Kirabo cyber cafe business plan

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KIRABO CYBER CAFÉ

BUSINESS PLAN

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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

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Executive Summary

Kirabo Cyber Cafe, is located in Mubende Municipal Council, Mubende-Uganda, offers a perfect spot

for the public for computer application packages, communication and entertainment through the

medium of the Internet, social gathering and leisure.

The business obtained finance from external equity in the amount of USD1, 000, to equipment

purchases. Preliminary capital injection was secured by parents, and friends,

Kirabo Cyber Cafe is organized on the structure for profit but with a strong core social goal and a

society centered mission (Social-economic development among the youth through Information

Technology.)

Objectives

Offering short computer packages to social-economically empower and impact

fellow youth through Information Technology.

Creation of a comfortable leisure and learning environment that will bring people

with different interests and backgrounds together for socialization and education.

Providing a high speed internet service to “all”.

Building communication networks for life.

Offering Online life changing financial services.

Mission:

Social-economic development among the youth through Information Technology.

As Internet has become more popular and grown at an expeditious pace, easy access has become

a part of life. Kirabo provides the public access to the Internet, and online services in a

comfortable environment. People from different backgrounds will come to enjoy the exclusive

and innovative environment that Kirabo Cyber Cafe offers.

Business History

Established towards the end of 2013, Kirabo Cyber Cafe was founded and started operation and with

a capital of US$ 1,000 (Shs.3,500,000) that was used to buy second hand dell desktop computers , a

used Canon iR 1600 copier and furniture .

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In our journey of over 2 years, we have grown from a capital of US$ 1,000 to about US$ 2,500(Shs.8,

750,000) ,and 2 workers currently at the business premises.

Milestones

2015

Increase in net monthly income to US$ 300

Introduces Employees at the business

Kirabo Cyber Cafe introduces new IT short courses to empower and impact the youth to

explore IT Innovatory.

2014

Switching from old Dell standalone desktops to Mini-frame computing (Multiple monitors-

single server structure)

Small 2.5 Hp generator donation

Reselling used computers.

Colour printing and photocopying.

1.1 Risks

The risks involved with Kirabo Cyber Café’s business are:

Insufficient demand for the services provided in Mubende

The popularity of the Internet stops to grow.

The opening of new cafés in the same area which offers the exact services that Kirabo Café

provides.

Smartphone era, as one accesses almost all services he would have got from the

café on his mobile phone.

Slow penetration rate due to conservativeness and nature of the people around.

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2. Company Summary

Kirabo Cyber Café, soon to be opened at Rubanga in Mubende municipal, Mubende District I,

will provide the public 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 Kirabo Cyber Café appealing. The staffs of

Kirabo Cyber Café 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.

2.1 Company Ownership

Kirabo Cyber Café will be privately owned by Kisakye Stephen, the founder and CEO,

2.2 Start-up Summary

Kirabo Cyber Café’s start-up costs will cover renovation, furniture, computers, coffee and

machines and cooking equipment, and running capital to cover expenses in the first year.

The equipment provided to Kirabo Cyber Café’s customers with high-speed connection to

the Internet forms a large portion of the start-up costs. These costs will include computers,

one laser copier and a diesel standby generator.

Besides, the start-up costs will comprise the coffee machines, chips/snacks machine, one

automatic coffee grinder, café tableware, 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 UGX

Trading Licence 50,000

Stationeries 150,000

Tableware 4,500,000

Consultants 100,000

Insurance 200,000

Rent 3,500,000

Coffee Machines 700,000

Snacks/Chips machine 500,000

Computer Systems (x11), Software (Miniframe) 3,500,000

Internet Lines 1,000,000

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Fixtures/Renovation 700,000

Total Start-up Costs 14,900,000

Start-up Assets

Running Cash 7,500,000

Start-up Inventory for loans 12,500,000

Total Assets 20,000,000

Total Requirements 34,900,000

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2.3. Company Location

A site was been chosen along Rubanga Road in Mubende Municipality for the following reasons:

Nearness to the close-by residents.

Easy access to security and financial institutions

High visibility

Strategic Location.

Market potentiality

Services

Kirabo Cyber Café provides access to the Internet and computer services such as printing, scanning to

customers. It also provides customers with a unique and innovative environment for enjoying top

quality knowledge in short computer application training packages and interns for university students.

Service Description

Kirabo Cyber Café will provide its customer’s access to the Internet and common computer software

and hardware. Some of the Internet and computing services available to Kirabo Cyber Café’s

customers are listed below:

Short computer application training packages and interns.

Internet browsers.

Networking and telecommunications.

Laser color printing, copying and scanning.

Popular software applications.

Architecture drawing and planning.

Hardware maintenance and repair.

.

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3.2 Competitive Comparison

Kirabo Cyber Cafe will differentiate itself from other ordinary coffee shops in the same area

by providing its customers with loan financial services (Quick loans), Internet and

computing services.

3.3 Technology

Kirabo Cyber Café will invest in high-speed computers and modern wireless technologies

to provide its customers with a fast and efficient connection to the Internet. The computers

will be reliable and fun to work with. Kirabo Cyber Café will continue to upgrade and

modify the systems to stay with current communications technologies.

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4. Market Analysis

Kirabo Cyber Café is facing the opportunity of being the among pioneers in the Mubende cyber café

market. The consistent popularity of coffee, snacks foods, computer training 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 Mubende.

4.1 Market Segmentation

Kirabo Cyber Café’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. Kirabo Cyber Café’s

target market falls anywhere between the ages of 11 and 45. 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, Kirabo Cyber Café’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

2013 2014 2015

Potential Customers Growth

University Students 4% 15,000 15,600 16,224

Office Workers 3% 25,000 25,750 26,523

Seniors 5% 18,500 19,425 20,396

Teenagers 2% 12,500 12,750 13,005

Others 0% 25,000 25,000 25,000

Total 2.68% 96,000 98,525 101,148

4.2 Target Market Segment Strategy

Kirabo Cyber Café 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, Kirabo Cyber Café 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

Kirabo Cyber Café’s PCs, or connect their notebooks, laptops and smart phones to our high speed

wireless gateway.

4.2.1 Market Trends

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

Mubende. Some key findings include:

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40 people said they enjoyed free access to the Internet.

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

4.2.2 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 Mubende,

Kirabo Cyber Café will enjoy the pioneer advantages of name recognition and customer loyalty. Initially,

Kirabo Cyber Café will hold a 100 percent share of the cyber café market in Mubende. In the next five

years, competitors will enter the market. Kirabo Cyber Café has set a goal to maintain greater than a 50

percent market share.

4.3 Service Business Analysis

The retail coffee industry in Mubende 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 Mubende.

The supplies is a main source of demand for coffee retailers. The climate in Mubende is extremely favorable to

coffee consumption. Current trends in this high-spending residential area reflect the popularity of fresh and

strong coffee. Mubende is a haven for coffee and snacks and chips 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. Kirabo Cyber Café 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 Kirabo Café 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 Mubende, presents Kirabo Cyber Café with a great opportunities

to enter into a profitable niche in the market.

4.3.1 Competition and Buying Patterns

The main competitors in the retail coffee and snacks segment within the same location are Good Times and

Kobus Mubende. These businesses target a similar segment to

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Kirabo Cyber Café’s (i.e. educated upwardly-mobile students and business people). However, Kirabo

Café will offer substantial computing services to its customers which these competitors are not

providing at the moment i.e Quick online Loans.

4.3.2 Distributing a Service

The dual product/service nature of Kirabo Cyber Café’s business faces competition on two levels. Kirabo

Cyber Café competes not only with coffee shops, but also with Internet service providers. The good news

is that Kirabo Café does not currently face any direct competition from other cyber cafés in the Mubende

market.

Heavy competition between coffee shops in Mubende 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

UGX 2,500/cup.

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5. Marketing Strategy

Kirabo Cyber Café 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 Mubende,

it is important that Kirabo Cyber Café sets fair prices for its products. Kirabo Cyber Café will use

advertising as its main source of promotion. Ads placed in food and school magazines will help build

customer awareness. Accompanying the ad will be a coupon for discounted coffee and nice bakeries.

5.1 Promotion Strategy

Kirabo Café will implement a pull strategy in order to build consumer awareness and demand.

Initially, Kirabo Cyber Café has budgeted UGX 3,000,000/= for promotional efforts which will

include advertising with radio station and food magazines and in-house promotions such as offering

customers free drinks.

Kirabo Cyber Café realizes that in the future, when competition enters the market, additional

revenues must be allocated for promotion and discounts in order to maintain market share.

5.2 Pricing Strategy

Determining a fair market for cyber café is more difficult because there is no direct competition from

another cyber café in Mubende. Therefore, Kirabo Cyber Café has to base its prices for coffee and

specialty drinks on the “retail profit analysis” provided by our supplier, Coffee, which has been in

the coffee business for over 50 years and has developed a solid pricing strategy.

5.3 Sales Strategy

As a retail establishment, Kirabo Café employs people to handle sales transactions. Computer

knowledge is a prerequisite for Kirabo Cyber Café 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. Kirabo Cyber Café’s commitment to

friendly, helpful service is one of the key factors that distinguishes itself from other cyber cafés.

5.4 Sales Forecast

Cost of Sales: The cost of goods sold for coffee-related products was determined by the "retail profit

analysis" we obtained from our survey in Kasaana Parish. The cost of bakery items is 15% of the

selling price. The cost of Internet access is UGX 550,000 per month, paid to Broadband for

networking fees.

Projected sales for three years with Market Potential

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2016 2017 2018

Unit Sales

Coffee/Tea with Baked Goods 51,864 54,710 61,472

Chips 32,145 58,650 59,516

Soft Drinks 40,460 46,344 53,182

Total Unit Sales 124,469 159,704 174,170

Unit Prices

UGX UGX UGX

Coffee/Tea with Baked Goods 2,500 2,500 2,500

Chips 4,500 4,500 5,000

Soft Drinks 2,500 2,500 2,500

Sales UGX UGX UGX

Coffee/Tea with Baked Goods 129,660,000 136,775,000 153,680,000

Chips 144,652,500 263,925,000 267,822,000

Soft Drinks 101,150,000 115,860,000 132,955,000

Total Sales 375,462,500 516,560,000 554,457,000

Direct Cost of Sales

UGX UGX UGX

Coffee (based on average) 32,415,000 34,193,750 38,420,000

Chips (based on average) 36,163,125 65,981,250 66,955,000

Soft Drinks (based on average) 25,287,500 28,965,000 33,238,750

Subtotal Direct Cost of Sales 93,865,625 129140,000 138,613,750

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6. Management Summary

Kirabo Cyber Café is owned and operated by Mr. Stephen Kisakye. The company, being small in

nature, requires a simple organizational structure. Implementation of this organizational form

calls for the owner, Mr. Kisakye, to make all of the major management decisions in addition to

monitoring all other business activities.

Personnel Plan

The staff will consist of six employees working for a monthly salary of UGX 350,000. In

addition, one full-time technician (who is more technologically oriented to handle minor terminal

repairs/inquiries) will be employed to ensure proper operation and emergencies for a monthly

pay of UGX 450,000 /=. 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 Kirabo Cyber Café that are common within larger organizational

chains. This strategy will enable Kirabo Cyber Café to react quickly to changes in the market.

2016 2017 2018

Total People 7 7 7

UGX UGX UGX

Owner 26,000,000 28,000,000 30,000,000

Secretary 1,800,000 1,800,000 2,000,000

Chef 2,400,000 2,700,000 3,000,000

Waiter 1,800,000 2,160,000 2,400,000

Cashier 4,200,000 4,700,000 5,000,000

Technician 5,000,000 5,200,000 6,000,000

Manager 6,500,000 7,000,000 7,200,000

Total Payroll 47,700,000 51,560,000 55,600,000

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7. Financial Plan

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

7.1 Start-up Funding

This business plan is prepared to obtain financing in the amount of UGX 55,000,000. 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 got from total uganda start upper project.

Owners’ investments has already been secured as follows:

1. UGX 5,000,000 of personal savings from owner Stephen Kisakye

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7.2 Projected Profit and Loss

Payroll Expense: The founder of Kirabo Cyber Café, Stephen Kisakye , will receive a salary of

UGX 26,000,000 /= in year one, UGX 52,000,000 /= in year two, and UGX 104,000,000 /= in year

three. Kirabo Café intends to hire 3 employees in year one at Ugx 350,000 /= and a technician at

UGX 450,000 /= per month.

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 Kirabo Cyber

Café 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: Kirabo Cyber Café will allocate UGX 3,500,000 /= for promotional expenses

over the first year. This amount will be used for advertising on radio stations and food magazines in

order to build consumer awareness.

Insurance Expense: Kirabo Cyber Café has allocated UGX 200,000 /= for insurance for the first

year. As revenue increases in the second and third year of business, Kirabo Cyber Café intends to

invest more money for additional insurance coverage.

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

2016 2017 2018

UGX UGX UGX

Sales 375,462,500 516,560,000 554,457,000

Direct Cost of Sales 93,865,625 129,140,000 138,613,750

Gross Margin 469,328,125 645,700,000 693,070,750

Expenses

Payroll 47,700,000 51,560,000 55,600,000

Marketing/Promotion 3,500,000 2,500,000 2,000,000

Rent 4,500,000 4,500,000 4,500,000

Taxes 50,000 75,000 80,000

Utilities 6,400,000 3,400,000 2,400,000

Start-up Cost 34,900,000 0 0

Insurance 200,000 200,000 200,000

Total Operating Expenses 97,250,000 62,235,000 64,780,000

Net Profit 372,078,125 583,465,000 628,290,750

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7.3 Projected Cash Flow

2016 2017 2018

UGX UGX UGX

Cash Received

Cash from Operations

Cash Sales 375,462,500 515,560,000 554,457,000

Subtotal Cash from Operations 375,462,500 515,560,000 554,457,000

Additional Cash Received

Capital Investment 5,000,000 0 0

Short Term Bank Loan 2,500,000 0 0

Total Startupper grant 55,000,000 0 0

Subtotal Cash Received 437,962,500 515,560,000 554,457,000

Expenditures

Expenditures from Operations 97250,000 62,235,000 64,780,000

Additional Cash Spent

Repayment of Short Term Loan 1,800,000 0 0

Subtotal Cash Spent 99,050,000 62,235,000 64,780,000

Net Cash Flow 338,912,500 453,325,000 489,677,000

Cash Balance 338,912,500 792,237,500 1,281,914,500

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7.4 Projected Balance Sheet

2016 2017 2018

UGX UGX UGX

Assets

Fixed Assets 34,900,000 25,960,000 17,675,900

Current Assets

Cash 338,912,500 792,237,000 1,281,914,500

Total Current Assets 338,912,500 792,237,000 1,281,914,500

Total Assets 373,812,500 818,197,000 1,299,589,500

Shareholders’ Equity

Paid-in Capital 60,000,000 60,000,000 60,000,000

Retained Earnings 313,812,500 758,197,000 1,239,589,500

Net Worth 373,812,500 818,197,000 1,299,589,5000

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