Far from a pep talk for entrepreneurs on how they can accomplish their goals even without big outside investment dollars, Ed Zimmer of The Entrepreneur Network actually recommends avoiding those investments...like the plague!
Here, at ZeroMillion.com, are his reasons (with my two cents thrown in):

• It may be difficult to find the capital you're looking for.

Too much or too little are the most common problems here. Back when I was going the Small Business Administration route writing business plans and trying to figure out who I could hit up for a loan, I began to realize there was a huge difference between a business model that showed a respectable profit I could support a family on and one making enough to give an investor an attractive return

• The search for that capital takes time and attention away from arguably more important things, like running your business or looking for customers.

Bootstrap guru Greg Gianforte has made a similar point. In a sense, finding investors can be a career in itself, and not a very profitable one for a beginning entrepreneur with no income. By contrast, if you can figure out how to generate revenue today with existing resources, you're already good to go.

• You're dealing with a "customer set" (investors) typically much more sophisticated than you. Consequently, your odds of getting taken are high.

Part of this is the desperation factor. Unless you have investors lined up around the block it can be hard to comparatively judge what you're being offered and without an operating business that generates revenue you'll have no concrete valuation and no experience upon which to base estimates.

• Unless you're a very experienced entrepreneur, it is almost certain you will underestimate the capital required (or conversely, overspend the capital available)...

Back when I was writing business plans for my local SBA advisor the numbers I was using for my first, second and third year estimated revenues were worse then wild guesses. They were outright fabrications! This isn't because I was or am a bad person and it was done with my advisor's full knowledge and consent. The problem is that I, like most entrepreneurs writing business plans instead of running businesses, had no experience upon which to base those numbers. I knew it, my advisor knew it and had I been fortunate (or perhaps unfortunate) enough to find investors, they would soon have known it too...the hard way!

• Even if you get the capital you want, and use it very well, you're still going to have to devote significant time and attention to "Investor Relations"...

As suggested above, investors are a set of customers...in a way. The trouble is that, after their initial investment, they generally contribute very little to growing your business while still demanding satisfaction. As even those who haven't gone through the process can imagine, keeping them happy is a distraction with no tangible return. Many people I've talked ideas with in the past have wanted to alter the whole size and scope of the business before they even write a check. Imagine how much control they would feel entitled to once they'd actually signed on.

• Again if all goes well, by taking investors' money, you have made a commitment to them to give them an exit at the appropriate time.

Read this about how Venture Capitalists, the big fish of the investment world, make their money. Then ask yourself, when your company goes on the auction block, what happen to you?

• And again if all goes well, recognize that the investors can exit -- but you can't.

When I talked to my first loan officer telling her that, even with a family to support, I was willing to leave my secure job and provide sweat equity to make the business work, she responded that, without collateral, if I got bored I could just walk away leaving the bank with nothing. (Nothing except the equipment and other tangible assets their money had purchased while I would be left with no job and no prospects. Such is the convoluted perspective of an investor)

CONTINUED NEXT POST