Boy, I wish I'd asked Dave Pollard to contribute to my Five by Five - Entrepreneur Edition. On his How to Save the World Blog, Dave has this great post titled, "Entrepreneurialism and the New Economy." The long post is worth ten minutes of your time, but what I found most valuable were his rules for entrepreneurs to succeed in the "New Economy:"

1. Don't try to play in the big guys' sandbox. You may have a great idea for a new pre-moistened window-cleaning, eyeglass-cleaning wipe, but do you really think Proctor & Gamble will let you make any money at it? You have to find a need that the big guys, for whatever reason, can't fill. Take advantage of their lack of agility, their focus, their disinterest in niches and specialization, their inability to customize, their physical distance, to find needs that they wouldn't even think of trying to satisfy.

2. Don't borrow money or give up equity. When the economic recession hits, or interest rates spike, those in debt, or with expensive equity, will fall like flies. Of course organically financed businesses are harder to get started, and they grow more slowly. But financial leverage is a double-edged sword. In bad times, it can kill you.

3. Avoid lawyers, and the need for lawyers. If you get into a legal fight to defend your intellectual property from a bigger guy, or because a bigger guy has sued you over your alleged infringement, you're going to lose. It may not be fair, but in court the most expensive team of lawyers almost always wins.

4. Be careful lying down with elephants. Many entrepreneurs find that the Business-to-Business niche is more lucrative, easier, or better suited to their competencies than a Business-to-Consumer business. Often that means your customers are much bigger than you. If you're careful, attentive, provide something unique and make a healthy margin with these customers, that can be a formula for great entrepreneurial success. But watch out if the elephant rolls over -- if it gets sold, or decides to change suppliers, or decides to squeeze suppliers, you could be squashed.

5. Do what you know. And know what you're doing. When times get tough, or new, disruptive innovations start creating waves in an industry, experts survice and dilettantes flounder. You must always be the best at what you're doing. If the idea of being in a particular business intrigues you but it's not in your area of competency, go work for someone else who is competent in it first. Then when you're an expert, go on your own.

6. Follow the money. The four big-opportunity industries noted above are going to explode because they are aligned with the needs of baby-boomers, who (by sheer numbers) have much of the disposable income in our society. Read books like Boom, Bust & Echo to find out who has the money, and then follow it -- find out what they're spending it on and why, and what they'll need next. This is especially true in a fragile economy, because the rich are the last to stop buying and the first to re-start.

7. Know your customer. Next to running out of cash, and making bad management decisions, not knowing your customer -- what they need and why they buy -- and not investing social capital in relationships with customers, is the biggest cause of entrepreneurial failure. The reasons why customers buy what they do, and don't buy what they don't, aren't always logical or even informed. You can't understand this from a distance -- surveys and studies of buying patterns won't tell you. You have to spend time with customers (real and prospective) and get inside their hearts and minds. These relationships also help recession-proof you, and, if you use them properly, they will provide most of the fodder you need for continuous innovation (rule #9 below).

8. Network with other entrepreneurs. The big guys network constantly with their suppliers, other corporate executives and even competitors. They leverage their contacts and, without the need for a LinkedIn or a Ryze, they know who to call for information and advice on anything that can happen that affects their business. They don't need to have all their expertise on staff or on retainer. Entrepreneurs, for some reason, seem to do this less (probably they're too busy trying to do everything themselves). Most entrepreneurs need to do it more, especially one-on-one.

9. Innovate. The big guys don't want to innovate (they think it's expensive and risky), they don't have to innovate (in today's economy it's easier for them to litigate, pre-emptively patent and buy out innovators than to develop anything radically new themselves), and they're no good at innovating (they're too big, too inflexible, and too risk-averse and cost-conscious). That's your competitive advantage as an entrepreneur. And innovation isn't just about products and services, and about pre-start-up activity, it's about every aspect of the business -- products, services, processes, distribution channels, technologies, organization, structure, strategy, everything -- and it must be continuous. There's a simple, intuitive process for doing it:

Now, I don't completely agree with number 3, but I think the rest is pretty sound advice for anyone running a business -- lawyers included.