Immediately you’re concerned that your beloved pet may have a tumor – but the odds are that it’s a tick or a sebaceous cyst. You’ll need to get a light and maybe a magnifying glass to investigate this bump further.
Ticks and their removal
If it’s a tick you need to get rid of before it makes your dog sick or it drops off the dog and lays eggs in your house.
Remove ticks with tweezers. Grab the tick by its head as close to the dog’s skin as possible. Pull away from the skin’s surface with steady even pressure. Jerking the tick away is more likely to cause the tick’s mouthparts to break off and remain in your dog’s skin. If this happens, try to remove those parts with the tweezers as best as possible. Rub the spot with alcohol or soapy water.
Other remedies like touching the tick with a hot matchstick or covering the tick with petroleum jelly are thought to be much less effective. Dispose of the tick by flushing it or sealing it in a container.
Most likely the lump is a sebaceous cyst.
Sebaceous cysts are extremely common in dogs (and people). Around a dog’s hair follicle are sebaceous glands. These glands produce a waxy/oily substance that keeps your dog’s skin and coat healthy. This substance, known as sebum or keratin, can sometimes become clogged on it’s way to the skin’s surface.
The clog can develop into a cyst. Most sebaceous cysts are from 5mm to 5cm in size and are round and smooth. They can be transparent, white or blueish in color and occasionally dark.
Sebaceous cysts happen for a variety of reasons: dirt, a small injury or insect bite, a hormonal imbalance, or a genetic predisposition toward cyst formation. Some breeds, like the Cocker Spaniel, Schnauzer and Yorkie are prone to getting sebaceous cysts.
As oily skin and blocked pores play a role in forming cysts, baths with a dog shampoo containing benzoyl peroxide could help prevent them.
Sebaceous cysts often resolve themselves and disappear, and sometimes reappear in the same spot. They also may “wall off”, meaning they stop growing, harden and remain under the skin. Or the cyst may rupture. They can also be opened and drained by a vet, or surgically removed.
You should not squeeze the cyst. It can burst under the skin creating other issues for your dog. 
How dangerous are sebaceous cysts?
These cysts are not harmful to your dog unless they rupture. When a cyst ruptures there is the possibility of bacteria entering the open wound. You need to keep the area clean. Disinfecting solutions, wipes, or ointments are helpful in keeping the area from becoming infected. Trimming the fur around the wound can be helpful as the hair shafts can lean over the wound, retaining moisture and potentially harmful bacteria. Keep your dog from licking the wound.
It’s common for these cysts to rupture and there’s nothing to be alarmed about.
The ruptured cyst is often putrid smelling. It’s shocking but don’t be overly alarmed. You should probably go to the vet if there is persistent redness, swelling, very rapid growth, foul-smelling discharge, or pain. If you notice that the contents were very dark, like dried blood, you should also consult your vet. It’s possible the cyst was very old, very deep, or not a sebaceous cyst.
Dr. Karen Becker Discusses Sebaceous Cysts in Dogs
We must in-cyst
If the cyst adversely affects your pup’s enjoyment of life it should be removed. Examples of this might be on an eyelid where it hinders sight or on a paw where it affects walking/running. Or even on their torso where it rubs during leg movement.
Can my vet be sure the lump is not dangerous?
Performing a biopsy is the only true way to know if the lump is malignant or offers a danger to your dog. This is rarely called for, but it’s always better to be safe, so you should mention any lump you’ve noticed to your veterinarian.
Test 1: Visual Inspection
Your vet will do a visual inspection first to note size, color, firmness, depth and location. All this information can give hints as to the type of mass, but may not be enough for a conclusive diagnosis.
Test 2: Fine Needle Aspirate
If your vet is concerned after the visual inspection, the next test suggested may be a “fine needle aspirate”. This is minimally invasive, as a very thin needle takes a tiny sliver from the mass. The sliver is transferred to a slide and examined under a microscope. This is often done in the vet’s office but may be sent out to a specialist. This procedure usually doesn’t require any anesthesia.
Test 3: Biopsy
A Biopsy is a larger version of the fine needle aspirate. A bigger area of the mass is removed with a greater cross-section, giving far more information about what the mass is made of. This will be most definitive in determining cancer/non-cancer. This procedure usually requires anesthesia.
Conclusion
So don’t worry too much if you feel a lump on your pup. It’s most likely a sebaceous cyst. Ticks or sebaceous cysts are the most common lumps you may find on your dog’s coat. There are other possible culprits like fatty cysts, benign or malignant tumors, etc. Note the size, color, feel, and location. Check it once in a while. Note any changes over time and be sure to mention it to your vet the next time you visit them.
When I asked my vet about the first cyst that appeared on Lily, he took out a hypodermic needle and drained the substance out of the pea-sized lump. Afterward, he was oddly amused by showing me the gross, whitish-cheesy contents of the needle.