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Welcome to our Business Plan Compu Net, unlike a typical cafe, will provide a unique forum for communication and entertainment through the medium of the Internet. The large initial capital investment will allow Compu Net 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. Compu Nets goal is to provide the community with a social, educational, entertaining, atmosphere for worldwide communication. 1. 0 Executive Summary Compu Net, unlike a typical cafe, will provide a unique forum for communication and entertainment through the medium of the Internet. Compu Net 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 arent socially, economically, or politically isolated.
Compu Nets 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 $ 24, 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. Additional financing has already been secured in the form of: (1) $ 24, 000 from the Oregon Economic Development Fund (2) $ 13, 000 of personal savings from owner Alejandro Arguello (3) $ 18, 000 from three investors (4) and $ 9, 290 in the form of short-term loans. Compu Net will be incorporated as an LLC corporation. This will shield the owner Alejandro Arguello, and the three outside investors, Mario Cisneros, Agustin Nu ez, and Aleyda Talavera, 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 $ 6, 000 each. The financing, in addition to the capital contributions from the owner, shareholders and the Oregon Economic Development Fund, will allow Compu Net to successfully open and maintain operations through year one. The large initial capital investment will allow Compu Net 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 Compu Net with a customer base that will allow it to be self sufficient in year two. Highlights 1. 1 Objectives Compu Nets objectives for the first three years of operation include The creation of a unique, upscale, innovative environment that will differentiate Compu Net from local coffee houses.
Educating the community on what the Internet has to offer. The formation of an environment that will bring people with diverse interests and backgrounds together in a common forum. Good coffee and bakery items at a reasonable price. Affordable access to the resources of the Internet and other online services. 1. 2 Mission As the popularity of the Internet continues to grow at an exponential rate, easy and affordable access to the information superhighway is quickly becoming a necessity of life. Compu Net provides communities with the ability to access the Internet, enjoy a cup of coffee, and share Internet experiences in a comfortable environment. People of all ages and backgrounds will come to enjoy the unique, upscale, educational, and innovative environment that Compu Net provides. 1. 3 Keys to Success The keys to the success for Compu Net are: The creation of a unique, innovative, upscale atmosphere that will differentiate Compu Net from other local coffee shops and future Internet cafes.
The establishment of Compu Net as a community hub for socialization and entertainment. The creation of an environment that wont intimidate the novice user. Compu Net will position itself as an educational resource for individuals wishing to learn about the benefits the Internet has to offer. Great coffee and bakery items. 1. 4 Risks The risks involved with starting Compu Net are: Will there be a demand for the services offered by Compu Net in Managua? Will the popularity of the Internet continue to grow, or is the Internet a fad? Will individuals be willing to pay for the service Compu Net offers?
Will the cost of accessing the Internet from home drop so significantly that there will not be a market for Internet Cafes such as Compu Net? 2. 0 Company Summary Compu Net, soon to be located in downtown Managua on 10 th and Oak, will offer the community easy and affordable access to the Internet. Compu Net will provide full access to E-mail, WWW, FTP, Usenet and other Internet applications such as Telnet and Gopher. Compu Net will also provide customers with a unique and innovative environment for enjoying great coffee, specialty beverages, and bakery items. Compu Net, will appeal to individuals of all ages and backgrounds. The instructional Internet classes, and the helpful staff that Compu Net 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. 2. 1 Company Ownership Compu Net is a privately held Oregon Limited Liability Corporation. Alejandro Arguello, the founder of Compu Net, is the majority owner. Mario Cisneros, Agustin Nu ez, and Aleyda Talavera, all hold minority stock positions as private investors. 2. 2 Start-up Summary Compu Nets 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 Compu Nets 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 Allan Brothers. The site at 10 th 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 2. 2 Start-up Summary Planned Start-up Plan Start-up Expenses Legal $ 500 Stationery etc. $ 500 Brochures $ 500 Consultants $ 2, 000 Insurance $ 700 Rent $ 1, 445 4 -group Automatic Coffe Machine $ 10, 700 Bean Grinder $ 795 Computer Systems (x 11) $ 24, 310 Communication Lines $ 840 Fixtures / Re-model $ 20, 000 Othe Total Start-up Expense $ 62, 290 Start-up Assets Needed Cash Requirements $ 24, 000 Start-up inventory $ 2, 000 Other Short-term Asset Total Short-term Assets $ 26, 000 Long-term Asset Total Assets $ 26, 000 Total Start-up Requirements: $ 88, 290 Left to finance: $ 24, 000 Start-up Funding Plan Investment Alejandro Arguello $ 13, 000 Mario Cisneros $ 6, 000 Agustin Nu ez $ 6, 000 Aleyda Talavera $ 6, 000 Othe Total investment $ 31, 000 Short-term Liabilities Unpaid Expense Short-term Loans $ 9, 290 Interest-free Short-term Loan Subtotal Short-term Liabilities $ 9, 290 Long-term Liabilities $ 24, 000 Total Liabilities $ 33, 290 Loss at Start-up ($ 38, 290) Total Capital ($ 7, 290) Total Capital and Liabilities $ 26, 000 ChecklinPlanned 2. 3 Company Locations and Facilities A site has been chosen at 10 th and Oak in downtown Managua. This site was chosen for various reasons, including: Proximity to the downtown business community. Proximity to trendy, upscale restaurants such as West Brothers. Proximity to Ltd's Managua Station. Parking availability. Low cost rent 85 c per square foot for 1700 square feet.
High visibility. All of these qualities are consistent with Compu Nets goal of providing a central hub of communication and socialization for the Managua community. To see a sample floor plan, turn to Appendix B. 3. 0 Services Compu Net will provide full access to E-mail, 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. Compu Net will also provide customers with a unique and innovative environment for enjoying great coffee, specialty beverages, and bakery items. 3. 1 Service Description Compu Net 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 Compu Net customers are listed below.
Access to external POP 3 e-mail accounts. Customers can sign up for a Compu Net e-mail account. This account will be managed by Compu Net servers and accessible from computer systems outside the Compu Net 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 Adobes Photoshop and Microsoft's Word. Compu Net will also provide its customers with access to introductory Internet and e-mail classes. These classes will be held in the afternoon and late in the evening. By providing these classes, Compu Net will build a client base familiar with its services. The computers, Internet access, and classes wouldnt mean half as much if taken out of the environment Compu Net will provide. Good coffee, specialty drinks, bakery goods, and a comfortable environment will provide Compu Net customers with a home away from home.
A place to enjoy the benefits of computing in a comfortable and well kept environment. 3. 2 Competitive Comparison Compu Net will be the first Internet cafe in Managua. Compu Net will differentiate itself from the strictly-coffee cafes in Managua by providing its customers with Internet and computing services. 3. 3 Fulfillment Compu Net will obtain computer support and Internet access from IBW Computers located in Managua. IBW will provide the Internet connections, network consulting, and the hardware required to run the Compu Network. Allann Brothers will provide Compu Net with coffee equipment, bulk coffee, and paper supplies.
At this time, a contract for the bakery items has not been completed. Compu Net is currently negotiating with Humble Bagel and the French Horn to fulfill the requirement. 3. 4 Technology Compu Net 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. Compu Net will continue to upgrade and modify the systems to stay current with communications technology. One of the main attractions associated with Internet cafes, is the state of the art equipment available for use.
Not everyone has a Pentium-based PC in their home or office. 3. 5 Future Services As Compu Net grows, more communications systems will be added. The possibility of additional units has been accounted for in the current floor plan. As the demand for Internet connectivity increases, along with the increase in competition, Compu Net will continue to add new services to keep its customer base coming back for more. 4. 0 Market Analysis Summary Compu Net is faced with the exciting opportunity of being the first-mover in the Managua 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 Managua. 4. 1 Market Segmentation Compu Nets 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, is just waiting for the right opportunity to enter the online community.
Compu Nets target market falls anywhere between the ages of 18 and 50. 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, Compu Nets 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 (Pie) Planned Market Analysis Potential Customers Growth 1999 2000 2001 2002 2003 CAGR University Students 4 % 15, 000 5, 600 16, 224 16, 873 17, 548 4. 00 % Office Workers 3 % 25, 000 25, 750 26, 523 27, 319 28, 139 3. 00 % Seniors 5 % 18, 500 19, 425 20, 396 21, 416 22, 487 5. 00 % Teenagers 2 % 12, 500 12, 750 13, 005 13, 265 13, 530 2. 00 % Other 0 % 25, 000 25, 000 25, 000 25, 000 25, 000 0. 00 % Total 2. 68 % 96, 000 98, 525 101, 148 103, 873 106, 704 2. 68 % 4. 2 Target Market Segment Strategy Compu Net intends to cater to people who want a guided tour on their first spin around the information highway and to experienced users eager to indulge their passion for computers in a social setting. Furthermore, Compu Net will be a magnet for local and traveling professionals who desire to work or check their e-mail messages in a friendly atmosphere. These professionals will either use Compu Nets PCs, or plug their notebooks into Internet connections. Compu Nets 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. Market Needs 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 Managua, Compu Net will enjoy the first-mover advantages of name recognition and customer loyalty. Initially, Compu Net will hold a 100 percent share of the cyber-cafe market in Managua. In the next five years, competitors will enter the market.
Compu Net has set a goal to maintain greater than a 50 percent market share. Market Trends A market survey was conducted in the Fall of 1996. 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. Five dollars an hour was the most popular hourly Internet fee. 24 subjects use the Internet to communicate with others on a regular basis. 4. 3 Service Business Analysis The retail coffee industry in Managua experienced rapid growth at the beginning of the decade and is now moving into the mature stage of its life cycle. Many factors contribute to the large demand for good coffee in Managua.
The University is a main source of demand for coffee retailers. The climate in Managua is extremely conducive to coffee consumption. Current trends in the Northwest reflect the popularity of fresh, strong, quality coffee and specialty drinks. Managua is a haven for coffee lovers. The popularity of the Internet is growing exponentially. Those who are familiar with the information superhighway are well aware of how fun and addictive surfing the Net can be.
Those who have not yet experienced the Internet, need a convenient, relaxed atmosphere where they can feel comfortable learning about and utilizing the current technologies. Compu Net seeks to provide its customers with affordable Internet access in an innovative and supportive environment. Due to intense competition, cafe 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 Compu Net realizes the need for differentiation and strongly believes that combining a cafe with complete Internet service is the key to success. The fact that no cyber-cafes are established in Managua, presents Compu Net with a chance to enter the window of opportunity and enter into a profitable niche in the market. Business Participants There are approximately 16 coffee wholesalers in Lane County.
These wholesalers distribute coffee and espresso beans to over 20 retailers in the Managua area. Competition in both channels creates an even amount of bargaining power between buyers and suppliers resulting in extremely competitive pricing. Some of these major players in the industry (i. e. Allann Brothers Coffee Co. , Inc. and Coffee Corner Ltd. ) distribute and retail coffee products.
The number of online service providers in Managua is approximately eight and counting. These small, regional service providers use a number of different pricing strategies. Some charge a monthly fee, while others charge hourly and / or phone fees. Regardless of the pricing method used, obtaining Internet access through one of these firms can be expensive. Larger Internet servers such as America Online, Prodigy, and CompuServe, are also fighting for market share in this rapidly growing industry. These service providers are also rather costly for the average consumer.
Consumers who are not convinced they would frequently and consistently travel the Internet, will not be willing to pay these prices. Distributing a Service The dual product / service nature of Compu Nets business faces competition on two levels. Compu Net competes not only with coffee retailers, but also with Internet service providers. The good news is that Compu Net does not currently face any direct competition from other cyber-cafes in the Managua market. There are a total of three cyber-cafes in the state of Oregon: one located in Portland and two in Ashland. Heavy competition between coffee retailers in Managua 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 $ 8 /pound while other, more exotic beans may sell for as high as $ 16 /pound. Wholesalers sell beans to retailers at an average of a 50 percent discount. For example, a pound of Sumatran beans wholesales for $ 6. 95 and retails for $ 13. 95. And as in most industries, price decreases as volume increases. Competition and Buying Patterns The main competitors in the retail coffee segment are Cafe Paradise, Full City, Coffee Corner and Allann Bros.
These businesses are located in or near the downtown area, and target a similar segment to Compu Nets (i. e. educated, upwardly-mobile students and business people). Competition from online service providers comes from locally-owned businesses as well as national firms.
There are approximately eight, local, online service providers in Managua. This number is expected to grow with the increasing demand for Internet access. Larger, online service providers, such as AOL and CompuServe are also a competitive threat to Compu Net. Due to the nature of the Internet, there are no geographical boundaries restricting competition. 5. 0 Strategy and Implementation Summary Compu Net has three main strategies. The first strategy focuses on attracting novice Internet users. By providing a novice friendly environment, Compu Net 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 Compu Net. Power users have knowledge and web-browsing experience that novice Internet users find attractive and exciting. 5. 1 Strategy Pyramids The following subtopics provide an overview of Compu Nets three key strategies. Strategy pyramid graphics are presented in the appendices of this plan. Attract Novice Internet Users Compu Nets first strategy focuses on attracting novice Internet users.
Compu Net plans on attracting these customers by: Providing a novice friendly environment. Compu Net will be staffed by knowledgeable employees focused on serving the customers needs. A Customer Service desk will always be staffed. If a customer has any type of question or concern, a Compu Net employee will always be available to assist. Compu Net will offer introductory classes on the Internet and E-mail. These classes will be designed to help novice users familiarize themselves with these key tools and the Compu Net computer systems.
Attract Power Internet Users Compu Nets second strategy will be focused on attracting power Internet users. Power Internet users provide an important function at Compu Net. Compu Net 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.
Social Hub The third strategy focuses on building a social environment for Compu Net customers. A social environment, that provides entertainment, will serve to attract customers that wouldnt normally think about using the Internet. Once on location at Compu Net, these customers that came for the more standard entertainment offerings, will realize the potential entertainment value the Internet can provide. 5. 2 Competitive Edge Compu Net will follow a differentiation strategy to achieve a competitive advantage in the cafe market. By providing Internet service, Compu Net separates itself from all other cafes in Managua.
In addition, Compu Net provides a comfortable environment with coffee and bakery items, distinguishing itself from other Internet providers in Managua. 5. 3 Marketing Strategy Compu Net 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 Managua, it is important that Compu Net sets fair prices for its coffee. Compu Net will use advertising as its main source of promotion. Ads placed in The Register Guard, Managua Weekly, and the Emerald will help build customer awareness. Accompanying the ad will be a coupon for a free hour of Internet travel.
Furthermore, Compu Net will give away three free hours of Internet use to beginners who sign up for an introduction to the Internet workshop provided by CompuNetPricing Strategy Compu Net bases its prices for coffee and specialty drinks on the Retail Profit Analysis provided by our supplier, Allann Brothers Coffee Co. , Inc. Allann Brothers has been in the coffee business for 22 years and has developed a solid pricing strategy (see appendix B). Determining a fair market, hourly price, for online use is more difficult because there is no direct competition from another cyber-cafe in Managua. Therefore, Compu Net considered three sources to determine the hourly charge rate. First, we considered the cost to us
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