Merit internet cafe (a business plan by Abinet Habte)

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Mission
Merit internet café provides community with the ability to access the internet, enjoy a
cup of coffee, and purchase software from our galleries, have free basic literacy programs
of internet usage and computer application and buy academic tutorials of different fields
of study in a comfortable environment. People of all ages and backgrounds will become
to enjoy the unique, upscale, and educational and innovative the merit internet café
provides.

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Confidentiality Agreement
It is acknowledged by reader that information to be furnished in this business plan is in
all respects confidential in nature, other than information which is in the public domain
through other means. And the information that we have got or gather from public
organization or observation are secret to us and we are confident that not to disclose it by
any means.
Signature: _____________________
Name: _________________________
Date:______________________

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Acknowledgements
First of all we would like to say thanks to the almighty Lord for his aid to successfully
complete these kind of endeavor. Next our deepest gratitude goes to our honored teacher and
close advisor Mr. Gezaheny for his support and advice on these business plan.
Finally we would like to acknowledge our family and friends whom we are unable to list
their names here specially our close friends who directly support via idea and material aid.

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Table of Contents
Mission............................................................................................................................................. i
Confidentiality Agreement............................................................................................................... ii
Acknowledgements ......................................................................................................................... iii
List of Figures.....................................................................................................................................v
List of Tables......................................................................................................................................v
1. Executive Summary...................................................................................................................1
2. Industry Analysis.......................................................................................................................2
INTRODUCTION..........................................................................................................................2
2.1 Future Outlook and Trends/Mission Statement.......................................................................2
2.2 Analysis of Competitors............................................................................................................3
2.3 Industry Forecasts.....................................................................................................................3
3. Description of Venture................................................................................................................5
3.1 Products/Services.....................................................................................................................5
3.2 Size of Business........................................................................................................................6
3.2 Office Equipment and Personnel..........................................................................................7
3.3 Hierarchy of Management of Merit internet café.......................................................................8
3.5 Background of Entrepreneurs....................................................................................................9
3.6 Location and Facilities...............................................................................................................9
4. Operational plan............................................................................................................................9
4.1 Business process.......................................................................................................................9
4.2 Machinery and Equipment......................................................................................................10
4.3 Name of supplier of raw materials ..........................................................................................10
5.Marketing plan .............................................................................................................................10
5.1 Pricing....................................................................................................................................11
5.2 Promotion..............................................................................................................................11
5.3 Place/Distribution...................................................................................................................11
5.4 Products/services forecast......................................................................................................11
5.5 Position..................................................................................................................................12
5.6 Market Segmentation.............................................................................................................12
5.7Controls ..................................................................................................................................13

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5.8Initiatives................................................................................................................................13
6.Organizational plan...................................................................................................................13
6.1 Form of ownership and identification of partners....................................................................13
6.2Authority of principals.............................................................................................................14
6.3Team Background....................................................................................................................14
6.4 Roles and Responsibilities of members of the Organization .....................................................14
7.Assessment of Risks......................................................................................................................15
7.1Evaluation of Weakness of business ..........................................................................................15
7.2New technologies....................................................................................................................15
7.3 Contingency plan....................................................................................................................15
8.Financial plan................................................................................................................................16
8.1 Income statement ..................................................................................................................16
8.2Cash Flow Statement...............................................................................................................17
8.3 Balance Sheet.........................................................................................................................18
Appendix.........................................................................................................................................19
List of Figures
Fig.3.1 Hierarchy of projected management of the Merit internet café…………………………8
Fig 2.1 Target Market Segment Strategy of Merit Internet Café………………………………..12
List of Tables
Table: Equipment’s needed for Merit internet café………………………………………….….7
Table: 3.1 Labor cost of Merit internet café…………………………………………………….8
Table: 8.1 Income statement of Merit internet café (projected) for five years…………………16
Table: 8.2 Cash flow statement of the Merit internet café (projected)…………………………17
Table: 8.3 Balance sheet of the Merit internet café over five years of period…………………..18

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1. Executive Summary
Merit Internet Café, unlike a typical café, will provide a unique center for communication and
entertainment through the medium of internet. Merit Internet café is 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 to a place to socialize and share
experience with friends and colleagues. The goal of Merit internet café is to provide the
community with a social, educational and entertainment atmosphere for worldwide
communication.
This business plan is prepared to run financing in the total amount of 180,000 Eth.Birr that will
be 90,000 Eth.Birr loan from microfinance and 90,000Eth.Birr from personal savings of the
owners of the Merit internet café with individual contribution of 30,000 Eth.Birr.
Merit internet café is the partnership type of startup small business enterprise. And the three (3)
members are Abinet Habte, Eftu Fiseeha and Roman Abi. And the power division will look Head
of the enterprise, the secretariat of the enterprise and the accountant of the enterprise respectively
coupled with creating job opportunities for two peoples on the job position of cashier and typist
at a startup. The enterprise is expected to have its own TIN number and pay the government tax
fee in accordance with law.
The proposed initial capital will allow the Merit internet café to provide uniquely its customers
with a full featured internet café, tutorial video sales of various academic fields of study,
computer software sales, giving basic computer literacy program and internet basics for novice
users, selling cup of coffee and computer software maintenance coupled with other services in
the short term plan of about five years forecast from 2009E.C to 2013E.C.
Marketing will play a vital role in the success of Merit internet café. Marketing efforts are just
beginning by the time a potential customer enters merit internet café for the first time. A strong
emphasis will be put on keeping customers building brand loyalty through programs focused on
staffing, experience and customer satisfaction. To meet the objective and goal of the enterprise
the KAIZEN philosophy and structure will be implemented giving emphasis on the seven wastes
(MUDA’s) elimination, the five s’s introduction and applying the seven quality control tools.
Hence this business plan is a guide to the Merit internet café which will bring customer
satisfaction, profit and job creation.

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2. Industry Analysis
INTRODUCTION
The internet café industry in Robe experienced rapid growth at the beginning of five
years from 2005 to 2009E.C on average as the report from Bale zone revenue
development office shows. Hence, the online service providers market is sure to
experience tremendous growth of the cyber café market in Robe town. In the next five
years many competitors will enter the market assuming the current market demand
trends.
Data from Bale zone revenue development office shows that the expected growth rate of
the industry is about 18% per annum during the previous five years on average.
On average there are only two firms opened regarding the industry in Robe town
annually. This shows that still there is barrier to enter the industry as many new firms as
possible. The reason for this is the industry needs technical personnel and the source of
startup capital of the small business is one constraint to launch.
The main competition from online service providers comes from locally-owned
businesses as firms. There are approximately eight (8) local online service providers in
Robe town. This number is expected to grow with increasing demand for internet access.
Larger, online service providers such as Henok internet café, Mosisa internet café and
Azhar internet café are a competitivethreats to Merit internet café. Due to the nature of
the internet there are no geographical boundaries which will restrict competition. The
new service of technology which is introduced within the previous five years by the
internet café’s in Robe town is the online audiovisual chat with voice call via internet
with PC’s or mobile phone for customers.
2.1 Future Outlook and Trends/Mission Statement
As the popularity of the internet continues to grow at an experimental rate, easy and affordable
access is quickly becoming a necessity of life. Merit internet café provides community with the
ability to access the internet, enjoy a cup of coffee, and purchase software from our galleries,
have free basic literacy programs of internet usage and computer application and buy academic
tutorials of different fields of study in a comfortable environment. People of all ages and

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backgrounds will become to enjoy the unique, upscale, and educational and innovative the merit
internet café provides.
2.2 Analysis of Competitors
Merit internet café will be the unique internet café in Robe town that was differentiate itself from
other internet cafes by providing its customers with internet and computing services like
providing internet and computer basics (literacy programs) free of charge and an additional
competitive advantages are software sales from gallery, academic tutorials sales in different
fields of study for students of different levels and provide coffee services for customers with
reduced service costs as a key competitive advantage as well as winning strategy by customer
attraction.
2.3 Industry Forecasts
Merit internet café has both short term and long term plans. The short term plans of the business
includes the following activities. Providing internet and coffee services at a fair and competitive
price, giving basic computer literacy program and internet basics for customers with free of
charge, selling academic tutorial videos of various fields of study, selling computer software
from gallery, providing computer software maintenance as a major plan. And in the long term
plan, the Merit internet café will provide computer hardware, office equipment and mobile phone
maintenance and selling of different types of books which are used for beginner and advanced
users in addition to the previous short term plans with company branch expansions in Robe town.
The industry analysis of the Merit internet café also includes the following listed SWOT-
analysis.
SWOT-Analysis
The SWOT-analysis provides us with an opportunity to examine the internal strengths and
weaknesses Merit internet café must address. It also allow us to examine the opportunities
presented to Merit internet café as well as potential threats.
A. Strengths
1. Knowledgeable and friendly staff. We’ve gone to great lengths at Merit internet café to
find people with a passion for teaching and sharing their internet and computer
experiences. Our staff is both knowledgeable and eager to please.

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2. State of the art equipment. Our customers enjoy beautiful flat screen displays, fast
machines and high quality printers.
3. Clear vision of market need. Merit internet café knows what it takes to build an upscale
cyber café. We know the customers, we know the technology and we know how to build
the service that will bring the two together.
B. Weaknesses
1. A dependence on quickly changing technology. The technology of internet is
changes rapidly. Merit internet café needs to keep up with the technology because a
lot of the Merit experience is the technology.
2. Cost factor associated with keeping state of the art of internet and computer
hardware (mobile phone). Merit internet café needs to balance technology needs
with the other needs of the business. One aspect of the business can’t be sacrificed for
the other.
C. Opportunities
1. Growing population of daily internet users. As the population of daily internet
users increases, so will the need for the services Merit’s offers.
2. Social bonds fostered by the new internet communities. The internet is bringing
people from access the world together unlike any other communication medium.
Merit will capitalize on this social trend by providing a place for smaller and local
internet communities to meet in person. Merit will grow some of these communities
on its own by establishing chat areas and community programs. These programs will
be designed to build customer loyalty.
D. Threats
1. Rapidly falling of internet access cost. The cost of access to the internet for home users
is dropping rapidly and due to mobile internet users. Internet access may become so
cheap and affordable that nobody will be willing to pay for access to it. Merit is aware of
this threat and will closely maintaining pricing.
2. Emerging local competitors. Many of our programs will be designed to build customer
loyalty, and it is our hope that our quality service and upscale ambience won’t be easily
duplicated.

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3. Description of Venture
3.1 Products/Services
(a) Products
Merit internet café will provide the following products to its customers with the fair and
competitive price. These products are academic tutorial videos of various fields of study
which will be available by CD, DVD and flash disks and cup of coffee sale in the short term
plan. And in the long term plan, the Merit internet café will provide new and used PC sales
up on customers request and books sale of computer application and science for beginners
and advanced users in the future.
(b) Services
Merit internet café will provide a full access to email, WWW, Facebook, YouTube,
Messenger, and other internet applications, printing, scanning, photocopy and basic computer
literacy programs and internet basics of free charge will be available for customers. And
computer software maintenance within short term plan. And the long term plan of the Merit
is to give computer hardware, office equipment and mobile phone maintenance service with
fair and competitive price for customers.
3.1.1 Service Description
Merit internet café 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
Merit internet café’s customers are listed below;
 Access to email service,
 Access to internet explorer and other browsers,
 Access to laser and color printer
 Access to photocopy service,
 Access to scanning documents and photos,
 Access to laminating,
 Access to Facebook, you tube, messenger and other popular internet utilities will be
available,
 Access to computer literacy programs and internet basics free of charge.

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Hence, the Merit internet café will be a place to enjoy the benefits of computing in a
comfortable and well-kept environment.
3.2 Size of Business
The Merit internet café is one of stat-up small enterprises which will be launched in
Robe town with initial owners as well as entrepreneurs. The initial financial size for
starting up the business is an amount of 180,000 Eth. Birr from each individual
member’s contribution of 30,000 Eth.Birr from personal savings and 90,000Eth. Birr
loan from micro finance organization.
3.2.1 Start-up summary
Merit internet café’s start-up costs will cover six computer purchase cost, capital
to purchase photocopy machine, generator, printer and scanner, software
purchases, stationary goods cost, traditional coffee making equipment’s purchase
and capital for internet communications equipment necessary to get its
customers online.
The communication equipment necessary to provide Merit internet cafe’s
customers with a high speed connection to the internet and the services if has to
offer make up a large portion of the start-up costs will also be designated for the
purchase of photocopy machine and printer with scanner. In addition, costs will
be allocated for the purchase of traditional coffee making equipment’s.
Start-up Expense Details
 6 computers purchase cost= 30,000Eth. Birr
 2 printers purchase cost = 10,000Eth.Birr
 1 scanner purchase cost = 1400Eth.Birr
 155 different Software’s purchase cost= 6200Eth.Birr
 Traditional coffee making equipment’s purchase cost= 3100Eth.Birr
 6 Computer desks with chairs purchase cost = 7500Eth.Birr
 Photocopy machine purchase cost = 35000Eth Birr
 Generator(medium purchase cost =20,000Eth.Birr
 Stationary goods purchase cost=8000Eth.Birr
 Communication lines and service charges for 1 year=30,000Eth.Birr
 House Rent per 1 year=21600Eth.Birr
Total startup expenses= 172,800Eth.Birr

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Startup assets
 Cash available=16800Eth.birr
 Startup inventory=0Eth.Birr
 Other current assets=0eth.birr
Total assets= 16800Eth.Birr
Total requirements=180000Eth.Birr
3.2 Office Equipment and Personnel
3.2.1 Office Equipment
The office equipment that are necessary to launch the Merit internet café includes six
(6) PC’s, one laser jet printer, one color printer,, one laminating machine, one
photocopy machine, one scanning machine, one binding machine, sic (6) PC tables,
three (3) office chairs, one office table with devices necessary for broadband and wifi
internet connection and cables are forecasted within short term plan of the business.
No Equipment No. of equipment
needed
1 Computer (PC’s) 6
2 Laser jet printer 1
3 Color printer 1
4 Laminating machine 1
5 Binding Machine 1
6 Pc tables 6
7 Office chairs 3
8 Scanning machine 1
Table: Equipment’s needed for Merit internet café.
3.3.2 Personnel
The personnel of the Merit internet café which is going to have in the short term plan
looks to have about a total of five (5) members having position of Manager,

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secretariat and accountant including an additional two member form outside on the
job position of typist and cashier in which the business is going to create two (2) job
opportunity at the start of the business.
The total number of labor needed is about 5 individuals.
No Position Required
(No)
Monthly
Salaries per each
Annual
Salaries
1 General Manager 1 3,600 43,200
2 Accountant 1 3500 42,000
3 Cashier 1 1900 22,800
4 Secretariat 1 3900 46,800
5 Typist 1 1750 21,000
Total 5 14,650 175,800
Table: 3.1 Labor cost of Merit internet café.
3.3 Hierarchy of Management of Merit internet café.
The hierarchy of management of the Merit internet café will look like the following figure
(fig.3.1). The Manager is the overall head and control all activities leading all the four members
of the enterprise and specifically secretariat and accountant are the near management committee
in which the manager is the boss. The casher and the Typist are led by the secretariat of the
enterprise.
Fig.3.1 Hierarchy of projected management of the Merit internet café.

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3.5 Background of Entrepreneurs
Merit internet café will be launched with the three entrepreneurs which will be the
owners of the business on the type of partnership business venture. All of them are
form BSC level of educational background of computer science field of study. And
none of the have previous entrepreneurial experience before but have a common clear
vision of being a successful entrepreneurs regarding the skills they have with
entrepreneurial skills practically, being independent financially facing any risks.
And one of the member have work experience in governmental organization who is
willing to have enterprise of such kind being employing himself and creating job for
others parting from being serving in governmental office and launching a venture
with a clear vision while the two owners and members are fresh graduates, energetic
and enthusiastic to achieve activities of planned business enterprise that they are
going to launch.
3.6 Location and Facilities
A site has been chosen at the main road at Madda Walabu University’s village in Robe town.
The site was chosen for various reasons including;-
 Proximity to the downtown business community,
 Proximity to its potential customer’s i.e university students of which covers much
percentages of market segmentation.
 High visibility,
 Proximity to the trendy restaurants and wholesalers of which university students
frequently get services.
 Fair rent cost that is about 1800 Eh. Birr per month for room/class suitable for internet
café.
4. Operational plan
4.1 Business process
The Merit internet café will run its business by providing the following business
processes as well as products. These includes, providing internet access via broadband
and wifi connection for customers on pc’s of Merit, customer’s laptop, tablet and/mobile
phones, providing basic computer literacy programs and internet basics, laser and color
printing, access to photocopy service, scanning documents and photos with laminating

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and others enjoying with exiting environment coupled with coffee service, computer
software sales from gallery, sale of academic tutorial videos of various fields of study are
planned in the short term period of company forecast.
The Merit internet café has also a plan to implement KAIZEN philosophy as a major
winning tool and introduce the seven (7) waste elimination, the five (5) s’s and the seven
(7) quality control tools so as to eliminate wastes (MUDA’s) and bring profits as a unique
winning strategy among its customers.
4.2 Machinery and Equipment
The operational machinery that the Merit internet café to launch its business includes; flat
screen comfortable PC’s Photocopy machine, scanner, laser jet printer, color printer,
biding machine and laminating machine in the short term forecast.
And the equipment’s used for operation of the operation of the Merit internet café includes
pc tablets, customer’s chairs, office tablet’s and other tools like staplers ad stationary
materials are forecasted to launch the business within short term plan of the Merit internet
café.
4.3 Name of supplier of raw materials
The Merit internet café will have potential supplier named Ico tech earth technologies
which is located in Addis Ababa Ethiopia. The major materials which is planned to
have materials from the supplier includes, the software’s, used and new PC’s, books
for basic literacy and advanced users and other ict related materials in the short and
in the long term plan.
5.Marketing plan
INTRODUCTION
Merit internet café will be a magnet for local peoples, university students, teenagers , civil
servants and others who desire to spent around the internet and those who want to work or
check their email messages in a friendly atmosphere, by using Merit’s PC’s or plug their
laptops in to the internet connection. Merit’s target market covers a wide range of ages from
members of generation X.

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5.1 Pricing
The Merit internet café used the market survey conducted in the year 2008E.c by Bale
zone revenue development office and members observation from sample internet cafés of
Robe town. Evaluating these two factors resulted in Merit internet vafe’s price of 20
cents per minute as well as 12 Ethi.birr per and hour which is low price among
competitors as one of pricing strategy to attract customers.
5.2 Promotion
Merit internet café will spend almost about 20,000 Eth.Birr in its first year of
advertising. A few specific marketing efforts include;
 Printed materials like business card, posting on notice board etc,
 Local announcements,
 Local newspapers,
 Facebook posts via our enterprise’s Facebook account.
5.3 Place/Distribution
The products of Merit internet café to be distributed to its customers includes the
computer software’s and academic tutorial video materials in the short term plan of
action. Hence, these products are forecasted to be distributed to customers via
potential retails and direct purchase from the enterprise.
5.4 Products/services forecast
This topic is a critical reminder of the fact that Merit is a service business. The success of our
business depends upon the quality of the service we offer and delivering that service and product
consistently. Merit is dedicated to delivering this quality service.
Dedicated to quality service programs:
 Merit internet café’s staff members will consistently be on hand to provide service and
product to customers with a passion to teaching and sharing their internet experiences.
Our staff is both knowledgeable and eager to please.
 A highly valued member of the Merit staff will be available for six days a week and will
be responsible for developing customer satisfaction programs, monitoring happiness

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levels, responding to customers concern and the general wellbeing of every merit
customers.
5.5 Position
The thing that we put an object as an image to our customers is the sale of video tutorials of
various fields of study on which they potentially buy from us coupled with providing basic
computer literacy and internet basics free of charge as a customer attraction of our enterprise.
5.6 Market Segmentation
Merit internet café’s customers can be divided in to 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 with internet and a cup of coffee. The second group is not familiar
with internet yet and just waiting for the right opportunity to enter the online community. Merit
internet café’s target market falls anywhere between the ages of 18 and 40. This 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, Merit internet café’s target market can be divided in to more
specific market segments. The majority of these individuals are students and government
employees. See the market analysis chart for more specifics.
Fig 2.1 Target Market Segment Strategy of Merit Internet Cafe
As the above pie chart shows merit internet café has a market segment strategy of about five (5)
types of customers. These are; 40% University students, 25% government workers, 20%
teenagers, 10% local peoples and 5% others. Merit internet café will be a magnet for local

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peoples travelling professionals who desire to work or check their email messages in friendly
atmosphere. These peoples will either use merit’s PC’s or plug in their laptops, tablets or
notebooks into internet connections or use wifi wireless internet connections. Merit internet café
will covers a customers of wide range of ages and groups.
5.7Controls
The goal of this marketing plan is to outline the strategies, tactics and programs that
will make the sales goals outlined in the Merit business plan a reality in the year 2009
to 2013 E.C. We have these marketing obstacles to face;-
 The creation of a unique, innovative, upscale atmosphere that will differentiate Merit
from other local coffee shops and future internet café’s,
 The establishment of Merit internet as a community hub for socialization and
entertainment,
 The creation of environment that won’t intimidate the novice users. Merit will position
itself as an educational resource for individuals wishing to learn about the benefits of the
internet has to offer.
Our marketing efforts will be focused on building the image outlined above. We have
milestones and sales goals to meet and business plan outlining our first and second year of
business detail. It will be critical to use this marketing plan and the Merit business plan as a
living/working documents. We can’t allow them to sit in a file. They must be used as a map
for the future success of Merit internet café.
5.8Initiatives
The increasing demand for internet usage, the current technology which is being
solving many problems and loved many users and limited number for Merit service
providers are the main icebreakers for Merit internet café which initiates to launch a
unique business venture in Robe town for practical winning strategy.
6.Organizational plan
6.1 Form of ownership and identification of partners
Merit internet café is owned and operated by three members. And the form of business is
partnership. The venture being a startup small enterprise in nature, requires a simple
organizational structure in the short term plan. Implementation of this organizational form calls
for the owners to make all of the major management decisions in addition to monitoring all other

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business activities. The initial position of the owners looks Abinet Habte as a manager, Eftu
Fiseha as secretariat and Roman Abi as an accountant.
Terms of agreement
The merit internet café will be launched by the three owners in the form of startup small business
enterprise in which they are going to equally contribute individual shred amount of
30,000Eth.Birr each with a total amount of 90,000Eth.Birr and the rest 90,000Eth.birr will be
loan from micro finance. Then the profit from total product and service sale will be equally shred
according to the terms of agreement.
6.2Authority of principals
The manager’s responsibility as well as the authority includes monitoring business
activities to make major management decisions, calling members for meeting
regularly or occasionally regarding business activities, identifying weaknesses or
problems and take corrective measure, promoting members as well as employees of
the Merit internet café via initiatives for their hardworking and efficiency, evaluating
the overall activities then give direction for the success of the company.
6.3Team Background
Merit internet café will be launched with three teams which will be the owners of the partnership
business venture. All of them are from the common type of educational level and field of study
that is BSC in computer science which is directly related to what they are interested to start a
business on internet café. In addition all of them have no previous entrepreneurial experience but
one of the group member is working in the governmental organization. And the members are
with clear vision and goal to be successful in their business they are going to start.
6.4 Roles and Responsibilities of members of the Organization
Merit internet café will be launched by a total of four (4) members at the beginning of the short
term period forecast. The position of the members looks like:- Manager, Secretariat, Cashier and
Typist. The role and responsibility of the manager (principal) is discussed on the above topic.
And the other members will have the following roles and responsibilities.

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The role and responsibility of secretariat is having and documenting each and every files of
meeting, serving customers via internet and computer skills and doing additional organizational
duties.
The role and responsibilities of cashier is to conduct the organizations plan and budget role,
collecting daily financial resources, doing budget audit and serving customers regarding internet
and computer based skills and doing additional organizational duties.
The role and responsibility of typist is to type and make documents, serving customers regarding
with the internet and computer skills and conducting additional enterprise duties.
7.Assessment ofRisks
7.1Evaluation of Weakness of business
1. A dependence on quickly changing technology. The technology of internet is
changes rapidly. Merit internet café needs to keep up with the technology because
a lot of the Merit experience is the technology.
2. Cost factor associated with keeping state of the art of internet and computer
hardware (mobile phone). Merit internet café needs to balance technology needs
with the other needs of the business. One aspect of the business can’t be sacrificed
for the other.
7.2New technologies
Merit internet café is a place for people to experience the technology of the internet. The
technology that is the internet changes rapidly with new technologies and additional
features. Hence, Merit internet café needs to keep up with the new technology and update
itself timely.
7.3 Contingency plan
This business plan is just a plan. And the plans don’t always work out and we have to be
ready to deal with the likelihood that Merit won’t make good on the projections outlined
in this plan. The following are some possible scenarios.
Revenues miss projections: - If we miss our projections, we simply have to re-double
our marketing efforts. The danger in this scenario is that the first reaction to missed
projections is to decrease spending’s, particularly marketing expenses. Additional capital
infusions may become necessary and that possibility is details in the business plan.

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Internet side of business plays a lesser role:- Our customers might not be willing to pay
for internet access or Merit memberships as internet access costs and hardware costs
continue to fall. If this scenario materializes, charge less and move our numbers around to
accommodate this trend since internet services in the scenario would still an important
role in attracting customers.
8.Financial plan
8.1 Income statement
Regarding income statement of the Merit internet café, the projected revenue and
production costs (Operating cost, depreciation cost and microfinance loan repayment
with interest rate) are listed and compared whether the plan will generate profit or lose.
Accordingly, the plan is found to be profitable throughout its life cycle. The amount of
net profit varies from Birr 23,100 at the end of the first year to 113,731.775 at the end of
fifth year. (See table 8.1 below)
Merit internet café
Income Statement (projected)
Period: 2009 E.C to 2013E.C
Revenue Projected five years scenario
Sales(Eth.Birr) 2009 2010 2011 2012 2013
Internet service 117000 193050 212355 233590.5 256949.55
Photocopy service 7200 10800 11880 13068 14374.8
Typing and printing 2250 3375 3712.5 4083.75 4492.125
Tutorial video sales 9600 14400 15840 17424 19166.4
Scanning and laminating service sale 9600 14400 15840 17424 19166.4
coffee sales 6000 9000 9900 10890 11979
Loan fee 90000
Members(owners) contribution 90000
Total revenue 331650 245025 269528 296480.25 326128.275
Expense(eth.birr)
Projected five years scenario
2009 2010 2011 2012 2013
Wage 76000 114000 125400 137940 151734
Rent 21600 32400 21600 21600 23760
Electric fee 1200 1800 1800 1800 1845
loan repayment with 7.5% interest rate 32250 48375 16125 0 0
Raw material purchase 12000 18000 16500 17325 19057.5
PC purchase 30000 0 0
Scanner purchase 1800 0 0
Photocopy machine purchase 40000 0 0
Generator purchase 25000 0 0
Communication lines and service charge 30000 0 0
Desktop chairs 7500 0 0
Office tables purchase 4500 0 0

17
Software purchases 6200 0 0
Printer purchase 15000 0 0
Total depreciation costs of fixed
materials 5500 7000 16000 16000 16000
Total Expense 308550 221575 197425 194665 212396.5
Net income(eth.birr) 23100 23450 72102.5 101815.25 113731.775
Table: 8.1 Income statement of Merit internet café (projected) for five years.
8.2Cash Flow Statement
The liquidity position of the project can be seen from the projected cash flow statement.
According to this projection, the plan will have healthy financial position to replay all its debits.
This is because the analysis shows that the plan will have positive cash inflow throughout the
anticipated life. The net cash flow is estimated to be 28600 Eth.birr at the first year and will
reach 129731.78 eth.birr. (See the following table 8.2)
Merit Internet café
Cash flow (projected)
Period: 2009 E.C to 2013E.C
Cash flow and financial transactions
Period 1
(2009E.C)
Period 2
(2010E.C)
Period 3
(2011E.C)
Period 4
(2012E.C)
Period 5
(2013E.C)
1) Cash Outflow
Wage 76000 114000 125400 137940 151734
Rent 21600 32400 21600 21600 23760
Electric fee 1200 1800 1800 1800 1845
loan repayment with 7.5% interest rate 32250 48375 16125 0 0
Raw material purchase 12000 18000 16500 17325 19057.5
PC purchase 30000 0 0 0 0
Scanner purchase 1800 0 0 0 0
Photocopy machine purchase 40000 0 0 0 0
Generator purchase 25000 0 0 0 0
Communication lines and service charge 30000 2000 2100 2200 2300
Desktop chairs 7500 0 0 0 0
Office tables purchase 4500 0 0 0 0
Software purchases 6200 0 0 0 0
Printer purchase 15000 0 0 0 0
Total cash outflow 303050 214575 181425 178665 196396.5
2) Cash inflow
Internet service fee 117000 193050 212355 233590.5 256949.55
Photocopy service fee 7200 10800 11880 13068 14374.8
Typing and printing service fee 2250 3375 3712.5 4083.75 4492.125
Tutorial video sales fee 9600 14400 15840 17424 19166.4
Scanning and laminating service fee 9600 14400 15840 17424 19166.4
coffee sales fee 6000 9000 9900 10890 11979
Loan fee 90000 0 0 0 0
Members(owners) contribution fee 90000 0 0 0 0

18
Total operating inflow 331650 245025 269527.5 296480.25 326128.28
3) Net cash flow (2-1) 28600 30450 88102.5 117815.25 129731.78
Table: 8.2 Cash flow statement of the Merit internet café (projected)
8.3 Balance Sheet
The balance sheet of the Merit internet café over the projected five years of operation will look
the following with identified Assets, Liabilities and Capital. And the net worth or the capital of
each year is also identified and it is about113, 100 Eth.birr at the first year and 203,732Eth.birr at
the fifth year of short term plan.
Merit Internet café
Balance sheet(projected)
Form Year 2009E.C to 2013E.C
Projected five years scenario
1) Assets(A) 2009E.C 2010E.C 2011E.C 2012E.C 2013E.C
Service fee 129150 125000 138017 150317 162234
Sales fee 25600 25700 27119 28120 28120
Office Furniture 18350 16515 14864 13378 13378
Total Assets 173100 167215 180000 191815 203732
2)Liability(L)
Microfinance loan 60000 53765 17897.5 0 0
Total Liability 60000 53765 17897.5 0 0
3)Capital(C )
Owner's
Contribution 90000 90000 90000 90000 90000
Saved profit capital 23100 23450 72102.5 101815 113732
Total Capital 113100 113450 162103 191815 203732
Net worth(C=A-L) 113100 113450 162103 191815 203732
Table: 8.3 Balance sheet of the Merit internet café over five years of period.

19
Appendix
Garaph.1 Service sale forecast of the Merit internet café over the five years (2009E.C to
2013E.C)
Garaph.2 Projected net income of Merit internet café over five years short term period.

20
3. Questionnaire provided for the Bale zone revenue development
office expert.(put ‘’ mark on the box provided)
a. How many internet café enterprises are there registered and pay
government tax in the previous five years?
___________________________________________________
b. What will be the growth trend of the internet café enterprises of
Robe town in the previous five years?
1. Incremental 2. Constant 3. Declining
c. If your answer for’ b’ is declining what will be the main reason?
____________________________________________________________
____________________________________________________________
___________________________________________________________
d. How many internet café firms on average are entering the market
per annum since the previous five years?
______________________________________________________
e. If there are no more internet café firms in Robe town what will be
the main cause that will be a barrier to enter the market?
i. Capital ii. Technically trained personnel
iii. Other (specify)_____________________________________
4. Chart 3: Loan repayment of merit internet café over five years (2009E.C to 2013E.c)
s

Merit internet cafe (a business plan by Abinet Habte)

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