What kind of small business do you want to start?
— -- Millions of workers are quietly toiling in their cubicles and dream of breaking free from corporate culture. Almost a quarter of full-time or part-time working Americans have considered leaving a job to become self-employed, according to a USA TODAY/Gallup Poll taken in July.
Many others don't want to ditch their day jobs but want to dabble in side projects to earn extra dough. Still others need to restart their careers after being laid off.
No matter what type of entrepreneurial venture someone undertakes, experts agree that an essential initial step is to research the industry, product or service offered, expected duties and the potential customer base. "Many businesses that open often have not prepared well enough, and they don't understand the challenges," says Ken Yancey, CEO of non-profit entrepreneur mentoring group Score.
To help would-be entrepreneurs get started, USA TODAY has outlined some of the more popular types of businesses that people start, as well as their pros and cons.
Direct sales
Face-to-face is key. Cosmetics, cutlery, vitamins — even racy adult novelties — fall in here. Most sales in these businesses come from face-to-face interactions such as in-home demonstrations or parties showcasing wares.
In the U.S., about 15 million people do direct sales, with the majority working part time, according to the Direct Selling Association. Many think of women when it comes to this job. But 14% of direct sellers were men in 2008.
•Pros. Initial costs typically aren't high. Hours are so flexible that many people tap into direct sales as second jobs. Successful salespeople can earn six-figure incomes, with commissions usually pegged at 25% to 50% of a product's retail price.
•Cons. Some firms have hidden costs or operate illegal Ponzi schemes. DSA's website, dsa.org, has information on how to avoid scams. While earning potential varies by company and sales ability, DSA says the median annual income for those in direct sales is $2,400.
Service companies
Busy lives lead to opportunities. From dog walking to carpentry to dental care, the service industry had the second-highest number of businesses created in 2008, according to entrepreneur-focused group Ewing Marion Kauffman Foundation. Construction ranked first.
The harried lifestyles of many Americans — as well as longer life expectancy — make landscaping and elder care service companies particularly lucrative opportunities, says market research firm IBISWorld. Personal care aides and home health care aides will be two of the fastest-growing occupations through 2016, says the Bureau of Labor Statistics.
• Pros. Folks can be extremely creative in the services they offer. George Peresman, for example, is a New York City chiropractor who only makes house calls. Start-up costs can be minimal, and barriers to entry are typically low.
• Cons. If a service-based worker gets sick — or takes a week of vacation — he or she often has to do without a paycheck. Initial costs can be high for those who do more specialized work such as providing medical services. Good service often means being flexible around customers' schedules, so a 9-to-5 day can be uncommon.
Internet-based
E-commerce is growing fast. Firms centered on e-commerce or online auctions are among the fastest-growing businesses, says IBIS. The Web makes cash-strapped consumers "better able to research and compare more inexpensive options offering the greatest value," its report says.
This year alone, U.S. online retail sales are projected to rise 11% to more than $156 billion (excluding autos, travel and prescription drug sales), according to Forrester Research. The massive success of shoe-seller Zappos.com, started by entrepreneur Nick Swinmurn, shows the potential of this field.
On a smaller scale, there is Ann Arbor, Mich.-based Michael Psarouthakis, who sells coins and rare books on eBay and other sites. It's a side business for Psarouthakis, who works full time in finance, but he still makes $20,000 to $50,000 a year in those online sales, he says.
• Pros. Technology advances continue to make it easier for novices to set up websites and use established online systems such as eBay. Consumers are getting more comfortable with using credit cards online or paying through systems such as PayPal.
• Cons. It can be tough to attract traffic. "You have to learn how to get listed so when people do searches on Google, your name comes up," says Bill Dunkelberg, chief economist at National Federation of Independent Business. For more elaborate sites, there can be a "hefty initial capital investment" plus ongoing costs to keep the site running smoothly, IBIS says.
Existing businesses
Sometimes franchising is best. Whether it's through a franchisor-franchisee relationship or purchasing an independent company outright, many entrepreneurs feel more comfortable investing in a pre-existing concept. On the franchising front, there's a multitude of choices, ranging from Meineke car care to Maid Brigade cleaning services.
Mike and Shameka Barbosa used a franchise consultant to determine that the kid-friendly BounceU franchise was right for them. In July, the couple opened BounceU indoor playground in Queens, N.Y.
• Pros. Buyers get an established business model and brand name. Franchisors can provide training, and if an entrepreneur is buying an independent company, they can offer to pay the past owner to provide coaching.
• Cons. Costs to buy into an established firm can be high. There are some shady firms that hawk businesses. The Federal Trade Commission's website, ftc.gov, offers some tips on how to avoid unscrupulous sellers. There also can be unknown pre-existing problems with the firm, its business model and its long-term growth potential.
Retailing
Beware of start-up shockers. Whether an entrepreneur is a Sam Walton wannabe or just interested in a small, single boutique, many people feel that owning their own retail store is an ideal business. But there are a lot of start-up shockers. A common one: not realizing how much work it takes to run a shop.
"You have to be prepared to wear a lot of hats," says Dan Butler, vice president of merchandising and retail operations at the National Retail Federation. Most owners take on roles such as head salesperson, marketer and chief financial officer, he says.
Those itching to own should also do some self-analysis: "You have to be brutally honest with yourself about your capabilities and your shortcomings," Butler says.
In addition, store owners need to be adept at customer service.
• Pros. Owners have the rewarding experience of building their own business, says Butler. They also get to embrace creative endeavors such as selecting a merchandise mix, picking a retail location and creating a store design to their liking.
• Cons. There are often high start-up costs as owners rent or lease a space, as well as purchase merchandise to sell. Small retailers also face big competition from chain stores that can undercut them on prices. Owners must differentiate themselves to remain competitive, Butler says.
Products
Creating your own merchandise. Imaginative producers can come up with everything from a better-tasting peanut butter to more-entertaining iPhone apps, then sell those creations online, at retail outlets or to wholesalers.
Some folks produce goods themselves. For instance Oldsmar, Fla.-based Toni DeFrancesco started her company, The Tile Mural Store, by making her own decorative tiles and selling them. Jessica Marquez of Brooklyn, N.Y., creates embroidery art.
Others opt to outsource: Austin-based entrepreneur Tom Nall found a Mexican distillery to make his all-organic tequila, and the Texas-shaped bottle that it comes in is made in China.
And some entrepreneurs work between the two: Jan Sneed, co-founder of Badgley/Sneed Designs in New York City, initially strings together the stone necklaces she sells, then takes the wired necklace to a professional to complete the process.
• Pros. Owners get to be creative in designing and producing their products. They have control over the quality of the goods that they produce.
• Cons. Can be labor-intensive if someone is doing the work themselves. If the product is outsourced, entrepreneurs have to worry about cost controls and quality management.