1. Sell my book via either payloadz or ejunkie. I want to investigate the reputation of each service, but I like the free account to start on payloadz.
2. If sales can cover my costs so far, and can pay for the cost of moving to Amazon, sell on Amazon.
3. If sales on Amazon cover my costs, add paperback print on demand.
How does that look for a business plan?
Alternatively, you can use a distribution service. I run Book Hatchery (www.bookhatchery.com), a web service that helps authors publish their books digitally. You can sign up for free and we'll format your book and get it listed on Amazon, B&N, and Apple. We also have a paid plan at $25/mo that provides you ISBNs (which normally cost $125 and required by Apple and some other ebook retailers), print on-demand help, and some other features. We are a startup working with an alpha product, so our service is constantly evolving. Of course we'd like all of the feedback we can get, especially from authors :)
Also, regarding question #2, that choice is up to you. For most authors selling ebooks you can simply operate as a sole proprietor (no fancy/expensive legal work required). If you ever make some reasonable money from your books you might consider forming an LLC.
I did print on demand, and got on amazon for free. I'm not sure if they do it but lulu has a 'published by lulu' option where your ebook gets an isbn (required to sell a physical book most places) for free. Also, after a number of months you get put on a list that makes you available on amazon and from other major booksellers. This all cost me exactly $0. The lulu plan I would recommend also has no monthly fees, and they do take a higher percentage since they're actually printing a book for you.
Monthly fees are a killer, and will make you more likely to give up quicker if sales are low.