Annu Cyber Cafe

 
Appendix 4:    Sample Business Plan
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CYBER CAFÉ BUSINESS PLAN

 ANNU CYBERCAFE

TABLE OF CONTENT

 

 

1. Executive Summary	3
2. Company Summary	5
3. Services	7
4. Market Analysis	8
5. Marketing Strategy	11
6. Management Summary	13
7. Financial Plan	14

1.            Executive Summary

 

Annu Cyber Cafe, a located in Chandausi, District Sambhal, U.P.  - 244412 INDIA, offers a perfect spot for the public in social gathering and leisure. It provides customers free access to the Internet as well as an area for to meet together in a casual environment under an economical manner.

The business intends to obtain finance from external equity in the amount of INR10,61,540, for which the application will be for commencing work on shop renovation, equipment purchases, and as operating cash flow. Preliminary capital injection has already been secured by the initial owners, Obewon Kinobi and Alex Skywalker, in the amounts of INR1,24,360 and INR1,15,385 respectively.

Annu Cyber Cafe will be incorporated as a limited liability company. The two initial owners will be the shareholders and their personal liabilities will be subject to a ceiling at the amount of their respective investments.

The finance acquired through this business proposal will allow Annu Cyber Cafe to successfully open and operate as a cyber café. A comfortable and innovative environment is provided to the customers with a casual atmosphere. Operations in year one will generate Annu Cyber Cafe a regular customer base that will allow it to be self-maintained in year two.

           Objectives

 

Annu Cyber Cafe’s objectives for the first year of operation include:

 

Ÿ    The creation of an exclusive, stylish, innovative environment that will distinguish Annu Cyber Cafe from other coffee shops.

Ÿ    The creation of a comfortable and casual environment that will bring people with different interests and backgrounds together for socialization.

Ÿ    High-quality coffee and bakeries at a reasonable price.

Ÿ    Free access to online services.

 

           Mission

 

As Internet has become more popular and grown at an expeditious pace, easy access has become a part of life. Annu Cyber Cafe provides the public free access to the Internet, high-quality food and beverages in a comfortable environment. People from different backgrounds will come to enjoy the exclusive, stylish, and innovative environment that Annu Cyber Cafe offers.

           Risks

 

The risks involved with Annu Cyber Cafe’s business are:

Ÿ    Insufficient demand for the services provided by Annu Cyber Cafe in Sambhal Gate, Chandausi .

Ÿ    The popularity of the Internet stops to grow.

Ÿ    The opening of new cafés in the same area which offers the exact services that Annu Cyber Cafe provides.

2.            Company Summary

 

Annu Cyber Cafe, soon to be opened at Sambhal Gate, Chandausi , District Sambhal, U.P. - 244412 INDIA Hong Kong Island, will provide the public free access to the Internet and a special and innovative environment for enjoying top quality coffee and bakeries.

Individuals of all ages and backgrounds will find Annu Cyber Cafe appealing. The staffs of Annu Cyber Cafe provide not only top quality service but also helpful instructions to customers in computer usage. This educational aspect will attract elderly customers and youngsters who do not own computers at home. The easy access location also provides residents in the same area convenience to their gourmet and online needs.

           Company Ownership

 

Annu Cyber Cafe will be privately owned by Mohd Anwar, the founder and CEO Mohd Anwar.

           Start-up Summary

 

Annu Cyber Cafe’s start-up costs will cover renovation, furniture, computers, coffee machines and cooking equipment, and running capital to cover expenses in the first year.

The equipment provided to Annu Cyber Cafe’s customers with high-speed connection to the Internet forms a large portion of the start-up costs. These costs will include computers, two laser printers and a scanner.

Besides, the start-up costs will comprise the coffee machines such as one espresso machine, one automatic coffee grinder, and other additional equipment. The shop will also require funds for renovation and modification. Breakdown of the start-up costs is illustrated as follows:

 

Start-up Costs	INR
Legal Fee	55000
Stationeries	50000
Tableware	55000
Consultants	188000
Insurance	70000
Rent	155000
Coffee Machines	13,718
Bean Grinder	1,020
Computer Systems (x11), Software, Printer, Scanner	225200
Internet Lines	1500

Fixtures/Renovation	125642
Total Start-up Costs	8,77,080
Start-up Assets
Running Cash	30,770
Start-up Inventory	2,565
Total Assets	33,335
Total Requirements	9,10,415

 

 

 

           Company Location

 

A site has been chosen in Chandausi for the following reasons:

Ÿ    Nearness to the close-by residents.

Ÿ    Proximity to stylish, upscale restaurants in the same area.

Ÿ    High visibility.

3.            Services

 

Annu Cyber Cafe will provide free access to the Internet and computer services such as printing, scanning to customers. It will also provide customers with a unique and innovative environment for enjoying top quality coffee and bakeries.

           Service Description

 

Annu Cyber Cafe will provide its customers free access to the Internet and common computer software and hardware. Some of the Internet and computing services available to Annu Cyber Cafe’s customers are listed below:

Ÿ    Internet browsers.

Ÿ    Laser color printing, copying and scanning.

Ÿ    Popular software applications.

 

Also, top quality food and beverages, and a comfortable environment will provide Annu Cyber Cafe’s customers with a second home, a place to enjoy the benefits of computing in a comfortable environment.

           Competitive Comparison

 

Annu Cyber Cafe will be the first cyber café in Sambhal Gate. It will differentiate itself from other ordinary coffee shops in the same area by providing its customers with free Internet and computing services.

           Technology

 

Annu Cyber Cafe will invest in high-speed computers to provide its customers with a fast and efficient connection to the Internet. The computers will be reliable and fun to work with. Annu Cyber Cafe will continue to upgrade and modify the systems to stay with current technologies.

4.            Market Analysis

 

Annu Cyber Cafe is facing the opportunity of being the pioneer in the Sambhal Gate, Chandausi . The consistent popularity of coffee, combined with the growing interest in the Internet, has been proven to be a winning concept in other markets and will produce the same results..

           Market Segmentation

 

Annu Cyber Cafe’s 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. Annu Cyber Cafe’s target market falls anywhere between the ages of 15 and 70. This extremely wide range of ages is due to the fact that both coffee and the Internet appeal to a variety of people. In addition to these two broad categories, Annu Cyber Cafe’s target market can be divided into more specific market segments. The majority of these individuals are students and business people. See the Market Analysis table below for more specifics.

 

Market Analysis
		2015	2016	2017	2018	2019
Potential Customers	Growth
University Students	9%	15,000	15,600	16,224	16,873	17,548
Office Workers	6%	25,000	25,750	26,523	27,319	28,139
Seniors	5%	18,500	19,425	20,396	21,416	22,487
Teenagers	15%	12,500	12,750	13,005	13,265	13,530
Others	5%	25,000	25,000	25,000	25,000	25,000
Total	2.68%	96,000	98,525	101,148	103,873	106,704

 

           Target Market Segment Strategy

 

Annu Cyber Cafe intends to cater to people who want a guided tour on their first spin around the Internet and to experienced users eager to indulge their passion for computers in a social setting. Furthermore, Annu Cyber Cafe will be a magnet for local and traveling professionals who desire to work or check their email messages in a friendly atmosphere. These professionals will either use Annu Cyber Cafe’s PCs, or plug their notebooks into Internet connections.

           Market Trends

 

A market survey was conducted recently with key questions asked to fifty

potential customers in Sambhal Gate, Chandausi . Some key findings include:

 

Ÿ    40 people said they enjoyed free access to the Internet.

Ÿ    44 subjects use the Internet to communicate with others on a daily basis.

 

            Market Needs

 

Factors such as current trends, addiction, and historical sales data ensure that the high demand for coffee and Internet access will remain constant over the next five years. Being the first cyber café in Sambhal Gate, Chandausi , Annu Cyber Cafe will enjoy the pioneer advantages of name recognition and customer loyalty. Initially, Annu Cyber Cafe will hold a 100 percent share of the cyber café market in Sambhal Gate, Chandausi. In the next five years, competitors will enter the market. Annu Cyber Cafe has set a goal to maintain greater than a 50 percent market share.

           Service Business Analysis

 

The retail coffee industry in Sambhal Gate, Chandausi  experienced rapid growth from the 1990’s and is now moving into the mature stage of its life cycle. Many factors contribute to the large demand for high-quality coffee in Sambhal Gate, Chandausi . The yuppies is a main source of demand for coffee retailers. The climate in Sambhal Gate, Chandausi is extremely favorable to coffee consumption. Current trends in this high-spending residential area reflect the popularity of fresh and strong coffee. Sambhal Gate, Chandausi is a haven for coffee lovers.

The popularity of the Internet is growing exponentially. Those who are familiar with the Internet are well aware of how fun and addictive going online can be. Those who have not yet experienced with the Internet need a convenient, relaxed atmosphere where they can feel comfortable learning about and utilizing the current technologies. Annu Cyber Cafe seeks to provide its customers with affordable Internet access in an innovative and supportive environment.

Due to intense competition, café owners must look for ways to differentiate their place of business from others in order to achieve and maintain a competitive advantage. The founder of Annu Cyber Cafe realizes the need for differentiation and strongly believes that combining a café with complete Internet service is the key to success. The fact that no cyber cafés are established in Sambhal Gate, Chandausi, presents Annu Cyber Cafe with a great opportunities to enter into a profitable niche in the market.

           Competition and Buying Patterns

 

The main competitors in the retail coffee segment within the same location are StarBugs and Cathay Coffee. These businesses target a similar segment to

Annu Cyber Cafe’s (i.e. educated, upwardly-mobile students and business people). However, Annu Cyber Cafe will offer substantial computing services to its customers which these competitors are not providing at the moment.

           Distributing a Service

 

The dual product/service nature of Annu Cyber Cafe’s business faces competition on two levels. Annu Cyber Cafe competes not only with coffee shops, but also with Internet service providers. The good news is that Annu Cyber Cafe does not currently face any direct competition from other cyber cafés in the Sambhal Gate, Chandausi market.

Heavy competition between coffee shops in Sambhal Gate, Chandausi creates an industry where all firms face the same costs. There is a positive relationship between price and quality of coffee. Some coffees retail at INR2.6/cup while other, more exotic beans may sell for as high as INR3.8/cup. Wholesalers sell beans to retailers at an average of a 50 percent discount. For example, a pound of Sumatran beans wholesales for INR9 and retails for INR18. And as in most industries, price decreases as volume increases.

5.            Marketing Strategy

 

Annu Cyber Cafe will position itself as a stylish coffee house and Internet service provider. It will serve high-quality coffee and specialty beverages at competitive prices. Due to the number of cafés in Sambhal Gate, Chandausi , it is important that Annu Cyber Cafe sets fair prices for its products. Annu Cyber Cafe will use advertising as its main source of promotion. Ads placed in food magazines will help build customer awareness. Accompanying the ad will be a coupon for discounted coffee and nice bakeries.

           Promotion Strategy

 

Annu Cyber Cafe will implement a pull strategy in order to build consumer awareness and demand. Initially, Annu Cyber Cafe has budgeted INR6,410 for promotional efforts which will include advertising with food magazines and in-house promotions such as offering customers free drinks.

Annu Cyber Cafe realizes that in the future, when competition enters the market, additional revenues must be allocated for promotion in order to maintain market share.

           Pricing Strategy

 

Determining a fair market for cyber café is more difficult because there is no direct competition from another cyber café in Sambhal Gate, Chandausi. Therefore, Annu Cyber Cafe has to base its prices for coffee and specialty drinks on the “retail profit analysis” provided by our supplier, Jenson Coffee, which has been in the coffee business for over 50 years and has developed a solid pricing strategy.

           Sales Strategy

 

As a retail establishment, Annu Cyber Cafe employs people to handle sales transactions. Computer knowledge is a prerequisite for Annu Cyber Cafe employees. If an employee does not possess basic computer skills when they are hired, they are trained by our full-time technician. Our full-time technician is also available for customers in need of assistance. Annu Cyber Cafe’s commitment to friendly, helpful service is one of the key factors that distinguishes itself from other cyber cafés.

           Sales Forecast

 

Cost of Sales: The cost of goods sold for coffee-related products was determined by the "retail profit analysis" we obtained from Jenson Coffee. The cost of bakery items is 20% of the selling price. The cost of Internet access is INR847 per month, paid to PC-Net for networking fees.

	2017	2018	2019
Unit Sales
Coffee	53,844	64,990	71,490
Specialty Drinks	40,135	48,350	49,706
Baked Goods	20,420	26,344	23,182
Total Unit Sales	114,399	139,684	144,378
Unit Prices	INR	INR	INR
Coffee	2.60	2.60	2.60
Specialty Drinks	3.20	3.20	3.20
Baked Goods	2.60	2.60	2.60
Sales	INR	INR	INR
Coffee	138,063	166,642	183,308
Specialty Drinks	128,639	154,970	159,315
Baked Goods	52,361	67,549	59,443
Total Sales	319,063	389,161	402,066
Direct Cost of Sales	INR	INR	INR
Coffee (based on average)	34,515	41,659	45,827
Specialty Drinks (based on average)	32,161	38,744	39,829
Baked Goods (based on average)	13,090	16,888	14,862
Subtotal Direct Cost of Sales	79,766	97,291	100518

6.            Management Summary

 

Annu Cyber Cafe is owned and operated by Mr. Mohd Anwar. The company, being small in nature, requires a simple organizational structure. Implementation of this organizational form calls for the owner, Mr Mohd Anwar also, to make all of the major management decisions in addition to monitoring all other business activities.

Personnel Plan

 

The staff will consist of six part-time employees working thirty hours a week at INR7 per hour. In addition, one full-time technician (who is more technologically oriented to handle minor terminal repairs/inquiries) will be employed to work forty hours a week at INR13 per hour. The other shareholder, Alex Skywalker, will not be included in management decisions. This simple structure provides a great deal of flexibility and allows communication to disperse quickly and directly. Because of these characteristics, there are few coordination problems seen at Annu Cyber Cafe that are common within larger organizational chains. This strategy will enable Annu Cyber Cafe to react quickly to changes in the market.

 

	2017	2018	2019
Total People	9	9	9
	INR	INR	INR
Owner	30,770	33,847	37,231
Part Time 1	10,154	10,154	10,154
Part Time 2	10,154	10,154	10,154
Part Time 3	10,154	10,154	10,154
Part Time 4	10,154	10,154	10,154
Part Time 5	10,154	10,154	10,154
Part Time 6	5,077	10,154	10,154
Technician	27,861	30,647	33,711
Manager	5,129	30,770	33,847
Total Payroll	119,607	156,188	165,713

7.            Financial Plan

 

The following sections lay out the details of our financial plan for the next three years.

 

           Start-up Funding

 

This business plan is prepared to obtain financing in the amount of INR61,539. The supplemental financing is required to begin work on site preparation and modifications, equipment purchases, and to cover expenses in the first year of operations. This amount is planned to be repaid by INR15,385 each year by four years.

Owners’ investments has already been secured as follows:

 

1.            INR24,359 of personal savings from owner Obewon Kinobi.

2.            INR15,385 from the second shareholder, Alex Skywalker.

3.            INR11,911 in the form of short-term bank loans.

 

	INR
Start-up Expenses to Fund	79,859
Start-up Assets to Fund	33,335
Total Funding Required	113,193
Assets
Inventory	2,565
Cash Balance	30,770
Total Assets	33,335
Liabilities
Short Term Bank Loans	11,911
Funds Needed to Raise	61,539
Total Liabilities	73,450
Capital
Obewon Kinobi	24,359
Alex Skywalker	15,385
Total Planned Investment	39,744

           Projected Profit and Loss

 

Payroll Expense: The founder of Annu Cyber Cafe, Obewon Kinobi, will receive a salary of INR30,770 in year one, INR33,847 in year two, and INR37,231 in year three. Annu Cyber Cafe intends to hire six part-time employees in year one at INR7/hour and a full-time technician at INR13/hour.

Rent Expense: Annu Cyber Cafe is leasing a 400 square foot facility at INR2,565/month for a total of 36 months. At the end of the third year, the lease is open for negotiations and Annu Cyber Cafe may or may not re-sign the lease depending on the demands of the lessor.

Utilities Expense: As stated in the contract, the lessor is responsible for the payment of utilities including gas, garbage disposal, and real estate taxes. The only utilities expenses that Annu Cyber Cafe must pay are electricity and the phone bill generated by fifteen phone lines; thirteen will be dedicated to broadband and two for business purposes.

Marketing Expense: Annu Cyber Cafe will allocate INR43,270 for promotional expenses over the first year. This amount will be used for advertising in food magazines in order to build consumer awareness.

Insurance Expense: Annu Cyber Cafe has allocated INR1,847 for insurance for the first year. As revenue increases in the second and third year of business, Annu Cyber Cafe intends to invest more money for additional insurance coverage.

Projected Profit and Loss data is presented in the table below:

 

	2017	2018	2019
	INR	INR	INR
Sales	319,062	389,159	402,065
Direct Cost of Sales	79,766	97,290	100,517
Gross Margin	398,828	486,449	502,582
Expenses
Payroll	119,604	156,185	165,711
Marketing/Promotion	43,270	51,283	55,129
Rent	30,770	30,770	30,770
Utilities	11,693	11,693	11,693
Depreciation	14,309	14,309	14,309
Start-up Cost	8,315	0	0
Insurance	7,693	7,693	7,693
Total Operating Expenses	235,654	271,933	285,305
Profit Before Interest and Tax	3,647	19,940	16,247
Interest Expense	2,981	1,885	1,411
Taxes Incurred	100	2,709	2,226
Net Profit	6,548	24,534	19,884

           Projected Cash Flow

 

	2017	2018	2019
	INR	INR	INR
Cash Received
Cash from Operations
Cash Sales	319,062	389,159	402,065
Subtotal Cash from Operations	319,062	389,159	402,065
Additional Cash Received
Capital Investment	39,744	0	0
Short Term Bank Loan	11,911	0	0
Long Term Funding	61,539	0	0
Subtotal Cash Received	432,256	389,159	402,065
Expenditures
Expenditures from Operations	375,732	359,504	375,145
Additional Cash Spent
Repayment of Short Term Loan	11,911	0	0
Long-term Liabilities Repayment	15,385	15,385	15,385
Subtotal Cash Spent	403,028	374,889	390,530
Net Cash Flow	29,228	14,270	11,535
Cash Balance	29,228	43,498	55,033

           Projected Balance Sheet

 

	2017	2018	2019
	INR	INR	INR
Assets
Fixed Assets	57,236	42,927	28,618
Current Assets
Cash	29,228	43,498	55,033
Total Current Assets	29,228	43,498	55,033
Total Assets	86,464	86,425	83,651
Liabilities
Long-term Liabilities	46,154	30,770	15,385
Total Liabilities	46,154	30,770	15,385
Net Assets	40,310	55,655	68,266
Shareholders’ Equity
Paid-in Capital	39,744	39,744	39,744
Retained Earnings	566	15,911	28,522
Net Worth	40,310	55,655	68,266