Executive Summary
MarKen Internet Cafe, unlike a typical cafe, will provide a unique forum for communication and entertainment through the medium of the Internet. MarKen Internet Cafe is the answer to an increasing demand. The public wants: (1) access to the methods of communication and volumes of information now available on the Internet, and (2) access at a cost they can afford and in such a way that they aren't socially, economically, or politically isolated. MarKen Internet Cafe's goal is to provide the community with a social, educational, entertaining, atmosphere for worldwide communication.
This business plan is prepared to obtain financing in the amount of Php240,000.00. 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. Additional financing has already been secured in the form of: (1) Php240, 000.00 from the Isulan Economic Development Fund (2) Php500, 000.00 of personal savings from owners Kenny Jay Malunes, Noel Potenciano and Mark Lloyd Obogon (3) and Php9, 290 in the form of short-term loans.
MarKen Internet Cafe will be incorporated as an Accel corporation. This will shield the owners Kenny Jay Malunes, Noel Potenciano and Mark Lloyd Obogon from issues of personal liability and double taxation. The investors will be treated as shareholders and therefore will not be liable for more than their individual personal investment of.
The financing, in addition to the capital contributions from the owners, shareholders will allow MarKen Internet Cafe to successfully open and maintain operations through year one. The large initial capital investment will allow MarKen Internet Cafe to provide its customers with a full featured Internet cafe. A unique, upscale, and innovative environment is required to provide the customers with an atmosphere that will spawn socialization. Successful operation in year one will provide MarKen Internet Cafe with a customer base that will allow it to be self sufficient in year two.
Table of Contents
The Company
*Starting Plan
Primary Expenses
*Company Location and Facilities
*Services
Description
Marketing Plan
*Target Market Strategy
Strategy
*Marketing Strategy
Pricing
Promotion
Sales
*Sales Forecast
The Company
MarKen Internet Cafe, soon to be located in Isulan Public Market will offer the community easy and affordable access to the Internet. MarKen Internet Cafe will provide full access to email, WWW, FTP, Usenet and other Internet applications such as Telnet and Gopher. MarKen Internet Cafe will also provide customers with a unique and innovative environment for enjoying great coffee, specialty beverages, and bakery items.
MarKen Internet Cafe will appeal to individuals of all ages and backgrounds. The instructional Internet classes, and the helpful staff that MarKen Internet Cafe provides, will appeal to the audience that does not associate themselves with the computer age. This educational aspect will attract younger and elderly members of the community who are rapidly gaining interest in the unique resources that online communications have to offer. The downtown location will provide business people with convenient access to their morning coffee and online needs.
Starting Plan
MarKen Internet Cafe's start-up costs will cover coffee making equipment, site renovation and modification, capital to cover losses in the first year, and the communications equipment necessary to get its customers online.
The communications equipment necessary to provide MarKen Internet Cafe's customers with a high-speed connection to the Internet and the services it has to offer make up a large portion of the start-up costs. These costs will include the computer terminals and all costs associated with their set-up. Costs will also be designated for the purchase of two laser printers and a scanner.
In addition, costs will be allocated for the purchase of coffee making equipment. One espresso machine, an automatic coffee grinder, and minor additional equipment will be purchased from Accel Corp.
The site at 10th and Oak will require funds for renovation and modification. A single estimated figure will be allocated for this purpose. The renovation/modification cost estimate will include the costs associated with preparing the site for opening business.
Start-up Expense Details:
· 11 computers = Php220,000.00
· two printers = Php10,000.00
· one scanner = Php500
· software = Php810
· one espresso machine = Php10,700
· one automatic espresso grinder = Php795
· other fixtures and remodeling:
o two coffee/food preparation counters = Php10,000.00
o one information display counter = Php10,000.00
o one drinking/eating counter = Php500
o sixteen stools = Php1,600
o six computer desks w/chairs = Php2,400
o stationery goods = Php500
o two telephones = Php200
o decoration expense = Php130,000.00
| Primary Expenses | |
| Requirements | |
| Start-up Expenses | |
| Legal | Php500 |
| Stationery etc. | Php500 |
| Brochures | Php500 |
| Consultants | Php20,000.00 |
| Insurance | Php700 |
| Rent | Php1,445 |
| 4-group Automatic Coffee Machine | Php10,700 |
| Bean Grinder | Php795 |
| Computer Systems (x11), Software, Printer, Scanner | Php24,310 |
| Communication Lines | Php840 |
| Fixtures/Remodel | Php200,000.00 |
| Total Start-up Expenses | Php62,290 |
| Start-up Assets | |
| Cash Required | Php240,000.00 |
| Start-up Inventory | Php20,000.00 |
| Other Current Assets | Php0 |
| Long-term Assets | Php0 |
| Total Assets | Php260,000.00 |
| Total Requirements | Php88,290 |
Company Location and Facilities
A site has been chosen at Isulan, Public Market. This site was chosen for various reasons, including:
· Proximity to the downtown business community.
· Proximity to trendy, upscale restaurants such as West Brothers.
· Parking availability.
· Low cost rent.
· High visibility.
All of these qualities are consistent with MarKen Internet Cafe's goal of providing a central hub of communication and socialization for the Eugene community.
Services
MarKen Internet Cafe will provide full access to email, WWW, FTP, Usenet and other Internet applications such as Telnet and Gopher. Printing, scanning, and introductory courses to the Internet will also be available to the customer. MarKen Internet Cafe will also provide customers with a unique and innovative environment for enjoying great coffee, specialty beverages, and bakery items.
MarKen Internet Cafe will be the first Internet cafe in Eugene. MarKen Internet Cafe will differentiate itself from the strictly-coffee cafes in Eugene by providing its customers with Internet and computing services.
Description
MarKen Internet Cafe will provide its customers with full access to the Internet and common computer software and hardware. Some of the Internet and computing services available to MarKen Internet Cafe customers are listed below:
· Access to external POP3 email accounts.
· Customers can sign up for a MarKen Internet Cafe email account. This account will be managed by MarKen Internet Cafe servers and accessible from computer systems outside the MarKen Internet Cafe network.
· FTP, Telnet, Gopher, and other popular Internet utilities will be available.
· Access to Netscape or Internet Explorer browser.
· Access to laser and color printing.
· Access to popular software applications like Adobe Photoshop and Microsoft Word.
MarKen Internet Cafe will also provide its customers with access to introductory Internet and email classes. These classes will be held in the afternoon and late in the evening. By providing these classes, MarKen Internet Cafe will build a client base familiar with its services. The computers, Internet access, and classes wouldn't mean half as much if taken out of the environment MarKen Internet Cafe will provide. Good coffee, specialty drinks, bakery goods, and a comfortable environment will provide MarKen Internet Cafe customers with a home away from home. A place to enjoy the benefits of computing in a comfortable and well-kept environment.
MarKen Internet 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. MarKen Internet Cafe will continue to upgrade and modify the systems to stay current with communications technology.
Marketing Plan
MarKen Internet Cafe is faced with the exciting opportunity of being the first-mover in the Eugene cyber-cafe market. 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 in Eugene.
Target Market Strategy
MarKen Internet 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, MarKen Internet 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 MarKen Internet Cafe's PCs, or plug their notebooks into Internet connections. MarKen Internet Cafe's target market covers a wide range of ages: from members of Generation X who grew up surrounded by computers, to Baby Boomers who have come to the realization that people today cannot afford to ignore computers.
A market survey was conducted. Key questions were asked of fifty potential customers. Some key findings include:
· 35 subjects said they would be willing to pay for access to the Internet.
· Ten pesos an hour was the most popular hourly Internet fee.
· 24 subjects use the Internet to communicate with others on a regular basis.
Factors such as current trends, addiction, and historical sales data ensure that the high demand for coffee will remain constant over the next five years. The rapid growth of the Internet and online services, that has been witnessed worldwide, is only the tip of the iceberg. The potential growth of the Internet is enormous, to the point where one day, a computer terminal with an online connection will be as common and necessary as a telephone. This may be 10 or 20 years down the road, but for the next five years, the online service provider market is sure to experience tremendous growth. Being the first cyber-cafe in Eugene, MarKen Internet Cafe will enjoy the first-mover advantages of name recognition and customer loyalty. Initially, MarKen Internet Cafe will hold a 100 percent share of the cyber-cafe market in Eugene. In the next five years, competitors will enter the market. MarKen Internet Cafe has set a goal to maintain greater than a 50 percent market share.
Strategy
MarKen Internet Cafe has three main strategies. The first strategy focuses on attracting novice Internet users. By providing a novice friendly environment, MarKen Internet Cafe hopes to educate and train a loyal customer base.
The second, and most important, strategy focuses on pulling in power Internet users. Power Internet users are extremely familiar with the Internet and its offerings. This group of customers serves an important function at MarKen Internet Cafe. Power users have knowledge and web-browsing experience that novice Internet users find attractive and exciting.
The third strategy focuses on building a social environment for MarKen Internet Cafe customers. A social environment, that provides entertainment, will serve to attract customers that wouldn't normally think about using the Internet. Once on location at MarKen Internet Cafe, these customers that came for the more standard entertainment offerings, will realize the potential entertainment value the Internet can provide.
MarKen Internet Cafe's second strategy will be focused on attracting power Internet users. Power Internet users provide an important function at MarKen Internet Cafe. MarKen Internet Cafe plans on attracting this type of customer by:
· Providing the latest in computing technology.
· Providing scanning and printing services.
· Providing access to powerful software applications.
The third strategy focuses on building a social environment for MarKen Internet Cafe customers. A social environment, that provides entertainment, will serve to attract customers that wouldn't normally think about using the Internet. Once on location at MarKen Internet Cafe, these customers that came for the more standard entertainment offerings, will realize the potential entertainment value the Internet can provide.
MarKen Internet Cafe's first strategy focuses on attracting novice Internet users. MarKen Internet Cafe plans on attracting these customers by:
· Providing a novice friendly environment. MarKen Internet Cafe will be staffed by knowledgeable employees focused on serving the customer's needs.
· A customer service desk will always be staffed. If a customer has any type of question or concern, a MarKen Internet Cafe employee will always be available to assist.
· MarKen Internet Cafe will offer introductory classes on the Internet and email. These classes will be designed to help novice users familiarize themselves with these key tools and the MarKen Internet Cafe computer systems.
Marketing Strategy
MarKen Internet Cafe will position itself as an upscale coffee house and Internet service provider. It will serve high-quality coffee and espresso specialty drinks at a competitive price. Due to the number of cafes in Eugene, it is important that MarKen Internet Cafe sets fair prices for its coffee. MarKen Internet Cafe will use advertising as its main source of promotion. Ads placed in The Register Guard, Eugene Weekly, and the Emerald will help build customer awareness. Accompanying the ad will be a coupon for a free hour of Internet travel. Furthermore, MarKen Internet Cafe will give away three free hours of Internet use to beginners who sign up for an introduction to the Internet workshop provided by MarKen Internet Cafe.
Pricing
MarKen Internet Cafe bases its prices for coffee and specialty drinks on the "retail profit analysis" provided by our supplier, Accel Corporation., Accel Corp. has been in the coffee business for 22 years and has developed a solid pricing strategy.
Determining a fair market, hourly price, for online use is more difficult because there is no direct competition from another cyber-cafe in Eugene. Therefore, MarKen Internet Cafe considered three sources to determine the hourly charge rate. First, we considered the cost to use other Internet servers, whether it is a local networking firm or a provider such as America Online. Internet access providers use different pricing schemes. Some charge a monthly fee, while others charge an hourly fee. In addition, some providers use a strategy with a combination of both pricing schemes. Thus, it can quickly become a high monthly cost for the individual. Second, MarKen Internet Cafe looked at how cyber-cafes in other markets such as Portland and Ashland went about pricing Internet access. Evaluating these factors resulted in MarKen Internet Cafe's hourly price of five dollars.
Promotion
MarKen Internet Cafe will implement a pull strategy in order to build consumer awareness and demand. Initially, MarKen Internet Cafe has budgeted Php50,000.00 for promotional efforts which will include advertising with coupons for a free hour of Internet time in local publications and in-house promotions such as offering customers free Internet time if they pay for an introduction to the Internet workshop taught by MarKen Internet Cafe's computer technician.
Sales
As a retail establishment, MarKen Internet Cafe employs people to handle sales transactions. Computer literacy is a requirement for MarKen Internet 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. MarKen Internet Cafe's commitment to friendly, helpful service is one of the key factors that distinguishes MarKen Internet Cafe from other Internet cafes.
Sales Forecast
Sales forecast data is presented in the chart and table below.
Sales: MarKen Internet Cafe is basing their projected coffee and espresso sales on the financial snapshot information provided to them by Accel Co. Internet sales were estimated by calculating the total number of hours each terminal will be active each day and then generating a conservative estimate as to how many hours will be purchased by consumers.
Cost of Sales: The cost of goods sold for coffee-related products was determined by the "retail profit analysis" we obtained from Accel Corporation The cost of bakery items is 20% of the selling price. The cost of Internet access is Php660 per month, paid to Bellevue Computers for networking fees. The cost of e-mail accounts is 25% of the selling price.
| Year 1 | Year 2 | Year 3 | |
| Unit Sales | |||
| Coffee (based on average) | 12,016 | 14,068 | 15,475 |
| Specialty Drinks (based on average) | 6,654 | 7,913 | 8,705 |
| Email Memberships | 8,703 | 10,505 | 11,556 |
| Hourly Internet Fees | 38,269 | 46,365 | 51,002 |
| Baked Goods (based on average) | 32,673 | 42,150 | 46,365 |
| Total Unit Sales | 98,315 | 121,001 | 133,103 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Coffee (based on average) | Php1.00 | Php1.00 | Php1.00 |
| Specialty Drinks (based on average) | Php2.00 | Php2.00 | Php1.00 |
| Email Memberships | Php10.00 | Php10.00 | Php10.00 |
| Hourly Internet Fees | Php2.50 | Php2.50 | Php2.50 |
| Baked Goods (based on average) | Php1.25 | Php1.25 | Php1.00 |
| Sales | |||
| Coffee (based on average) | Php12,016 | Php14,068 | Php15,475 |
| Specialty Drinks (based on average) | Php13,308 | Php15,826 | Php8,705 |
| Email Memberships | Php87,030 | Php105,050 | Php115,560 |
| Hourly Internet Fees | Php95,673 | Php115,913 | Php127,505 |
| Baked Goods (based on average) | Php40,841 | Php52,688 | Php46,365 |
| Total Sales | Php248,868 | Php303,544 | Php313,610 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Coffee (based on average) | Php0.25 | Php0.25 | Php0.25 |
| Specialty Drinks (based on average) | Php0.50 | Php0.50 | Php0.25 |
| Email Memberships | Php2.50 | Php2.50 | Php2.50 |
| Hourly Internet Fees | Php0.63 | Php0.63 | Php0.63 |
| Baked Goods (based on average) | Php0.31 | Php0.31 | Php0.25 |
| Direct Cost of Sales | |||
| Coffee (based on average) | Php3,004 | Php3,517 | Php3,869 |
| Specialty Drinks (based on average) | Php3,327 | Php3,957 | Php2,176 |
| Email Memberships | Php21,758 | Php26,263 | Php28,890 |
| Hourly Internet Fees | Php23,918 | Php28,978 | Php31,876 |
| Baked Goods (based on average) | Php10,210 | Php13,172 | Php11,591 |
| Subtotal Direct Cost of Sales | Php62,217 | Php75,886 | Php78,403 |
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