NEW YORK -- Tough times call for unusual measures. That's why you might consider starting a small business.

Granted, a depressed economy may make you wary of shelling out money to start up a business -- especially if your investment portfolio isn't in tiptop shape. But certain considerations might make being an entrepreneur worthwhile.

If you're unemployed, you may have more time and opportunity to strike out on your own. Also, because many others are out of work, you're likely to have a greater selection of potential employees. And low interest rates mean that you can borrow money more cheaply.

These benefits are partly why starting a business in a weak economy may make as much sense as in a favorable one. You just have to know how to write a business plan, decide upon a company structure and craft an exit strategy.

"During the good times, you have a paycheck and things are going well, so you don't question what you want," said Garrett Sutton, the author of "Own Your Own Corporation," a book published last year. "But when there's the possibility of layoffs, you may start thinking about doing something else."

Indeed, the number of start-up businesses, as a percentage of the overall population, usually rises slightly during recessions, according to Karen Kosanovich, an economist at the Bureau of Labor Statistics. The change is always less than one percentage point, but the rise has been consistent in every recession for the past 50 years -- excluding the current downturn, which has yet to end.

But starting a business isn't easy. And keeping it running may be even harder, as many small shops fold after a few years, according to industry experts.

"They fail partly because they don't have a well-defined focus of what the need is for the product," said Ira S. Newman, a Great Neck, N.Y., attorney who provides legal assistance for small businesses.

About half of all Americans dream of starting their own business, according to a poll conducted earlier this year by Harris Interactive. The survey was conducted on behalf of Martindale-Hubbell's lawyers.com, an online legal resource for consumers.

Entry, Exit Strategy

Those who want to be their own boss should think about their entry as well as exit strategies.

To turn your idea into a reality, first write a business plan outlining what your venture will be, how you plan to finance it and how you will make money from it, among other considerations. This document may need to be presented to banks and private corporations to help secure financing.

Then decide on a name for your business. But you need to make sure that it's not already taken before plowing tens of thousands into marketing your company, said Mr. Sutton, the book author and a lawyer in Reno, Nev. You can do an initial search on the United States Patent and Trademark Office web site, at www.uspto.gov, but don't stop there. You may also want to consult an attorney who can do a more comprehensive search.

Next, decide how to structure your business. This decision will depend largely on whether you want to insulate your personal assets from future creditors and what type of tax structure you're comfortable with.

Corporations, limited liability companies and limited partnerships shield your personal assets while sole proprietorships and general partnerships will put your personal assets at risk.

Taxation will also be a factor. Some businesses, such as limited liability companies, limited partnerships and S corporations, aren't taxed at the corporate level, only at the shareholder level, as income. On the other hand, sole proprietorships, general partnerships and C corporations are "double-taxed," or taxed at the corporate as well as the shareholder levels.

So why would you want to set up these latter types of businesses? Well, for one, the sole proprietorship is the simplest business form, allowing the owner to reap all the rewards, profits and debts. Also, you have more control of the business in a general partnership than a limited partnership. And you have to be a C corporation to go public, whether you incorporate as this or switch to this business structure later.

Funding is another issue. Figure out whether you want to raise money through family and friends, bank financing, securities offerings, a line of credit or venture capital. Also consider what you may have to do to secure this funding.

For instance, the venture-capital firm might want you to set up in a certain business form so they can take stock immediately, said Alan Kopit, a legal adviser for Martindale-Hubbell's lawyers.com site.

But whichever method you choose, make sure that everything is in writing. Even with family and friends, you should note whether this is a gift, a loan, or a payment for a portion of the company.

"If the business is successful later on, you need to know what is the expectation to the person that wrote the check," said Mr. Kopit.

Also think about exit strategies as soon as possible. This will provide you with a plan of action in the event of unexpected circumstances or retirement. Having an exit strategy may also help you attract investors, because they are more likely to put money in your business if they know how to get out if the company fails.

One exit strategy is a buy-sell agreement. It can guarantee that there'll be a buyer for the business if a partner leaves, provide a first right of refusal to the person remaining, and set out a sales formula to determine the price of the company in case part or all of it is sold.

Another concern: employment issues. As your company grows, matters such as stock options and employee agreements are likely to become a bigger concern. So having a game plan now can make it easier to attract and retain employees later.

One resource that can walk you through the steps is the Small Business Administration's Web site, at www.sba.gov. This agency, besides providing loans, gives online information about starting a business. Entrepreneurs can even get a referral for free counseling from the Service Corps of Retired Executives, a nonprofit organization that partners with SBA.