Managing growth can be as taxing to a small business owner as managing employees. Any type of growth creates change in the company and brings to the fore different financial, managerial and legal challenges that increase risk.

Nevertheless, most entrepreneurs aspire to build their small business. Some are interested in expanding their existing markets, whereas others want to enter entirely new markets. Which type of growth will be right for you? If your goal is to achieve sensible, logical growth, you'll want to balance your expansion plan with flexibility. Otherwise, you'll miss out on promising market opportunities and will be less adaptive to changes in the marketplace. Franchising, licensing and distributorships or dealerships are three possible ways to grow an already healthy small business.

Franchising is an option for some product and service companies that are not in a position to finance internal growth. Franchisees are sharing the risk of expanding market share, because they are committing their own capital and resources to model satellite locations after the existing business. However, there are a host of state and federal regulatory issues around the offer and sale of a franchise. Too, sufficient capitalization is only the beginning of a solid foundation from which to launch franchises.

As with franchising, licensing enables a business owner to spread the risk and cost of developing and distributing a product. However, licensing typically falls into two categories: intellectual property, such as computer software and high technology, and merchandise and character licensing, having to do with trademarks and images. In the second type, the name, logo, symbol or character is the property whereas the actual product (a toy, for example) becomes the licensed product.

One way to bring a manufactured product to the marketplace is through independent, third-party distributorships and dealerships. A distributor buys the product from the manufacturer your small business at wholesale prices and will be reselling either to a retailer or directly to customers. Your controls over the dealer must be minimized to avoid the business's being included in the category of a franchise, which entails more complex regulation beginning with a disclosure document.

Whichever form of growth you select will have specific legal regulations and some variation in the amount of control you will have over the other party.