Internet Cafe Business Plan

Internet Cafe Business Plan

An Internet Cafe or Cyber Cafe is a specialty beverage retailer that offers a high-quality option to the fast-food, gas station, or institutional coffee. Your Internet Cafe, unlike a typical cafe, will provide a unique forum for communication and entertainment through the medium of the Internet.

The concept of a cafe with full Internet access was invented in 1994 by Ivan Pope. Commissioned to develop an Internet event for an arts weekend at the Institute of Contemporary Arts (ICA) in London, and inspired by the SFnet terminal based cafes in San Francisco, Pope wrote a proposal outlining the concept of a cafe with Internet access from the tables.

The public wants:

  • Access to the methods of communication and volumes of information now available on the Internet.
  • Access at a cost they can afford and in such a way that they aren't socially, economically, or politically isolated.

More concerned with communication than computing, Internet Cafes have become a forum for social interaction. Customers use the facilities to communicate globally via the Internet and locally, face to face with other people.

Internet Cafes provide customers with access to Internet facilities in a sociable and relaxed environment, offering a wide range of services in addition to access to the World Wide Web. This includes access to e-mail accounts, faxing, scanning, printing and photocopying, as well as the opportunity to have a coffee and a snack.

Anyone looking to open an Internet Cafe should bear in mind that the majority of profit made will come from the catering side of the business. Therefore care and attention must be paid to making the cafe an enjoyable place for people to eat, drink and relax. If customers are not happy with the refreshment side of the business, then they may choose to access the Internet using another source.

The market for Internet Cafes is extremely competitive. It is estimated that there are currently in excess of 700,000 Internet Cafes operating with this figure predicted to rise significantly. The number of Internet Cafes operating has increased by nearly 250% during the last ten years. This increase has now slowed to around 5% per year but an estimated 95% of the population has access to the Internet on a regular basis. There are now a total of 16 billion hits a year from people using Internet Cafes, kiosks and public libraries.

The market is becoming increasingly competitive, as businesses such as supermarkets, banks, coffee shops, motorway services and high street stores are now installing Internet and cafe facilities into their premises. A threat to independent Internet Cafes is emerging from businesses diversifying into new areas. For example, the recently established Yeah cafes sell mobile phones, top-up-cards and offer secretarial services. However, at present food, and beverages are only available from vending machines.

Recent market trends include the growth of franchise and Internet Cafe chains. This is leading to changes in demand and higher customer expectations of the services available. For example, EasyInternet Cafe (a growing national chain) has introduced foreign currency exchange, cash machines, post boxes, a post service and a money wiring service into its cafes.

Concern is growing within the industry over security issues. The use of 'chat rooms' by unscrupulous people, particularly in communicating with women and children, has led to calls for better policing of the Internet.

Research into Internet usage shows that nearly 20% of users are aged under 35, more than 25% of users are aged between 35 and 49 and 20% are over 50. Other users are mainly younger people accessing, the Internet for leisure and educational purposes.

Customers for Internet Cafes can span a range of social groups but include:

  • Younger people, students and teenagers seeking a place to meet friends and communicate with others using the Internet.
  • Young professionals accessing a wide range of information, most commonly relating to financial services or specialist retail.
  • People with little or no Internet experience trying to learn or find out more about the Internet and its uses.
  • Travelers seeking information and checking e-mails.
  • Individuals with little interest in the Internet side of the business but making use of the cafe.

It is therefore vital that Internet Cafe owners do not neglect the refreshment side of the business, as this will impact on the success of the business as much as the technical expertise available.

TV programs such as 'Friends' have introduced the image of the 'cafe society'. Spending time in a coffee shop is often viewed as a leisure experience rather than as just a place to eat and drink. Lifestyle changes have also contributed to the increase in popularity of coffee shops. Many people have moved away from pub culture and coffee shops are seen as offering an alternative.

Your customers can be divided into two groups. The first group is familiar with the Internet and desires a progressive and inviting atmosphere where they can get out of their offices or bedrooms and enjoy a great cup of coffee. The second group is not familiar with the Internet, yet, and is just waiting for the right opportunity to enter the online community.

Your Internet Cafe's goal is to provide the community with a social, educational, entertaining, atmosphere for worldwide communication.

Your Internet Cafe should be a full-service cafe. Your restaurant should provide a full menu of moderately priced comfort food based upon time-honored recipes from around the world. Your Internet Cafe could also feature a dessert bar, magazines, and a space for live performers.

Your objectives should be:

  • The creation of a unique, upscale, innovative environment that will differentiate your Internet Cafe from local coffee houses.
  • Educating the community on what the Internet has to offer.
  • The formation of an environment that will bring people with diverse interests and backgrounds together in a common forum.
  • Affordable access to the resources of the Internet and other online services.

The mission for your Internet Cafe will be to offer easy and affordable access to the Internet that is quickly becoming a necessity of life. Your Internet Cafe should provide the local community with the ability to access the Internet, enjoy a cup of coffee, and share Internet experiences in a comfortable environment.

People of all ages and backgrounds will come to enjoy the unique, upscale, educational, and innovative environment that your Internet Cafe can provide.

Your keys to Success in this business are:

  • The creation of a unique, innovative, upscale atmosphere that will differentiate your Internet Cafe from other local coffee shops and Internet Cafes.
  • The establishment of your Internet Cafe as a community hub for socialization and entertainment.
  • The creation of an environment that won't intimidate the novice user. Your Internet Cafe will position itself as an educational resource for individuals wishing to learn about the benefits the Internet has to offer.
  • Product quality: Food, coffee-based beverages, and entertainment are your products. They must be of the high quality and value.
  • Service: Your patrons are paying to have a good time. Their experience will suffer if service is not of the highest calibre. Each member of the staff will be courteous, efficient, and attentive.
  • Marketing: You will need to target your audience early and often. While the business is likely to be located in a central and accessible location, many people will have to be reintroduced to the neighborhood.
  • Management: You will need to have a firm grasp on food, beverage, and labor costs. The coffee shop experience must be delivered in a fashion that will not only inspire repeat business, but also encourage word-of-mouth recommendations to others.
  • Proper inventory, employee management, and quality control are key.

Writing An Internet Cafe Business Plan

Writing An Internet Cafe Business Plan

Writing An Internet Cafe Business Plan

Why should you write an elaborate Internet Cafe Business Plan? Why not just send in the required cash flow forecast, copies of accounts supplied by the vendor and a covering letter?’

First, despite the understanding and sympathy many bankers feel for traders as against manufacturers, they do know that many retail shops lose money. Experience has shown that even if the bank recovers its money, there is often very little left for the owner. Your banker is not an ogre. He or she will want to be assured that you are not making a bad mistake and fully understand what it is you are proposing to undertake.

Second, writing a comprehensive Internet Cafe Business Plan is the best way of ensuring that the strategy and tactics to be employed are well thought-out and logical. There are more dangers and difficulties entailed in a retail business than most people think.

Two questions require particular attention: what is the market for your goods, and what should your buying policy be?

  • Is there a sufficient market?
  • What must your share of the market be to enable you to make a reasonable profit?
  • How much will each customer have to spend to give you a reasonable annual profit?

Questions like this must be asked and the answers entered in your Internet Cafe Business Plan.

Management processes

How will you manage your Internet Cafe? Getting organised will make your Internet Cafe more efficient and ultimately enjoyable. Even if you are the only person involved, it is still worth looking at your key skills, responsibilities and management processes at this stage. Your Internet Cafe Business Plan will need to consider the following key areas:

  • Marketing and sales.
  • Finance.
  • Recruitment and staffing.
  • Product development or product sourcing.
  • General management.
  • Administration.

You will also need to set out how you plan to monitor your Internet Cafes performance (against objectives and targets), and to co-ordinate the roles of any key staff.

There are many different ways of making an Internet Cafe MArketing Plan, individual business have different areas that are most important to them. Any Internet Cafe Business Plans you make should have emphasis on the areas you feel are most important to your business.

The key aspects of an Internet Cafe Business Plan are to describe each area, look at the best opportunities for your Internet Cafe, and come up with a sensible objective (and hopefully ideas on how to achieve it). This will give you a number of objectives across all areas of your Internet Cafe. Even if an objective is to “Keep marketing costs as near to level with last year as possible”, you will have a set written goal, and will therefore be more likely to achieve it.

Remember, an Internet Cafe Marketing Plan may just mean writing down your current strategies, there may be no need for change. However, the Internet Cafe Business Plan will still help, as it will show you that the strategy is ok, and, may point to ways of ensuring it continues to be successful in the future.

Sound financial management is one of the best ways for your Internet Cafe to remain profitable and solvent. How well you manage the finances of your Internet Cafe is the cornerstone of every successful business venture. Each year thousands of potentially successful Internet Cafes fail because of poor financial management. As an Internet Cafe owner, you will need to identify and implement policies that will lead to and ensure that you will meet your financial obligations.

To effectively manage your finances, plan a sound, realistic budget by determining the actual amount of money needed to open your Internet Cafe (start-up costs) and the amount needed to keep it open (operating costs). The first step to building a sound financial plan is to devise a start-up budget. Your start-up budget will usually include such one-time-only costs as major equipment, utility deposits, down payments, etc.

The start-up budget should allow for these expenses.

Start-up Internet Cafe Budget

  • personnel (costs prior to opening)
  • legal / professional fees
  • occupancy
  • licenses / permits
  • equipment
  • insurance
  • supplies
  • advertising / promotions
  • salaries / wages
  • accounting
  • income
  • utilities
  • payroll expenses

An operating budget is prepared when you are actually ready to open for business. The operating budget will reflect your priorities in terms of how your spend your money, the expenses you will incur and how you will meet those expenses (income). Your operating budget also should include money to cover the first three to six months of operation. It should allow for the following expenses.

Internet Cafe Operating Budget

  • personnel
  • insurance
  • rent
  • depreciation
  • loan payments
  • advertising / promotions
  • legal / accounting
  • miscellaneous expenses
  • supplies
  • payroll expenses
  • salaries / wages
  • utilities
  • dues / subscriptions / fees
  • taxes
  • repairs / maintenance

Internet Cafe Business Plan

Internet Cafe Business Plan

Internet Cafe Business Plan

The financial section of your Internet Cafe Business Plan should include any loan applications you've filed, a capital equipment and supply list, balance sheet, breakeven analysis, pro-forma income projections (profit and loss statement) and pro-forma cash flow. The income statement and cash flow projections should include a three-year summary, detail by month for the first year, and detail by quarter for the second and third years.

The accounting system and the inventory control system that you will be using is generally addressed in this section of the Internet Cafe Business Plan also. If a franchise, the franchisor may stipulate in the franchise contract the type of accounting and inventory systems you may use. If this is the case, he or she should have a system already intact and you will be required to adopt this system. Whether you develop the accounting and inventory systems yourself, have an outside financial advisor develop the systems or the franchisor provides these systems, you will need to acquire a thorough understanding of each segment and how it operates. Your financial advisor can assist you in developing this section of your Internet Cafe Business Plan.

The following questions should help you determine the amount of start-up capital you will need to purchase and open a franchise.

  • How much money do you have?
  • How much money will you need to purchase the franchise?
  • How much money will you need for start-up?
  • How much money will you need to stay in business?
  • Other questions that you will need to consider are:
  • What type of accounting system will your use? Is it a single entry or dual entry system?
  • What will your sales goals and profit goals for the coming year be? If a franchise, will the franchisor set your sales and profit goals? Or, will he or she expect you to reach and retain a certain sales level and profit margin?
  • What financial projections will you need to include in your Internet Cafe Business Plan?
  • What kind of inventory control system will you use?

Your Internet Cafe Business Plan should include an explanation of all projections. Unless you are thoroughly familiar with financial statements, get help in preparing your cash flow and income statements and your balance sheet. Your aim is not to become a financial wizard, but to understand the financial tools well enough to gain their benefits. Your accountant or financial advisor can help you accomplish this goal.

Great Internet Cafes don't just happen

They are planned that way

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