may seem an obvious point of common sense, but too many people who

love something, perhaps sports, come in waving a business plan drawn

up on the kitchen table outlining a sporting goods store. Mosho

recalls

counseling one woman desperate to buy a Subway Sandwich Franchise.

A month after he had finally persuaded her to take a job as an

employee

at one, she returned. She hated the work, hated food handling, and

nixed the whole idea. Give yourself at least a few months on the front

lines, Mosho suggests.

proprietorship,

partnership, corporation — each carries its own benefits and

restrictions.

To some extent, your choice may be curtailed by your sources of

funding,

but Mosho says each entrepreneur should avoid trends and examine his

or her firm individually. In the l980s, many small firms were swept

into the prestige of incorporating their companies, which added

substantial

set-up and bookkeeping fees, and in the end afforded little in the

way of practical tax or liability protection.

Administration makes loans. Not so, Mosho laughs. "They got too

badly burned on that years ago," he says, adding that the SBA

now only guarantees certain, select loans from banks. Banks loans,

carrying a lower rate of interest than many other types of financing,

are the first port of call for borrowers, but they want to see you

shoulder a major part of the risk. These institutions are very fond

of instilling commercial incentive by putting your stock portfolio,

house, or your parents’ savings on the line. If you haven’t got this

collateral, best lower your sights and move up the interest chain.

Your stock broker may be willing to margin your portfolio and thus

come up with more cash than a bank could allow. But beware the

interest

rates and a labyrinth of Byzantine conditions.

Until recently, financial waters were brimming with venture

capitalists

who abandoned traditional loan guidelines in a frenzied search for

investment profits. Unfortunately, the recent glut and fall of

E-commerce

firms dried up this financing source. Currently, Mosho notes, venture

capital firms are turning down about 98 percent of all applicants.

But if you can lure one in, venture capital funding remains a way

to get your needed funding with minimal collateral. The good news

is that frequently venture capital firms will allow you to launch

on a larger scale than first anticipated. However, Mosho warns,

"the

interest will come higher and almost invariably, they want a

percentage

of your action."

<B>Consider a franchise. To those beginning to have

second thoughts at entering the lonely, chimera-strewn forest of sole

proprietorship, Mosho offers that popular and potentially profitable

middle ground — franchise. Purchasing a business franchise may

usher you into a very supportive club, "but the initiation

scrutiny,"

says Mosho, "will rival and exceed any bank loan inquiry."

Typically, franchisers are seeking stable candidates with business

experience. People with a strong managerial background are considered

ideal. Ironically, they seldom seek veterans of the same industry.

"Most franchises," says Mosho, "spend millions on training

their people expertly to run the business their way. My own past years

in the field, I was told, were not an asset, but baggage best

forgotten."

consider

the six percent fee, plus two percent advertising cost franchises

typically take from the top of your profit each month. Do you really

need the mother company’s network and support? Is it worth eight

percent

of your profits? If you are a personnel firm seeking cross-country

placement, yes, the network will help. However, if you want to start

an advertising firm, a franchise is probably not going to bring you

enough new business. If you want to sell pizza, go it alone. But if

you want to sell burgers, best not to face off against MacDonald’s

and the other Big Boys. Equipment rental, yes; cleaning service or

car detailing shop, probably not.

of the strongest points in favor of going with a franchise rather

than striking out on your own. They have the cash and the business

analysts to set you up in an ideal trading area, and don’t wince over

high rent if the traffic merits it. But this can be a two-edged sword.

All too frequently, Mosho says, "corporate egos push franchises

into very expensive malls where the rent and necessary furnishings

cripple profits."

chain, and you will serve it their way, thank you. Carvel franchises

sell ice cream. They sell yogurt. They do not sell thick shakes. Mosho

suggested that this would be a natural and wanted to try it. They

forbade his straying from the product line. In any franchise, the

corporation, not you, is the monarch of what you survey. Be honest

with yourself before you sign that independence away.

out onto the open waters of commerce. More marketing considerations,

more new tools, and heaven knows, more legal entanglements mark the

horizon. Yet, we also hold an advantage. The Good Old Days never

offered

helmsmen so expert and easily accessible as Mosho, nor safe harbors

like the Mercer/Middlesex Small Business Development Center. The

guides

have improved.

— Bart Jackson

Corrections or additions?

— the web site for U.S. 1 Newspaper in Princeton, New Jersey.