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Kirabo cyber cafe business plan

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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.)

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Kirabo cyber cafe business plan

  1. 1. 1 KIRABO CYBER CAFÉ BUSINESS PLAN
  2. 2. 2 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
  3. 3. 3 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 .
  4. 4. 4 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.
  5. 5. 5 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
  6. 6. 6 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
  7. 7. 7 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. .
  8. 8. 8 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.
  9. 9. 9 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:
  10. 10. 10 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
  11. 11. 11 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.
  12. 12. 12 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
  13. 13. 13 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
  14. 14. 14 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
  15. 15. 15 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
  16. 16. 16 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
  17. 17. 17 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
  18. 18. 18 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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