A few months ago, I spoke to a class of college seniors about the requirements for organizing a successful startup company. This was a fun group. After graduation, many of these high-energy entrepreneurs want to enjoy a more creative workday, turn their best ideas into cash, and of course, be their own boss.

To challenge the class, I asked, "What is the most important job of the CEO, president, or founder of a small business?" My students' hands all shot up quickly. They answered that leaders of startup enterprises had to be "visionaries," "superior technologists," "top sales agents," and more. Yes, these were all good answers. But not my first choice.

The No. 1 priority of entrepreneurs is to make sure their companies always have enough cash to make payroll and fund growth. They have to be skilled fund-raisers and cash managers. While other duties in product development, marketing, and sales can be temporarily postponed or delegated to employees and consultants, the job of speaking to investors and lenders always rests on the entrepreneur's shoulders ... always!

Cash is the gas that keeps every entrepreneurial engine running. When companies run out of cash—from investors, lenders, or customers—they go out of business. It's that simple.

So what mistakes do many entrepreneurs make while trying to fund their young enterprises? Here is my list of the top six no-nos.

1.   Raising the wrong amount of money.  I hear it all the time. Entrepreneurs say, "All I need is enough money to get going." Fine, but raising just enough money to start your entrepreneurial engine is more risky than raising a larger amount of money to start the engine, plus drive the business to a safe destination. When entrepreneurs don't raise enough money to complete product development, build out Web sites, or fund advertising campaigns, they just stand still or slide deeper into trouble. In contrast, entrepreneurs who set sensible fund-raising goals gain respect from check-writing investors.

Entrepreneurs should calculate how much money it will take to reach "cash-flow break-even." This is the point when monthly revenues consistently match or exceed expenses and the risk of business closure drops significantly.

2.   Investing IRA and 401k money.   Retirement accounts should not fund business startups. When entrepreneurs, their spouses or parents draw funds from a retirement account, they may face costly early withdrawal tax penalties if they don't return the capital within plan requirements. Plus, if the investment doesn't work out, investors can't deduct losses within retirement plans. Double ouch!

3.   Soliciting the wrong investors.   Startup entrepreneurs can turn to friends and family members, wealthy individuals (called "angel investors"), and venture funds to help finance a young company. The secret to efficient fund-raising is soliciting investors whose investment preferences most closely match a company's geographic location, industry, and stage of growth. For example, there are more than 1,500 venture funds in the United States. Some funds invest in Web services, environmental, or consumer products companies. Others invest in women or Hispanic-owned businesses. Startup entrepreneurs should limit solicitations to "incubator" or "seed" stage investors in their industry.

4.   Overestimating the company's value.  Ambitious entrepreneurs all believe their ideas are worth millions. However, investors close their checkbooks whenever they are asked to "buy a Chevy at a Ferrari price." Pricing shares of your company's stock is no different than selling a car; if you want it sold, you must price it to move. Here's one more reason to price first fund-raising rounds in a conservative way. When investors pay more, they expect more. If performance goals are not met, entrepreneurs could get the pink slip from unhappy investors and board members.

5.   Assuming new investors will pay off old debt.  Entrepreneurs often borrow money from friends and family members to get their companies off the ground. As their business prospers, entrepreneurs then turn to angel investors and venture funds for their next round of financing. Here's the conflict. Entrepreneurs want to use the money to pay off old debt; investors want the money to go to revenue-building product development, advertising, and sales. Who wins? The new investors!

What's worse is the new investors may insist that early lenders cancel their debt and roll it into a long-term equity position in the business. Thanksgiving dinner is never the same when entrepreneurs make promises for quick loan repayments to family members—promises they just can't keep.

6.   Pushing for fast answers.   Here's a contradiction. Patient entrepreneurs who give investors plenty of time to learn about a company's plans for growth raise money faster than entrepreneurs who press investors for quick, ultimately negative decisions. Given the risk involved with venture investing, it's rational for investors to ask a lot of questions and read business plans and projections with care.

I know there are thousands of capable entrepreneurs who don't get to build the business of their dreams because of funding problems. It doesn't have to be! All it takes to raise money is thoughtful planning, common sense, and a willingness to get out there and talk to investors. Yes, anyone can do it.

About the author   Susan Schreter is a Seattle-area investment banker and venture-funding expert serving startup entrepreneurs and fast-growth company executives. She also teaches business financing and entrepreneurship at business schools, angel forums, and microfinance organizations in the United States and internationally. Write to Susan at susan@takecommand.org.