The biggest precaution when installing ANY Operating System to an external drive, is to make sure that you select the CORRECT drive. I have once or twice, or maybe sixteen times, got into the click-click-click mentality, and selected the wrong drive.
Ok, maybe not sixteen times, but the same goes for when you are formatting a drive, especially when not booted from you primary internal drive. (OS X will not let you format the drive you booted from, unlike GSOS from many, many years ago.)