How to Start a Business for First-Time Entrepreneurs

Let me tell you a little secret: I’ve never thought about opening my own business. I thought I would work in a 9-5 job, day-in-day-out, until I retired. Everything changed when my husband Michael asked, “why don’t we open a cat café?” When we realized this was something that we definitely wanted to do, we had to figure out if it was something that we actually could do. How do you open a cat café? If you do manage to open one, how do you know if you’ll make enough money to keep it open? What if we started this business and it didn’t succeed? What was the backup plan? Where would a business like this thrive, and where would it even be allowed? At first, there was a myriad of answers we didn’t know, and we didn’t even have the right questions to ask.

How do you open a [insert your business idea here]?

Research is your best friend. If you don’t know something and don’t know anyone who knows more than you do, I recommend visiting your friendly neighborhood search engine. If you were to look at my search history starting from when we first had the idea, you’d see I literally Googled “how to open a cat cafe”. I thought that a cat café was so unique that it had to be a million times harder to open than any other business.

While, back in 2015, we ended up with very few search results, you will hopefully encounter dozens and dozens and dozens of articles with information about the business you’re attempting to start. It might even seem a little overwhelming, right? Chances are, most of those articles contain the same information, just rephrased and tailored for different types of ventures. After you sift through all that data, making note of what applies to you specifically, you’ll start to have a pretty good idea of the things you’re going to need to do as you start down this path. You won’t have to take immediate action on every task all at once, but at least you’ll have a better grasp on all the issues you’ll need to address at some point of the process.

How do you know if you’ll make enough money?

This was probably our biggest question. We were two working adults with no children. We needed to know if this business idea would make enough money not only to support us now, but also in the future. We still had our whole lives ahead of us, which includes one day buying a house, having children, caring for these children, and sending them to school. This cat café is intended to be our full time job and needs to make financial sense in order to be considered successful.

It is really hard to determine how many people will patronize your business when you’re not anywhere close to opening. So what can you do to predict those results? More research. If you’re opening a café, for example, find one that’s similar to the ideal that you’re envisioning, in terms of size, neighborhood, menu, etc. – and just sit there for a little bit. Observe how busy it gets. Notice how many customers they serve in an hour. Watch who orders what.

Now that you have an idea of what your demand might be, you can begin figuring out your costs and revenue. The numbers you noted while watching your ideal business are only an estimate – you can’t know if you caught them at a slow time or if you can replicate their business, but this is merely the first step of your financial assessment. You can adjust along the way as you receive additional information.

From the number of people you observed, figure out how many that would average out to for a day, and then a week, and then a month, adjusting for potentially busy or slow days. (For example, your business may be a weekday business, so there are few people purchasing on weekends.)  Compile every single expenditure you can think off that you’ll be paying for every day: rent, utilities, staff, toilet paper, towels, cleaning supplies, everything. And then add 20%, for all the things you haven’t thought about yet.

Note that I didn’t include things like renovation or equipment. At this point in the process, I just want to know this: If I were to open today, with everything magically in place, how much money would be coming in and how much would I need to spend, just to keep up the day-to-day operations.

What if we started this business and it didn’t succeed? What was the backup plan?

Our goal is for both of us one day to work full-time at the cat café. We understand that it could take a while to get there, and that there is a chance that it may never happen. It’s a scary thought, but as much as we are planning our business, we also needed to have a plan for what to do if and when it’s time to change direction. Making a plan isn’t enough. As anyone who’s started a business knows, things rarely go according to plan. Maybe your business is a side gig while you work a full-time job until you have enough customers to support your business 24/7. Maybe you recruit some family members to help out until you can hire staff. Maybe you decide that at some point – it could even be after a year or two – you’ve evaluated your sales and can see that you’re not making enough to continue and it’s time to move on. If that happens, it just means you now have the knowledge to make it better next time and you can live to fight another day.

What else don’t I know?

At the end of the day, every new venture, no matter how unique, needs to go through the same process of opening a business. The following tried-and-true websites include information, webinars, and important contacts.

SBA (https://www.sba.gov/). The Small Business Administration continuously updates their website to organize the massive amount of information they provide. Besides the newly designed homepage that directs you based on where you are in the process, they have a Learning Center with webinars.

State and city business sites. Connecticut (http://portal.ct.gov/Business/Start-Your-Business/) and New Haven (https://www.newhavenct.gov/gov/depts/obd/small_business.htm) both have pages where they direct you to the things you’ll need to open a business (like licenses and fees), and some extras, like funding opportunities and data.

SCORE (https://www.score.org/). SCORE focuses on local workshops where you can get face-to-face time with knowledgeable businesspeople and mentoring where you can have that one-on-one personalized meeting.