When signing up to a franchise deal, there are a few details you should get clear first:

1. Make sure your contract mentions the period of the agreement. This is often five years, but it can vary. It should also specify a renewal option. Check any small print in the renewal terms in case they involve much greater expense or other prohibitions.

2. Nail down the exact location you’re getting and your rights to exclusivity within it.

3. All fees and costs, plus calculation formulas, should be presented to you. You also need to know if you can sell the business on for a profit.

4. A clause specifying that you can leave the business to next of kin in the event of your decease is also important, if a little gruesome to the squeamish.

5. Costs of training of you and your staff should be met from the fees you pay to the franchisor. Hidden costs for training can be large and sometimes disabling.

6. If you think you know enough to set up on your own after a few years, talk to the franchisor. Enlightened businesses will provide opportunities for you to expand with greater input to the business as a whole.

Above all, make sure you are aware of all the subtleties of the business before signing away your cash.

One of the simplest ways of starting a business is to buy a franchise. These are usually sold by suppliers of well-known products or services in order to expand their user base without investing in more staff, bricks and mortar etc. It’s also a good way of increasing cash flow.

Franchises can represent a good deal for a startup business. Typically, the franchising business will provide product, literature, national advertising, links to potential customers, and much else. All for a price, of course.

What to look out for when buying a franchise

1. Make sure you have a solid business plan in which you have budgeted for your living expenses and management fees.

2. You may have to borrow from a bank, but expect to commit about one-third of the total cost yourself.

3. The franchisor should know the business and its prospects better than you, so take their projections seriously.

4. See if you are eligible to secure any loan through the UK Government’s Small Firms Loan Guarantee Scheme, if you are in the UK. Other countries may have similar schemes.

5. If you are not satisfied with the information you are given by the seller, walk on by.

Tomorrow we’ll look at what you need to do before you sign on the dotted line.

Bootstrapping is a way of starting a business with virtually no money. The best book on the subject is Greg Gianforte’s, Bootstrapping Your Business. I’ll review the book later in this post.

For all bootstrapping situations, the key indicator in your business is the relationship between revenue and costs. Costs, of course, should be your principal concern simply because they are the one element you can control.

I remember a Danish real estate business owner I knew on the Costa del Sol. His dream was to have a fleet of white Rolls Royces with his company name emblazoned on the sides and driven by salesmen in white suits. Apart from the costs of the operation, would anyone actually buy anything from a man in a white suit driving a white Rolls Royce? Think of the profits he must be making.

Gianforte reminds us that a business is not a West End production or a Broadway show. It’s not a government agency either, with its hands in the deepest of pockets. A business is a fragile entity with a single pot marked “Income” around which circle a whole forestful of predators. These include dark spirits confusingly dressed in white suits: your friendly local lawyers and accountants, the Inland Revenue (so helpful with mountains of detailed information on how to empty your pot), competitors who’d steal your shoelaces to garrotte you with. I may be exaggerating, but you get the picture.

My previous business was an educational publishing house. We produced books and distance-learning courses which were sold to the public at a high price while the British Government paid 80pc of our customers’ costs. It was relatively easy to keep revenues ahead of costs in such a marketplace.

One evening we heard that the Government had scrapped the entire scheme without notice because it believed that some £100 million ($180m) of its £2 billion ($3.6bn) investment had been fraudulently obtained. Most of the sector collapsed.

You can see the attraction of bootstrapping a business. You have nothing but your time to lose.

Bootstrapping a business is also much more fun. You have to be adventurous — though never with money — and there’s a great freebooting air about the place. You don’t have to worry about keeping up the payments on the white Rollers … or the men in white suits, who could well be coming to get you in the end.

Bootstrapping Your Business : Start and Grow a Successful Company With Almost No Money is a newish book by Greg Gianforte, CEO of RightNow Technologies and writer of a Thought Leader column over at SiliconValleyWatcher.com.

Greg’s contrarian suggestion is that you should strongly consider starting your new business without Venture Capital assistance. He points out that Dell, HP and Microsoft all began without VC funding. His own business followed the same path.

The sheer effort involved in raising money, and the complexity of contractual arrangements, deplete your time and energy which should be concentrated on selling value to customers. That income is the only thing that counts in any business, large or small.

Be realistic, he writes, support your idea, not another’s cash flow. Run your business, not an income stream for someone else. Excellent advice, no doubt, but can it be done?

Yes, and he can prove it : “At RightNow, we doubled our revenue and employees every 90 days for two years before we took any outside money, and even then the employees retained more than 75% ownership after raising $32m.”

Money reduces essential discipline. If you have the money, you’ll spend it, regardless of whether you have a clear idea of your business model or not. Moreover : “Raising VC money determines your exit strategy. You will either sell the business or take it public. What if you end up with a very profitable, modest sized business that you want to just run? That is no longer an option once you raise VC money.”

So raising money before you have developed your business model and proved its worth is putting the cart before the horse. It’s the worst time to raise money from a valuation perspective.

It’s never easy starting any business. Why then, says our author, shackle yourself at the outset? This is not a fashionable view, but it makes sense.

Switching back now to the UK after a series of reports from our US finance correspondent, we’re going to consider how to start a business in the UK. The first part will appear tomorrow and the series will continue through next week.

Britain is generally regards as one of the most enterprising countries in the world, with relatively light regulation for business startups. As if to emphasize that, the UK currently has 4.3 million small businesses. An astonishing 500,000 people each year attempt to go it alone.

We will look at ways of getting started and the means of building a successful business.

Although the basic facts will refer to British conditions, the principles will apply to any country that allows freedom of enterprise.

Next: How to Start a Business: 1. Bootstrapping.