I believe honesty is absolutely essential for a good mentoring relationship. But it's sometimes counterproductive to be too blunt or too harsh. One way mentors can help the entrepreneur without coming across as negative or critical is to ONLY ASK QUESTIONS. Don't give advice. Don't lecture. Just ask a series of good questions. More often than not, while answering one of those questions the entrepreneur will have an aha moment on their own. Good questions from a trusted mentor have provided many a helpful knock-up-side-the-head for me -- without things getting adversarial or emotional.