring budget, and turn your idea into a functional business before you seek investment.

3. Leave the hockey sticks on the ice.

Excite investors about your big picture, but be reasonable and responsible. Avoid hockey stick projections. Respectable investors will not take you seriously if you present them with nonsensical financial graphs that claim your company’s revenues will grow from $100,000 to $50 million in three years. Show investors that you have a grasp on reality with three versions of financial projections: best case, moderate case and worst case. Base each of these models on facts, past and present performance data, industry and competitor analyses and a series of well-thought-out, defendable assumptions.

4. Learn to love discount stores.

Being cheap is chic. In an age where spending is out of control, you’ll need to prove that you are a fiscally responsible manager who knows how to get the most out of a buck. Give yourself wiggle room in your operations and marketing budgets, but avoid being excessive. Never ask for a large salary or big-budget perks. Investors want you to be in a position where everything is on the line.

5. Rome wasn’t built in a day. Your business won’t be either.

Investors are wary of funding over-eager businesses that seem destined to bite off more than they can chew. Before asking for millions of dollars to fund 50 divisions and hundreds of product lines, prove how well you can create, manage and fulfill demand for a single product. Demonstrate that your business can crawl before you say it can walk. Perfect your marketing tactics, sales strategies and operational procedures. Investors appreciate companies with sustainable step-and-repeat business models that are poised for exponential growth. Remember, even Google’s success is based on a single product.

6. Choose not to be the smartest person in the room.

Know what you know, know what you don’t know and find the people who know what you don’t know. Build a team of credible experts. The smartest leaders in the world are those who surround themselves with smarter people. Investors are funding a management team as much as they are investing in a great business concept.

Are you a young entrepreneur with a unique venture? Email Scott about it at pitchme@askgerber.com.

Scott Gerber is Entrepreneur Magazine’s Young Entrepreneur columnist, CEO of Gerber Enterprises and founder of AskGerber.com. Visit AskGerber.com to find out how your business can get featured in Scott’s new book, Never Get A Real Job. For information on speaking engagements, media appearances or Gerber Enterprises’ portfolio of businesses visit www.GerberEnterprises.com. Follow Scott on Twitter @askgerber.

Truth: Most people never become what they could be. Without a definite purpose or ambition, they cruise along in life, tackling what’s easy with great aplomb, saving what’s difficult for another day that never comes. When obstacles become too tough, too inconvenient or seemingly insurmountable, they give up, then resign themselves to the fact that success wasn’t meant for them.

Obstacles – nasty as they may be – are really nothing more than giants on the road to your goal. Giants pop up to test you, to strengthen you and – more often than not – to make you prove you’re ready for what you want in the first place. (Some people say that giants are a sign that you’re on the right path.)

No matter what you do in life, how you handle giants will ultimately determine how successful you become.

Be warned, however: Giants are clever. They come disguised as a lack of time, funds, education, contacts, resources…you name it. There’s a garden variety to choose from, all giants nonetheless. Perhaps the greatest giant of all is insecurity, i.e., who am I to do that? Don’t allow yourself to get intimated by big projects and paralyzed into inaction. Whenever feelings of doubt of insecurity creep in, recognize it for what it is – fear – and then get out of your own way. (Note: The more giants you tackle, the easier they become to defeat.)

The key to conquering fear is not to try and banish it completely (which is impossible), but to deal with it. Use it. Turn your fear into focus. No matter what the situation, if you take the spotlight off of yourself (how is this going to make me look?) and put it on the task at hand (what would really make this project outstanding?), you’ll have an easier time moving forward.

“Focus is bringing everything you have to what you want and cutting off everything else.”

~Advertising Legend Mary Wells Lawrence

Emily Bennington is the author of Effective Immediately: How to Fit In, Stand Out, and Move Up at Your First Real Job. She hosts a popular blog for career newbies at www.professionalstudio365.com and can be found on Twitter @EmilyBennington or via email at ebennington@msn.com.

I always wanted to be both an entrepreneur and writer. Which is what led me to start Literary Magic, an online literary magazine. I was only 15 at the time and was heading into an industry known for thick competition and thinner business plans, but I used my verve and love for writing and words to distinguish my creation from the rest. So was born Literary Magic, the first online source for literati of all parts: short stories and literature combined with linguistics and etymology.

Literary Magic is like a story to me. Like my life, it’s had its up and downs. Successes and failures. But now our traffic has grown and our name has begun to establish itself within the minds of literati and bibliophages (people who “consume” books at a ludicrous rate). We receive hundreds of submissions a year and dozens of book review requests. What started as an idea for a website has been transformed into a thriving venture. Now I’m working on turning it into a profitable business, utilizing a three-pronged business model of advertising, consulting and e-commerce.

I first got started with Literary Magic by following my passions. At 12 I wrote my first book. That took three years. My second book took three days. Sound crazy? Well, if there’s a will there is a way. This led to me to explore other aspects of the English language, which birthed Literary Magic. Since then, I have written over 200 articles and reviews on language and business, received the Attorney General’s Triple C Award and won my high school’s English literature award.

But my passions took me further. Only six months after working on Literary Magic, the former New York Times columnist William Safire dubbed me a “word maven.” A few weeks later, I was invited to intern with The McGraw-Hill Companies to work with their Online Media team.

The most important things I have learned from my experiences is to never give up and that while there is no formula for success, one method that works for me is the equation “Idea + Implementation = Success. Ideas are nothing if you do not persist and put in the effort to make it happen.

I have also gotten a taste of the incredible amount of effort that goes into running a website and managing people. However, from this experience I have improved my communication and marketing skills.

Today, as I start college,  I still run Literary Magic as CEO and Editor-in-Chief, with a staff of six editors, two dozen staff writers and a couple of web technicians. It has transformed into Reichman Media, which will serve as my platform for all future web ventures. I’m trying to both build a business model and expand the readership of Literary Magic. I also do marketing as CMO for robotics and electronics startup Narobo. I have interned with McGraw-Hill for 4 years and I am working on my third novel. When I’m not working on business, I write and tap dance.

But to me, entrepreneurship isn’t just a career choice. It’s way of life.

Please feel free to contact me with any questions about writing or entrepreneurship or if you just want to connect. I love meeting fellow entrepreneurs and writers!

Five ways to look like you make a lot of money without spending a lot.

In today’s cluttered, hyper-competitive marketplace your business can’t afford to make a poor first impression. Every touch point that leads to your company needs to impress, motivate and inspire a prospective customer. You may have a great product or service, but to be taken seriously, clients need to believe that you’re on the same playing field as the bigger guys. Even if you’re a consultant that works from a home office, you’ll need to position your company as a polished brand that touts confidence, experience and quality. Fear not. Here are five simple tips for branding your business to create the illusion that it is a global corporation with an army at the ready — all without breaking the bank.

1. Website:
Your website is the center of your brand universe. Simplicity is the key to looking like a big fish. Less is more. A clean, easy-to-navigate two-page site with useful content will make your company look far more established than a cluttered 20-page site with long-winded fluff. Design your site with the needs of your user in mind, not your ego. Sites that try to be everything to everyone will often become nothing to anyone.

Don’t get discouraged if you don’t know how to build a website. You can solicit bids from designers and programmers using sites such as Elance.com, GetACoder.com and Freelance.com. Other solutions include subscription-based companies such as Web.com. These service providers offer small businesses online tools, templates and hosting packages that can have your site up in a matter of hours without you needing any previous web experience.

Choosing the right URL is also a vital part of your brand positioning strategy. Your main URL should be no more than 10 characters in length. Long URLs are harder to remember, harder to read and are more likely to be spelled incorrectly. Avoid URLs that are phrases, begin with lackluster words or utilize dashes. There is a reason Apple.com isn’t WeLoveApple.com, or Apple-Computers.com. Finally, use a URL with a .com extension. While it’s important to purchase all of the other domain extensions to protect your name, major companies rarely use extensions such as .tv and .net.

2. Vanity Numbers:
How often have you seen a billboard or heard a radio spot that advertises an easily forgettable phone number? Phone numbers must be catchy, memorable and relate to your product or service in order to prove effective. Online services such as TollFreeNumbers.com sell custom vanity numbers for around $50. Purchasing a vanity number is a great way to increase sales call volume, build brand awareness and increase the effectiveness of your marketing efforts. Case in point, one of my businesses, SizzleIt.com, witnessed a 30 percent increase in calls the month after we replaced our generic 800 number with 877 EZ SIZZLE. Our clients told us that the number was easier to share with others and reinforced the simplicity of our services.

3. Automated Phone Systems:
Combining a toll free number with automated phone systems and virtual assistants enables small businesses to look and sound like a cohesive Fortune 500 enterprises while operating in multiple locations anywhere in the world. These services utilize professionally recorded voice over talents to automatically route callers to the appropriate party and provide callers with brand messaging and information while they wait on hold. While big companies pay tens of thousands of dollars for their phone services, small business phone systems, such as those offered by OneBox.com and My1Voice.com, can cost as low as $50 per month. This gives small-business owners and employees the ability to receive calls in their home offices or on their mobile devices while appearing to be available in their office. Which brings me to‚

4. Virtual Offices:
Even though you might be answering a call on your mobile phone from your living room, it’s important that your customers believe they are calling a global headquarters located in a skyscraper overlooking Central Park. Virtual offices are an effective solution for businesses that conduct most of their day-to-day communications via phone calls and emails, and rarely need to host their clients on-location. For only a few hundred dollars per year, virtual offices offer small businesses high profile mailing addresses on brand name streets in major metropolitan areas. In addition, they include mail receiving and forwarding services, receptionists and options for on-location meeting space. Instead of paying exorbitant NYC rental fees, my first business saved over $100,000 by purchasing a Madison Avenue address for only $300. The address enhanced my company’s clout so much that we needed to increase our rates in order to keep the illusion believable. After all, Madison Avenue companies aren’t cheap hires.
5. The Business Card:
Now you have a slick website, a jingle-worthy toll free number and a captain-of-industry street address. It’s time to combine all of those elements into a single tool. The business card is a vital part of the first impression experience and an instant reflection of you and your company’s work. A cheap, uninspired business card may send the wrong message to a prospective customer. Spend time designing a card that will have people saying, “Wow, nice business card.” Be creative, yet tasteful. Avoid using white, standard size business cards. Choose a thicker card stock with a high quality finish. Make the card longer, a different shape or a bold color to stand out. These printing options will increase the price of your cards, but they will pay off ten-fold in the long run. Customers want to do business with companies that demonstrate their ability to provide high quality services, and a creative business card will send them that message.

Scott D. Gerber is Entrepreneur.com’s Young Entrepreneur columnist and CEO of Gerber Entertainment, a brand development and venture management company that specializes in the entertainment, Internet, media and marketing industries. For information on speaking engagements, media appearances or Gerber Entertainment’s portfolio of businesses visit www.GerberEntertainment.com.

Here’s a great story of unexpected success written by our friend Karen Axelton, writer for Small Biz Daily.

Ever since I moved to the Long Beach, California, area years ago, I’ve heard about the gondola rides in Naples – a waterfront part of Long Beach where homes are built on a network of canals like those in  the Italian scene above.  Earlier this year I got to witness gondola rides live when I visited a home in the area. But I had no idea the gondola company was run by an entrepreneur until I read an article about it in my Auto Club magazine, Westways.

Mike O’Toole started Gondola Getway in 1981 when he was still a student at USC. The business was a marketing project, but when he graduated in 1982, O’Toole bought an 18-foot replica gondola, put an electric motor on the back, and started doing cruises on the canals with just one boat.

As the business started to grow, he found a business partner, David Black, and added a second boat. But soon, the business required even more expansion and in 1984, O’Toole went to Venice, Italy, to observe how real gondolas were built. He came back and began building gondolas that would easily be steered by one gondolier with an oar.

Today, O’Toole has 10 gondolas and as many as 30 employees who take passengers on romantic cruises through the canals.

“I didn’t think I’d be doing this for the next 25 years,” O’Toole told Westways about the business he started as a student.

That got me thinking about how many successful entrepreneurs get started by accident. But was it really an accident? O’Toole grew up on the canals of Venice and learned to sail as a kid. He ended up creating a business that enables him to do what he loves.

And lots of other people love it too. When I watched gondolas going by, my first thought was how joyous everyone was. The gondola passengers and their gondoliers were beaming (no wonder, since O’Toole says an average of one marriage proposal a day takes place on the boats). And everyone in the homes up and down the streets overlooking the canals lit up, smiled and waved with excitement whenever a gondola went by.

Some people make fun of that saying “Do what you love, and the money will follow.” I’m not sure how much money Gondola Getaways makes, and it’s not the kind of business that can become the next Starbucks or McDonald’s. But it warms my heart to read about a business owner doing something that makes him happy – and makes everyone else happy, too.

You can find out more about O’Toole at the Gondola Getaway site.

SmallBizDaily is powered by four people with a passion for entrepreneurship: Rieva Lesonsky, Maria Anton, Maria Valdez Haubrich and Karen Axelton. We met at Entrepreneur Magazine nearly 25 years ago, when Rieva hired the rest of us as editors. We’ve been a great team ever since, so when Rieva decided it was time for her to stop talking about entrepreneurship and start living it, she naturally turned to us to be her business partners.

At SmallBizDaily, the writers combine their decades of experience reading and writing about entrepreneurship with their new experience as startup entrepreneurs to share their unique take on the world of small business.