(FORTUNE Small Business) – Impromptu Gourmet couldn't wait any longer. It had assembled just about all the ingredients it needed: a strategy, $4 million from Scripps Ventures and other backers, and the product itself, haute cuisine takeout designed by some of New York City's top chefs. But someone was missing. Despite weeks of advertising, Impromptu Gourmet had not been able to find the right marketing director. The experience left owner Max Polaner, 33, stunned, since he had thought the process would be a snap. After all, people were abandoning corporate America in droves, right? And even though dot-coms were suffering, small businesses like his were still hot--or so he thought. Wrong. It took longer than he expected to find someone. Unable to wait, Impromptu Gourmet made its test debut in July without a helmsman in the marketing department.

Where have all the candidates gone? What has become of those mid-career strivers with 15 or so years of corporate experience who not long ago would have been eager to jump to a startup like Impromptu Gourmet, or to a small business with revenues growing at 98 miles per hour, and get rich? Impromptu Gourmet eventually filled the crucial position several weeks after the opening. Many other small firms, however, are still struggling.

The hunt for seasoned executives--Gray Hairs, as they are sometimes called in the search business, old hands in their field even though they can be as young as in their mid-30s--is becoming frantic. Owners of fast-growing small businesses are beating the bushes and finding such hires much more elusive than investors. "We are inundated by requests," says New York City executive recruiter Susan Bishop, whose firm, Bishop Partners, specializes in helping communications and media companies.

The candidates most in demand are directors of marketing, directors of business development, CFOs, and CEOs, according to recruiters across the country. The reason is easy to understand. Experienced corporate recruits add enormous value--sharp leadership skills, as well as heightened visibility within a small firm's industry niche.

Why Gray Hairs have become so difficult to lure to emerging growth companies in recent months is somewhat complicated, but it can be traced to the convergence of several trends. The most obvious is the growing perception that not all small businesses will succeed in the digital economy. Many dreams of wealth vanished in the breathtaking plunge of dot-com stocks in spring 1999. As a result, stock options that were to be converted into gold became worthless paper instead. Understandably, a corporate executive is reluctant to jump into a niche that stands a good chance of becoming passe. The fall of technology share prices in the late summer, which vaporized the value of even more options, reinforced the inclination of these managers to shun entrepreneurial enterprises in all fields and stay put in their comfortable corporate offices.

An even more powerful trend is a classic imbalance of supply and demand. The demand for corporate talent is rising rapidly, because even with the recognition that many new companies will fail, there is still plenty of venture capital around to fund the more promising undertakings. VentureOne in San Francisco, a research service for venture capital firms, reports that the number of startups backed by VCs swelled to 1,443 in 1999, up from 870 the previous year. The pace of new funding is even faster in 2000. More startups require more experienced managers, especially since most VCs insist that such managers be on board to coach entrepreneurs. (So, in other words, woe to the small business owner who has to compete with all those new companies for seasoned hands.)

Even as the demand for experienced corporate guns is taking off with a bang, their numbers are shrinking. The population in the prime group to take on key senior jobs in small companies--roughly those age 35 through 44--will decline by about 15% over the coming decade, according to an analysis by consultants McKinsey & Co.

If you are a business owner looking for that elusive but indispensable Gray Hair, how should you conduct a star search? Besides going on the standard industry network junket, now is the time to be creative. That might mean asking your corporate clients for referrals, posting jobs in industry newsletters and Websites, or even announcing your job openings at trade conferences.

Avistar Communications Corp., a six-year-old financial software company in Redwood Shores, Calif., has used some of these strategies but finds the most effective approach is to forge alliances with recruiters in the geographic regions in which it does business. "We need a grassroots network to help us, since we're just too busy to do this on our own," says Jim Hughes, president and co-founder of the $20 million company. Through trial and error, Hughes has learned that small boutique search firms are best suited to do this job for entrepreneurs on a contingency basis. "Unlike big outfits that can take two to four months to complete a search, they give us the attention we need so we can locate candidates quickly," he says. Hughes should know. In September he called on one of his recruiters, Norma Menkin, president of Gainor Staffing, a 22-employee search firm in New York City, to help find a sales manager for Avistar's Northeastern region. In three weeks Menkin snared Joseph DelliCarpini, 46, a former investment banker at Furman Selz.

Once you have a candidate dangling on your hook, the courtship begins. You'll have to gulp down your pride and praise the candidate in a manner you thought only the most obsequious courtier would use to flatter a prince. You will also have to put up with those old-economy questions, which have become fashionable again, says Lauren Doliva, a recruiter at the executive search firm Heidrick & Struggles--questions such as, What is your business plan? Who are your investors? Do you have a quality team?

The entrepreneur who is not willing to send flowers, get down on bended knee, and otherwise plead for attention may well get ignored. "The business owner really has to woo the candidate and show some enthusiasm and sell himself even more than he did with investors and major clients," says Bishop. "I have clients who say, 'If a candidate cannot see the value of our company, we don't want him.' I have to remind them that the candidate is probably talking to five other companies that feel the same way."

Persistence wins. Anas Osman, 23, and Azhar Usman, 24, founders of Xolia.com, a Website that helps consumers make financial decisions, were still in their angel financing phase two years ago when they astutely concluded that before VCs would listen to their pitch they would need a senior corporate exec as their CEO. They paged through business magazines in search of names. They wangled invitations to business conferences that promised guidance on the new economy, where they shamelessly introduced themselves to speakers and pressed business cards upon them.

Eventually they zeroed in on the man they wanted: Jim Fischer, 51, the No. 3 executive at Andersen Consulting. In September 1999 they started serenading him under his balcony, so to speak. Every 48 hours they telephoned or e-mailed him. For two months Fischer ignored them. Finally Osman and Usman began to wear him down, and Fischer agreed to talk to them if they would meet him at Chicago's O'Hare Airport as he was changing planes. He liked their plan for Xolia. In the first couple of meetings they persuaded him to become an investor. After a few more get-togethers Fischer agreed last June to sit on the board of directors; in July he agreed to become CEO.

Fischer says that what turned his head was the opportunity to leave a lasting imprint on a small, growing business. "I wanted to find a small venture in which I could help plan strategy," he says. "I didn't want a situation in which the owners would say, 'Here's the plan. Execute it.'"

After the wooing, golden handcuffs clinch a deal. They are expensive. As in Fischer's case, small business owners often have to give up a piece of their company to get senior management talent--from directors of marketing to CEOs--onboard. According to recruiters, the amount can range from .5% to 12%, based on such factors as the candidate's level of expertise and the company's location, industry niche, and stage of growth and profitability. That's not counting a recruiter's slice. Many ask for the equivalent of a third of the hire's cash compensation for the first year, plus an amount of stock equal to a third of the new executive's stock grant for the first year.

Business owners have to be willing to part with a lot of cash, too. Salaries have skyrocketed. According to Bob Bassman, a partner at the Dallas search firm Kaye Bassman, it's not uncommon to pay $175,000 plus bonus for a topflight marketing director and $80,000 to $175,000 or more for a CFO.

Besides monetary rewards, corporate hires want any perks that can improve their quality of life. That can include home offices so they can spend more time with their kids, and company-paid road-warrior tools such as laptops, cell phones, and Palm Pilots. "The point is, everyone wants to be flexible with their work time," says Bishop.

So what qualities should business owners look for in a Gray Hair? "Besides the necessary work skills, the candidate must have an entrepreneurial spirit and be a self-starter," says Jay Desai, co-founder of seven-year-old Knightsbridge Solutions, a Chicago-based systems integrator that has lured many corporate executives to its team, including senior principal John Bell, a former vice president at CapGemini Ernst & Young. "He or she needs to constantly challenge the status quo and thrive on change, since small businesses move at a fast pace."

In addition, a corporate hire must fit into your business' culture. Matthew Pittinsky, co-founder of Blackboard Inc., which has developed a system that colleges use to put their courses online, learned this the hard way. Two years ago he recruited four senior executives. His firm needed managers who would roll up their sleeves and coach Gen Xers. "But some of the newcomers wanted strategic roles," says Pittinsky. "They were political and undermined the company's collegial environment." Pittinsky had to replace two of them. (For more advice on factors to consider when hiring a Gray Hair, see box at left.)

If you're a small business owner looking for that elusive but indispensable seasoned exec, it's critical to assess how the new hire will adapt to your company's culture. The cost of mis-hires can be 27 times salary, according to studies by Smart & Associates, a human resources consultancy in Wadsworth, Ill. Michael Clifford, CEO of Clifford Public Relations, a three-year-old PR firm in New York City, who has experience with failed hires, offers this tip: First bring the candidate in as a consultant to see how he thinks and works with your staff. Then have clients interview him to see if his personality meshes with theirs. It is a great litmus test.

Indeed, despite all the challenges and discouraging trends that make it difficult and expensive to lure seasoned executives to small businesses, entrepreneurs should not lose sight of the rewards. The right hire can teach his employer a lifetime of skills and can leverage his industry contacts to help build a fledgling brand. Those efforts can reap amazing results and catapult a small company to its next level of growth.