The business the report will be talking about will be an Internet Caf.
INTRODUCTION
The business the report will be talking about will be an Internet Café. The Internet café will be called my Internet Café Search the World. This shop will provide a service to the public, which involves them using the Internet, and consuming drinks and snacks. Hopefully it will be very popular, to see if it is going to be a success the report will carry out a lot of market research, for example this will tell me what location to put the shop in and how much customers are willing to pay.
I will be targeting Lower class to middle class people who are willing to pay £2.00 to £2.50 for an hour session. To find out whether customers are going to pay this I will do postal research for example surveys, questionnaires this will give me a general idea of how much I should be charging and how many will pay at these prices.
I will also need research to find out how many Computers I will have to install, but this all depends on demand if demand is low then there is no need for me to install a lot of computers but if demand is high and there is a very high demand for my service then I will have to install as many Computers as is possible.
In order for my business to be an overwhelming success I will have to increase advertising this will make the public aware of my product and therefore it is more likely that there will be a demand for my service.
The busiest days for my service will probably be the weekend as the market I am targeting will probably not be in work and will want to use their weekend to search for information.
As the weekdays are not going to be as busy as the weekends I will be providing many special offers to draw customers in, the special offers will be advertised in the area which I choose to set up my business in.
My business has got quite a few competitors over different areas in London but my service will be unique I will be providing more computers and better offers than any other competitor. In task 1 I will investigate the market and find out what the majority of people will want from their Internet cafe and how many consumers they are willing to pay for the service I am providing. This information will be found out by questionnaires and once they have been filled in I will present the results in a graph to make them easier to understand and make better judgements.
To gather my primary evidence I will have 10 questionnaires, I will use them on people between the ages of 16 - 40 because these are the age ranges I am hoping to concentrate on, once I have received the questionnaires back I will see what people in this age range and paying and using for the internet.
There will 2 specially trained supervisors within the site everyday and these people can help with any faults that the computers may have. These people can also help any customers that are first time users to the service or experiencing any technical difficulties.
The internet cafe will only have the computers switched on when customers have prior booked the system to save on electricity, the company will have to save on electricity because of the low start up costs and this way I can keep track of regular consumers and predict for future references, and this way it is easier to keep track of money that is on its way.
Money is not the only problem I will encounter because my image is going to be very low as I do not have the resources, time or money to use advertising so my company is very much relying on word of mouth. Once some money has came in I will try and invest in a low cost advertising scheme which is cheap but effective and has a high return on customer interest.
TASK 1
My Internet Café is a consumer market, a consumer market is where most production in this country focuses on consumer goods section. We buy consumer goods because of the satisfaction we get from them. Value for money can be thought of as a satisfaction we receive from goods relative to the price we pay for them one of the things I will trying to provide within my service will be value for money as this will guarantee customers I could also try penetration pricing this will get consumers interested and hopefully they will keep coming back to my business. The demand for consumables depends on their price. Some consumables are considered, as luxuries while others are necessities the service I am providing is not a necessity but some businesses may see it as that because the internet can provide many useful information into their business or any other. Consumer markets are also typically made up from individuals who purchase items for personal or domestic consumption. Consumers typically buy from retailers and their transactions tend to be of low value. Most consumers who are using my service will tend not to spend a lot as you cannot stay on a computer for to long but as long as I have regular customers I should be able to survive or even make a profit.
The marketing audit will help my business to examine the market and evaluate how well it can meet its objectives in serving a market
EXTERNAL AUDIT
Market characteristics and trends- More and more people are getting the internet therefore there may not be a gap for my market, how ever people may come out and desperately need to send an e- mail and also my internet café does double up to a business meeting room, there are also people
Products, prices of competitors- prices are charged by the minute and competitors are charging about 5p a minute therefore I will have to work out how much it is costing to run and charge my costs lower than competitors in order in force them out of the market.
Physical Distribution- Though my dealer and the Internet
Customers and consumers- The main target I am aiming for will be 19- 35 year old males, lower class to working class. They will have quite a low income.
Common industry practices- using clean equipment supervised Internet access, environment quiet and sensible.
Competition- Cafes. Other Internet cafes and all other electrical suppliers which supply the Internet to households.
SIZE- One small shop, 3 full time applicants
Marketing- There will be special offers for example half price weekday internet access and half price gift vouchers available because this will get consumers interested in my business.
Profitability- my business will be quite good at making profit as I can make profit on the drinks and food as well as charging double what I pay for Internet access.
INTERNAL AUDIT
To meet all the needs of the market and serve the interests of its customers, a business needs to have the capability to achieve the objectives it sets the marketing audit will also assess the following.
Sales- I will need to work out my sales in order to know whether I can afford to run my business and whether I can even break even or survive.
Market Share- Using my market research I will also need to see how much of the market share I will be receiving, for example if sales in total are 50,000 for the whole market and I will be receiving 10% of the market then my sales will be 5,000. This information will tell me if I am going to make a profit.
Costs- I will need to work out my sales, for example the cost of buying the computers and the cost of employees and the running of the Internet. My fixed assets and fixed costs will very important to the running of my business.
Market research- This is very important when setting up my business it tells me a lot of information regarding the market and whether it is worth setting up a business in a particular area and also what type of prices you can charge to an average customer.
Variables- the variables are price for example how much can I charge. Product/ service is there a demand for my service.
In order to find out if my Internet café is going to a success I will have to assess the suitability of my product and whether the plans or solutions fit the situation I am to put my business into. My internet café is going to be a small company so it will be unsuitable for me to have out of reach aims because they will not happen, there is also no point in buying lots of computers as the business will just not use them.
I will also have to find out what type of risk I will be taking when setting up my business, and whether my market plan is suitable for setting up a new business. I will also have to consider whether the ethical, fair or reasonable.
I also have to consider whether my plans can actually work in practice or have I considered all the factors. For example are the funds available if I have to fix a broken computer. Also will my Internet café be able to deal with the competition surrounding it within the area.
When carrying out my Market Research I considered the following:
Why will people use my service?
People will use my service when their computers are not working and they need to use a computer desperately for example when they need something for next day. Consumers will also use my service when they do not have a computer for various reasons and they still want to enjoy the Internet experience. Many people may already have the Internet but they feel they need to go out to fully enjoy and they may enjoy the café atmosphere. Consumers who visit the café regularly may also meet people and use my café for a social gathering.
Who will use my service?
The main groups that will be using my service will be people who cannot afford a computer, people who don't want them. And consumers who's computers have broken down. I will be targeting these groups because they are the groups, which will bring in the most custom and help to push my profits up. There may be people who will only use my service as a one off so I will have to account for this in my market research these will be the people who do not use computers and may only want to use the internet to book or holiday or something similar.
How often will customers use my service?
I need to find out how often consumers would use my service. Finding out how often people need the services of the Internet will give me a clear indication of the amount of computers I will have to supply to the public. In order to find this out I sent a number of questionnaires to households finding out if they had the Internet, this will determine the demand for the service in a particular area. There will be customers who use my service very regularly and these will be the people who bring in the money and the high market share to my business. There will also as above be people who will only use my service as a one off, these people will not bring a lot of money into the business and will not be confused with regular customers.
Who are my competitors?
When researching into my competitors I was aiming to find out what offers and tactics the other Internet cafes were offering and whether I could match them with the budget I am on. I also need to find out the strengths and weaknesses of my competitors and look
At their weaknesses and make sure my competitors weaknesses are not mine. Also my -
make sure my strengths are bigger than theirs are therefore if I do all this then I will be a market leader and not a market follower.
What will my market share be?
The market share calculation is very important to my business plan, this will tell me whether it is worth setting up a business in the local area and how much profit I will receive within it. As there is no other internet cafes in the area I am going to set it up in I am hoping to receive 100% of the market share although I do not yet know how much the market is worth but at least I have no competitors in the immediate area.
When will customers use my service?
I will need to identify the peak periods of the year for my business, as this will give me a clear indication of the equipment and resources I need. The peak times for the business I am setting up will obviously be the winter as this is when more people are likely to use computers because it is cold and there is not much else to do.
What price will consumers are willing to pay
Market research might indicate what prices I should be charging am if I am hoping to receive a large share of the market then I will have to lower my prices just enough to be a cheaper service then any other business. This will let consumers know that I am providing a cheaper service than any other internet café therefore customers will try out my service and may enjoy and use my service again.
Is the market growing or contracting
I will need to know if the Internet market is growing or contracting because this will tell me if I need to how many computers I will need to purchase in order to fill all customer spaces. If there are not enough computers to go round then customers will become disappointed and will not continue to use my service. If the market is contracting then I will know that I will not have to purchase many computers, as I will be wasting valuable resources such as electricity and supervision. If I know whether the market is growing or contracting then I can predict for the future and not stand the chance of losing any money.
All these points show how important a marketing plan is to the business and if you do not have a marketing plan then many problems can persist within the business. If the business has a marketing plan then they can consider all aspects of the business and if they consider it well then this is the best way to help the company improve their market share and gain a substantial profit.
There are many factors, which will affect the demand for my service, and how many people are likely to visit
The price compared with competitors
Competitors may already have a large market share and therefore they are able to sell their products at a much lower price, and if they continue to sell their services at a low price they will force me out of the market as my consumers will not pay more when they can get the same thing for less.
Area size
If you are setting up a business in small local area then you are unlikely to receive a substantial amount of profit because there are obviously not enough consumers ...
This is a preview of the whole essay
The price compared with competitors
Competitors may already have a large market share and therefore they are able to sell their products at a much lower price, and if they continue to sell their services at a low price they will force me out of the market as my consumers will not pay more when they can get the same thing for less.
Area size
If you are setting up a business in small local area then you are unlikely to receive a substantial amount of profit because there are obviously not enough consumers within that given area. If the area is very big and there are more consumers then the business can expect to receive a better profit.
Technology advancements
Fashion, which influences different markets
Once I have identified whom I am going to sell my service to, I need to research into my competitors e.t.c.
Other Internet cafes
Other services which offer the Internet
Internet manufacturers
Cafes
I also need to find out
How many competitors I have
Factors affecting demand for my service
There are many reasons why a demand for a product may rise or decrease.
One of the reasons will be the amount of disposable income a person has to spend on a service. The more money a person has the more they are likely to spend and visa versa.
The relative prices of substitute services whose purchase might be performed or seen as better value for money.
The size of the area the business is setting up in also has a lot to do with how well the business does as there are more people to market your product to. If the area you set up in is quite small the chances of attracting a lot of consumers are lower because there just are not enough customers to go round.
Another reason will be that tastes fashions and habits are constantly changing and where there internet may be in fashion one year it may not be the next.
TASK 2
A marketing plan is one of the most important things that a business has to do before they even start to build up a business because this will tell the person who wants to set up the business whether there is a gap in the market and whether they will succeed in the current market and whether they can perform to their best standards within their current positions. The business plan is also very important because if they are wanting to receive a loan from the bank then the bank will want to see a successful business plan and correct financial figures which prove that you and the business are going to do well and make a substantial profit. If my business is to be a success then I will have to create and keep customers by finding out their needs and wants which means I will have to have high quality services and high quality services. The marketing plan for my company will also give me a chance to find out who my main competitors are, what they are up to in terms of promotion and advertising and what services they are offering this will give me an understanding of what I have got to aim for and what I have got to achieve in future months. The marketing plan will also help me identify market trends and see what has done well over the years, once I have succeeded in seeing what has done well in the current market I can decide what I want to do and I can make my business successful. My marketing plan will also help me assess how much profit I will be making and when assessing how much the business is likely to make I can make an accurate judgement of when the time is going to be right to purchase new technology. A marketing plan also helps to provide a company with a balance and the focus they need for the mix. A marketing plan can also translate objectives into actions for the company.
Through the above information you can see how important a marketing plan is and why it is crucial if I am able to survive or make any substantial money. The marketing plan will also provide many things for my company and will define the way my company is run in future years.
The Model I Will Be Using For My Marketing Plan
Each of these headings are part of my marketing plan and at the end of this I will put them together to make a plan.
OBJECTIVES
Where do I want to go? What is important
STRATEGY
What is the best way of achieving my objectives?
TACTICS
What specific actions will enable to meet my day to day and week to week targets?
CONTROL
SWOT ANALYSIS
Here is a swot analysis of my service here it will be telling me the strengths and the weaknesses of my service and the threats there will be for my business.
The strength of my Internet café is that there be no other internet café similar to mine. This is likely to give me a competitive edge over my competitors, because people like things that are not already on the market. There is no other internet café like mine because my internet café will double up as a business meeting room in order to attract more customers and to ensure I at least break even. I also have the strength that I am charging less than other Internet cafes on the market, therefore just by lowering prices I will attract more customers already because this is the main thing which consumers will go on.
One of my weaknesses is my financial state. I may not have the financial resources to run my company. So I may not have money to advertise the product or may not have enough money to improve my service in the future.
One of the opportunities of y business is to get new customers and may make a small or a large profit and to expand my market share and advertising I great deal.
The threats are my competitors who are bigger than me and have a better financial state then they and me can run me out of business.
MARKETING OBJECTIVES
The aims of marketing aims are to get my company into a high status when compared with other major Internet cafes.
The main aims for marketing are
To gain a 15% market share though out the whole market share
To maintain a good image and is known for outstanding services
Receive a solid customer base and therefore this will help me gain 15% of the market as above.
When received the market share I want, expand the company and purchase lots more equipment
Advertise on radio and television
Obviously my main objective is to receive a 15% of the market because if this is achieved then I will be able to achieve all other goals and therefore better my services and buy more equipment. If I can also get more advertising then I will improve sales and market share.
Internet Café
More concerned with communication than computing, interent cafes have become a form of social interaction. Customers use the facilites to communicate globally via the Internet and locally face to face with other people.
Internet cafes provide customers with access to internet facilities in socialable and relaxed environment, offering a wide range of services, in addition to access to the world wide web. This includes access to e mail accounts, faxing, scanning, printing and photocopying as well as the opportunity to have a coffee or a snack.
Through the research that I have conducted I have came to the judgement that the majority of money I will making will be coming in from the catering side of the business, therefore I will have to make sure that I take due care and attention in making the café an enjoyable place to eat drink and relax. I have also found out through my research that if customers are not happy with the refreshment of the side of the business, they may choose to access the internet using another source.
What are the current business issues
The number of internet cafes operating across the U,K has increased by nearly 25% during the period 2000 - 2002. It is suggested that by the end of 2002 approximatly 60% of the u.ks population will accesss the internet on a regular basis.
The market is becoming increasingly competitive, as businesses such as supermarkets, banks, coffee shops, motorway services and high street stores are now choosing to install internet and café facilites into their premises.
Recent market trends include the growth of franchise and internet café chains. This is leading to changes in demand and higher expectations of the services available.
Concern is growing within the industry over security issues. The use of chat rooms by unscrupulous people, particularly in communicating with women, has lead for calls of better policy of the internet.
Research into interent usage shows nearly 20% of users under 35, more than 25% of UK users are aged between 35 and 49 and 20% are over 50. Other users are mainly younger people accessing the interent for leisure and educational purposes.
What is the Market potential
The market for interent cafes is extremely competitive. It is estimated that there are currently in excess of 7, 000 internet cafes operating in the U.K with this figure predicted to rise significantly over the coming months.
Many people now have access to the internet. Figures suggest that by 2005 nearly 15 million households in the U.K will have access to the interent. This increase in access is seen as a major threat to interent cafes as more people can gain access free of charge at work, school, college or at home.
Over recent months a number of organizations, not traditionally associated with café or interent services, have entered the market.
Tradittional coffe/tea shops are also exploring the potential offered by the internet. And starbucks have actually introduced interent access into their coffee shops, in wider to attract a wider customer base.
A threat to independent interent cafes is emerging from businesses diversifying into new areas. For example, the recently established yeah cafes sell mobile phones, top up cards and offer secretarial services. However at the present moment food and beverages are only available from vending machines.
To combat competition, interent cafes should consider other services such as training, special events such as courses designed for women only, interent parties or a computer dating service. If there are sufficient resources and interest it may be possible to branch out into such as consulting services, or seminars designed for companies or schools.
Who are my customers likely to be
Customers for interent cafes can span a range of social groups but include
Younger people, students and teenagers seeking a place to meet friends and communicate with others using the internet.
Young professionals accessing a wide range of information most commonly relating to financial services or specialist retail.
People with little or no interent experience trying to learn or find out more about the internet or its uses.
Travellers seeking information and checking e mails
Indivivuals with little or no interest in the interent side of the business but making use of the café.
It is therefore vital that I do not neglect the refreshment side of the business as this will make an impact on the success of the business as much as the technical expertise available.
Who are my competitors likely to be
Direct competition will come from other internet cafes, at present there are estimated to be 7,000 internet cafes throughout the u.k and this figure is expected to rise. Further competition will also come from businesses such as banks, supermarkets, motorway services and traditional coffee/tea shops
I will be researching about my competitors I will gather this information from
Companies House
Yellow pages or Thompson local directory
Regional business listings, such as the federation of British interent cafes, intenet society and the British computer society.
Local newspaper business pages
By talking to other small businesses in your area you plan to work.
What are my marketing and sales tactics
Internet cafes must attract customers by offering something different from what is currently on offer in their schools or workplace. This can be achieved by creating an enjoyable, relaxed and friendly café atmosphere that is easily accessible to existing and new customers.
Careful market research will identify who the target audience is and any marketing undertaken will benefit from being directed toward the relevant groups but could include.
Identifying the correct premises in order to attract substantial passing trade. This will play a significant part in the eventual success or otherwise of the business.
Getting a listing in a relevant guide may attract people to the outlet who are not from the specific geographic location.
Advertising in publications read by the audience, such as the Net café on one of the numerous website listings may also boost interest.
In order to stand out from the crowd, outlets often choose an exclusive image or theme and apply it to the décor, staff uniforms, and crockery and cutlery menus. For example if aiming at younger clients it may be beneficial to adopt a bold and loud style with the focus on fast computers with advanced games facilities.
Promotion could be directed at different audiences depending on the time of day. Both daytime and evening menus could be provided, with daily specials offered to vary the routine bill of fare.
Electronic bulletin boards can be useful medium for advertising internet cafes or advertising cyber services.
Offering incentives such as free training, help lines for internet users or free coffee with internet access can also be used to increase interest.
Special offers can be used to boost trade during slack times, with mid afternoon discounts for students and OAPS and special childrens menus offered to attract families.
As word of publicity is of the utmost importance for cafes, it is crucial that the customer service should always be attentive, prompt and polite.
Training and qualifications
No special qualifications are required to open a internet café, however experience and knowledge of computing and catering is recommended. It is advised that all food handlers should have training in food hygiene and preparation.
What additional skills are required
In additional to technical qualifications and ability a number of softer personality traits are useful for anyone considering the potential business opportunities in running an internet café.
Communication and interpersonal skills are required
The ability to motivate staff, ensuring they are helpful, effective and project of a professional image is vital to the log term success of a venture of this kind.
It is important to be organized as there are significant levels of paer work and administarative for booklings fees and training sessionms.
A genuine interest on i.t developments, as it will be vital to remain aware of progress with in the sector.
More over, as a significant proportion of internet cafés have failed, the owner will have to word hard and maintain vision and motivation.
Start up And running costs
The initial outlay when setting up an independent internet café will be high, as costs will include computer systems, premises, furniture and catering equipment.
As most software comes in Windows PC and Macintosh varieties this should influence the choice of hardware purchased.
For data transfer the choice of interent connection will depend on a number of factors, the amount of time the computers will be connected, the number of computers and if services such as website hosting are to be offered.
Ideally a permanent connection to the interent via a leaded line or broadband connection should be arranged.
The cost involved in securing a leased line can be prohibitive, whilst access to broadband is dependant on location. This should be investigated prior to the business starting up.
It is advisable to invest in a burglar alarm and security roller shutters. Many insurance companies will specify the type of system you will need to install.
The size and location of the café will determine rental costs and insurance premiums. You will also need budget for staff wages.
Franchise packages are becoming more and more readily available as the market for internet café continues to grow.
What insurance polices are required
Insuring a business is complex and polices must be in place as soon as the business is up and running, an insurance broker will be able to provide you with information on the insurance polices that your business requires.
In addition insurance should be sought to protect the computer systems in case of failure and appropriate warranties should be obtained.
Financial Concepts
In the business plan I have used many financial concepts, some of which are the break even chart, profit and loss account and the balance sheet. These accounts are essential in every business and the day to day ruuning of it. Businesses will always need to know what financial state they are at and how to improve profits or cut spending and these accounts will give everyone involved in the company a chance to do this.
The profit and loss account is very important to my business due to the reason it shows how much money is going out or how much money is coming in to my business. This will tell me how much I am in debt or how much money I have to try and improve the business. The proift and loss is also one of the best ways of showing other people also how much money you are making and where you are spending it. Another reason why I would draw up a profit and loss account to show all the investors in my company how the money they have invested is doing. I can also show an account like this to any potential investors who may be looking to put funds in a business and this could well be a document they would want to see.
Profit and Loss Account for Internet Café 2002
£
£
Turnover
£ 23,790.00
Openng Stock
£ 20,000.00
Purchases
£ 5,550.00
Total
£ 25,550.00
Closing Stock
£ 22,200.00
Cost of Goods sold
£ 3,350.00
Gross Profit
£ 20,440.00
Expenses
Wages
£ 2,000.00
Repair
£ 1,730.00
Interest
£ 1,725.00
Total
£ 5,455.00
Net profit
£ 14,985.00
This chart below is a break even chart, this shows me and the other investors what I will need to do in order to increase my sales or revenue so I thought it would be a very helpful thing to use. The break even chart will give me a insight into what direction the business is going in and direction I need to continue in. The break even chart tells me when I need to cut down spending. This all depends on my revenue.
Break Even chart for internet café 2002
Selling Price of item
2.00
Fixed Cost
.500
Variable Cost
50.00
Output
Fixed Cost
Variable cost
Total Cost
Total Revenue
20.00
50.00
50.00
200.00
220.00
40.00
50.00
00.00
250.00
290.00
60.00
50.00
50.00
300.00
360.00
80.00
50.00
200.00
350.00
430.00
00.00
50.00
250.00
400.00
500.00
20.00
50.00
300.00
450.00
570.00
40.00
50.00
350.00
500.00
640.00
60.00
50.00
400.00
550.00
710.00
80.00
50.00
450.00
600.00
780.00
200.00
50.00
500.00
650.00
850.00
In order to find out what people are likely to use my service and what they are interested in I asked the following questions.
I first asked the question what Gender are you, I asked this question to find out which sex is more likely to use my service, because if I find this out then I can direct my advertising more a one particular type. This graph shows that most of the market base which will be vsiting my business are likely to be male, so this will be who I will be targeting my business for.
I then asked the question do you already go to a intenet café, I asked to question to find out how many people I was asking was already going to a competitors business. The results were surprising good as most of the potential customers I asked were not already at a internet café so this is very good news for the business and I have found out that in the area I am setting up there is a gap for my service.
I then asked the question how many times are you likely to visit my internet café in a week, the results for this question were very varied. The most common amount was 3 times, which I was also quite pleased with as this means I will be gaining regular customers. The majority of people are at least going to visit once a week, as my people become more aware of my business I should gain a strong customer base.
I then asked the question how much are you willing to pay for a hour for the internet most people were willing to pay two to three pounds, which is reassuring as I am charging 2.50 an hour. This was a very important question to ask as I don't want to drive customers away by charging too much, if I am to make my business a success I will have to meet customer demands.
TASK 3: PRODUCTION and QUALITY ASSURANCE Plan
Adding value to my product is one of the important things I can do to my service, search for the world, and if I can add value to my service then customers will be more satisfied and they are likely to tell their friends what a good service I am providing and therefore I will gain more customers which will in turn increase my profits and this will give me the capital to again further my position as a company in the internet café market. There are many different things I can do to promote my service and add value to it. The first thing I am going to do in order to add value to my product is improve the speed of the internet this will be done by a faster modem and a product called ADSL this will increase the speed of the internet dramatically. Therefore customers will be happy with the service and by word of mouth more people should become consumers in the long term. ADSL will help my business because consumers will now be able to search quicker and find what they want quicker therefore this will beat competitors because they will not have a fast service. ADSL is a brand new digital line, which is twice as fast as a normal modem and is the highest quality in Internet searching; ADSL will really help expand my business and should help bring in more customers. This program will set me on my way and will help me to receive the market share I am aiming for.
ADSL can do many things for my Internet café including:
* "Always on" service - therefore no dialing in every time like ISDN and no usage charges.
* Phone and fax systems will continue to work as normal using the same lines.
* A low cost alternative to leased lines.
* Download times can be 10-40 times faster than a standard 56k modem depending on what ADSL service you subscribes to.
* ADSL can be installed into inernet networks meaning more than one PC in your organisation can have access to the ADSL service.
* The are three download speeds available depending on your company's requirements, 512k, 1MB and 2Mb.
Another thing that I can do in order to add value to my service is to employ very trained staffs who are appropriately trained to deal with any problems that consumers may have while using the Internet. Most of my competitors will not have many trained staff and therefore will not be fully equipped to deal with faults or problems should they arise.
I will train my staff on and off the job, in order for my staff to gain maximum experience. My staff as well as being very trained and experienced staff within my organisation consumers will also feel at ease and have no worry's because they will know if they make any mistakes then there will be someone there to sort it out for them and help them to continue on task.
If I can keep on track with my profits then I will able to add more things to my service. One of the first things I will add to my service will be air conditioning this will help add value to my service and will be fantastic for the summer months. As one of the busiest time of years for my service will be the summer months customers will be very attracted to an Internet café which is fully air-conditioned. This could be because people can become very hot and bothered so they will be very attracted by air conditioning and therefore by adding air conditioning I will also add more value to my service.
Also according to my profits and market share I will also add new equipment i.e. a vending machine in case customers do not want to get up, new chairs so customers feel very comfortable and stay for longer or book up for regular sessions. New decorating so customers feel very at home and feel very happy and feel they are working in a nice environment which will also help turn non consumers into consumers all these points are adding value to my service and the more value I add, the better my service will be to consumers.
The way my service will be produced
There are many ways which different customers and consumers will be able to book an Internet capable computer when they feel they need to use it. When a customer wants to use the Internet café service in advanced they can phone up and book they can tell the staff the date, day or time which they want to use the service. They will also need to tell the staff, which is working at the present time, how long they wish to use the service for because other people will want to book also. When customers spot my service or maybe are just walking past they can also book a computer without phoning up providing there are enough to go round. People can also just come into the shop to book a computer in advanced because this maybe easier for people who are passing or live near by. However the business does work on the fact that consumers are going to book by phone because this is more time resourceful and staffs do not really have time to deal with customers in person because they will be busy dealing with other consumer's problems.
Once the consumers have booked their computer one of the members of staff will show them to the computer, get them on to the Internet and then let them surf away. Once the consumers have finished with the computer I am using they will know because there will be a timer which I have will which will log the consumer off automatically therefore this will save time on my members of staff and it will also easier on the customer because they will have an interrupted service. When a first time user finishes their service with me they will be given a business card to remind them of who I am and the great service I provide, this will customers a last reminder and hopefully tempt them to come back again.
The way the service is produced
Before you start up any business, the owner will need to find a location where they know they can gain profit and a large market share this is shown by the market research and this should indicate a suitable place for setting up a business. I have decided to rent a shop in George Lane east it is a busy high road and should attract many customers but there are many advantages and disadvantages to having an Internet café on a high road.
Advantages
Many office workers from the city will spot the Internet café and decide to come in, Georgia lane station is very busy station so will attract many customers; this is a main of advantage of having shop down a high road. Obviously having a shop down a busy road will also bring in consumers from all professions and all jobs this is another main advantage of having a shop situated in a busy high road. It is also lowers costs of advertising as many workers and members of the public will see signs and promotions and I will be able to rely on word of mouth advertising.
Disadvantages
Although many people will spot my Internet café and enjoy the environment of this, there will also be many people who may be a member of the local library, and within the library service you can receive free Internet access across the boarder, however the public library will have limited number of machines and will only be open a short number of hours compared with my business, my business will be open un social hours in order to meet customer needs.
After deciding where I am going to situate the work place I will have to decide what staff I am going to employ and what shifts I will want them to work. I have a decided to employ two specilised staff with have qualifications in office applications or information technology this will mean they are very equipped to deal with any problems that a customer may have. I will also have a person who serves the coffees, teas, crisps e.t.c I will also have to employ a person to clean up any mess than may arise on the café floor. So all in all there will only be five members of staff including myself, this is not a big team but the team will have enough quality for the problems I will be facing.
I am also going to have to purchase a lot of stock this is going to cost a lot of money so therefore my opening first few weeks are going to have to be quite strong and I'm really going to need to take a lot of capital because the expenses are going to cost a small fortune. I am going to have to purchase 10 computers, new carpet, fending machines and desks, chairs and so on. I am also going to have to pay labour costs to fit the machines e.t.c. Once the shop is up and running and everything is fitted I will be putting up posters, posting leaflets and using billboards, I may even advertise on the local radio station providing I have enough within my working capital. The next step will to have consumers in working on the computers. Consumers Internet explorer will work like this.
I will be well equipped for when customers come in because I will have a brand new Internet service and system, which can do many things at the touch of a button.
Each computer in your cafe is known as a client, except the server. As a new client connection is made, I can Drag & Drop the client wherever I want in the workspace, and this will become the permanent position for that client until it is moved, or deleted from the workspace by the administrator. I can size the client icons from small to jumbo to suit your needs. Once a connection is made, the client will always connect to that icon -Employee logon, event logging and a point-of-sale system have been implemented in this version, which will give me detailed reports filled with valuable information to help you increase your profitability. Reboot or shutdown any or ALL CLIENT COMPUTERS...with the press of a button!
Within this system I will also be able to determine
* Total sales, sales and usage by Timecodes, by Play & Pay, or both
* Who sold what and when (between dates and times)
* What adjustments were made, and by whom
* What you made this week, month, year, or on or between any dates of your choosing
* Timecode VS. Play & pay statistics
With an all-new pricing interface, computers can be added to different pricing groups, and they will automatically update when connected. (If in a session, it will wait until the user is finished before changing mode or price). This gives the owner, incredible control of the computers without having to step out from behind the counter. With a click of a button, the client computers can be set to Timecode mode, or I can choose one of two pricing schemes. Timecode mode pricing automatically calculates the price for a timecode when sold, then the logged on employee must enter it into the database. Overriding of prices is allowed (if access level is greater than default) and is also logged to the database as an adjustment. This gives me total knowledge of what is happening in your business, and how much money is coming in. If put into self-pricing mode, computers will retain whatever pricing scheme is setup on them at that time. You can also set the default group into which new connections will fall.
When a customer is done, the client can be reset from the server, only once the employee enters the sale. The employee's username and any override adjustments that are made, if any, will be logged to the database and associated with the sale. This ensures that employees will not allow friends or family to play for free without you knowing about it, and help you keep track of cash outs that don't line up with sales.
The scale of production is a major factor in giving a competitive edge for nearly all services where there is a large demand. I am hoping to receive around 50 customers a day for a hour service each, and after the initial opening week this should grow to around 65 customer a day for a hour service.
I am going to have to purchase about 500 canned drinks for a monthly period, I will order fresh sandwiches and rolls daily which will be delivered straight to the shop and stored in the fridge. I am also going to buy a coffee, tea machine that will cost 50p, which most customers are happy to pay, as I found out from market research. The coffee machine will be self-service and I think customers will be happier with this because they will feel more comfortable, I will also save on staff costs because the customers will not need any assistance. I most important thing I am going to buy will be computers, I am going to buy 10 computers which will cost approximately £ 500 pounds each this may not cost as much as I originally thought because I may be able to get sponsors by other companies for selling their snacks and drinks.
Forecasting is going to be a major factor in running the business because this can make or brake a business and can increase sales or lower them. If I am employing too many staff and I do not need this amount then my profits will drop and I will not have as much working capital. Although I know I will make regular mistakes to start with, but I know with regular forecasting I will be able to improve my service and cut losses to a minimum. Forecasting will also tell me how much I am likely to spend and whether my income is covering my outgoing costs to a satisfactory level.
Standard. Also if forecasting is not up to a satisfactory standard then customers may become disappointed because there will not be enough staff to go round between consumers which are having difficulty. In order to keep mistakes to a minimum I will set up a database, which holds present and past data.
Obviously the main type of machinery I will need will be computer systems and the Internet service this will also be the most expensive but I cannot run my business without it, I will be able to purchase my systems for a little less because I am buying the systems in bulk and the company I am purchasing the systems off will appreciate it and will lower the price as they will be my main dealer and will be receiving substantial amounts of money from my business, the company may also like to sponsor me and therefore have their company name around my business.
There will also have to be a number of vending machines and a number of coffee machines because the consumers may like to have a drink or a snack while they are using the Internet service. There will also be two telephones in order to take bookings and
Answer questions any customers may have.
Quality Levels
I want my business to be a quality business and to do this I will have to keep up all quality levels, because customers always recognise quality and are prepared to pay for a quality price.
In order to have a quality business and treat customers I have well I will have to create customer satisfaction, exceed customer expectations and delight the customers, these three things should guarantee a quality service and ensure customers come back when needing to use the Internet.
I will also be using quality control within my business this will involve doing regular tests this involves assessing one days business from another and seeing the best way for my business to perform and which way it is making the most money. Once I have found out the best success formula for my business I will scrap all other methods and use this one as it is performing the best and making the consumers most happy with the service. When I have found the best formula I can really concentrate on making my business a lot of profit and increasing its market share completely, if the business continues to run very well then the businesses reputation will be very high and so will customer satisfaction.
I will also be doing regular checks on the businesses Internet service to check that is running to a satisfactory standard and all consumers are happy with the service I am providing and they are interested in booking more sessions. When there are consumers there will always be a technician on hand to help customers who are having trouble and tackle any faults with the Internet service may encounter. If consumers are not entirely happy then they can fill in a form on request and occasionally when the shop is not busy and staff have spare time on their hands there will be forms going around which customers can fill in. These forms will ask the consumer how well they think the business is performing; the consumers can feel these forms in if they feel it is necessary. Also I will be assessing staff by watching them and seeing how well they are interacting with customers and how vital their help is to the consumer, they will be assessed every three months and may be given bonus payments depending on how well they are meeting the company's objectives.
I will also once a month check the monthly figures to see how well the business is performing and if the business isn't performing as well as it should then they will think of ways to improve the service. If the figures show that the business is performing well then I will not change anything and continue to increase profits and improve customer satisfaction when necessary. I will also give feed back to my staff telling them how well they are doing and what they may want to improve on in future months. These feed back will show the staff that I am interested in them and should be a good source of motivation providing they are working hard and getting good feed back. Obviously I will also have to check that the snack bar and the drinks machine are running appropriately and the snack bar is being kept clean at all times. I will have to get all food and drink surfaces clean for the customers and the business reputation. If the food and drink surfaces are not being kept clean entirely then the local authorities will want to know. hen they will shut me down and I will not have an internet café this is why keeping these surfaces clean is so important for the business and the customers hygiene. I will always treat my employees with absolute respect and show them that they are a valuable member of my Internet café. This will lead to employees wanting to do well for the business and seeking to delight all customers, this is turn will have a good effect on the businesses profits and reputation though out the area. I will always treat my employees well as they have a direct return on capital and this can lead to my profits being increased and me being a market leader though out my company. Occasionally when the business is going through slow patches I will have a staff greater on the door who will welcome customers into the business and help them ease into a new environment. A greeter in a business will show the consumer that the company cares about their customers and wants them to enjoy their stay within the organisation. In order to keep up with other companies, I will also be doing a lot of advertising in order to let customers know about my service and the prices I am currently charging. I will also let them know about the daily rates I am charging and what promotions I am currently doing in order to enhance the performance of the business. If advertising isn't working and many other companies are performing better than me then I will try to under price them by a little bit, this will lead to more consumers coming to me and if they enjoy my companies service then hopefully they will become regular customers and will continue to use my service. By this process I should be able to build up a strong customer base. Customers are very interested in a cheaper price and almost definitely will pick the service, which has a cheaper price. Even if it is that they want to try the service once this still gives me the chance to impress them and try and make them a regular consumers to my business.
The Stakeholders in my Business
There are many stake holders in my business as there are in any business stake holders are very important in my business and in order to keep them happy the business will have to be performing very well in all areas. It is very important to keep them happy as they have a reason to care they hold a stake in my business. There are many different types of stakeholders in my business and I am one of them. The other stakeholders are employees, managers, customers or consumers, the general public and the shareholders. The shareholders will have shares in my company which they will buy, by buying the shares they are investing in my company, their shares will go up and down depending on whether my business is making a profit or a loss. This is why they will care very much about how the business is performing as they have the chance to increase their investment or loss a lot of the income they put in to the business. Employees also need to keep tabs on how well my business is performing as their job will count on it and they may find a very nasty surprise when they find out the business can no longer afford to keep the employee on. The employee could also be made redundant or on the other hand if the business is performing very well then the employee could be in for a pay rise as they are part of the reason why the business is making a profit. The stakeholders will want to look at the financial documents in order to assess how well the internet café is doing and how much return on their capital they will be receiving in future months. Before the stakeholders even invest in the business they will want to see many predictions from the business in order to have a sense of what the internet café is hoping to achieve in the future months. The stakeholders will also want a clear idea of the businesses aims and objectives in order to get a sense of direction from where the business is going and what they plan to be making in terms of profit within the next six monthly period. The stakeholders will want to look at the financial documents in order to see whether the business will be making a profit, loss or be breaking even by the end of the six monthly period, this gives a very clear indication whether any stakeholders will want to invest in the business. The stakeholders will never stop looking at these documents as this is an ongoing process and they may want to withdraw their services or sell there shares at any moment if they are not entirely happy with their investment.
The three main stakeholders in my business are
Employees, the employees are my stakeholders because they are currently working in my business the information I require are how well the business is performing. The reason why they will need this information is because they would like to know if they are looking to get paid or not. Another type of information they would like to know is how well the business is currently performing, this will be vital information as if the business is not performing well the business may no longer need this vacancy to be filled.
Creditors, the creditors are my stakeholders because they are the people that give me loans. The information they would like to know would be my financial information. The reason they would like to know my financial information is because they would like to know if they should lend us money. If our financial state is bad they may not lend the business any money because there may be a chance the business would not be able to afford to pay them back then they will lose money this way.
Debtors, the debtor are the people that owe me money. So they would provide information about the company. The reason for that is because they want to know if they should buy their goods from me. Another reason would be that they would like to know if they should buy goods from us or not.
Return on capital employed or R O C E for short tells you a bit about how the business is performing by looking at the amount of profit that has been compared with the amount of capital being used. Capital employed includes share capital, reserves and long term loans.
The ratio is of special interest to share holders, potential investors in the business and banks.
R O C E = Operating or Net profit x 100
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Capital employed
Year 1
R O C E = 2415 x 100 = 12.66
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9081
Year 2
R O C E = 19258 x 100 = 47.10055
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40887
The R O C E has improved dramatically from a poor 12.66 to a respectable 47.10055 making it a more attractive investment. The R O C E has increased by 34.44055 this will lead to new investor that would like to invest their money into the business. Another reason why they would like to invest in me is because this is my second year and I have already done so well. Finally the last reason they would like to invest in me is because I have made substantial profits.
Net profit Margin
Net profit = Net profit x 100
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Turnover
Year 1
Net profit = 3572 x 100 = 44.86874
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7961
Year 2
Net profit=19258 x 100 = 88.93507
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21654
The net profit margin has increased from a very low 44.86874 to 88.93507 in 2002. This means that the business made a net profit of 44.06633 for every £ of goods sold. Another benefit this would bring is that it would interest potential investors to invest their money in the business. This would be good for me because I could expand my business.
The net profit margin may have increased because sales were up and cost of sales were down. The business had found cheaper suppliers. The small increase in expenses was much less than the increase in the sales.
Debtors Day
Debtors day = Debtors x 365
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Credit Sales
Year 1
Debtors day = 102 x 365 = 4.840723
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7691
Year 2
Debtors day = 200 x 365 = 3.371202
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21654
The debtor's day has again improved from good 4.840723 to an even better 3.371202. The debtor's day collection has improved by 1.46952121. The creditor day has seen a small decrease. The business is very good at settling debts, especially if the trade credit period is 28 days.
The creditor days have improved. This shows that there is good training going training going on in business. They should on monitoring the aged creditor list.
To be the world's leading Internet café chain that is the cheapest way to get online.
We will achieve the lowest cost base among our competitors (home and mobile access and other Internet cafés) by exploiting economies of scale at the store level and by keeping the business simple. We will offer only "no-frills" access to the entire world wide web (no walled gardens and no access to PC installed software) whilst maintaining content filtering to avoid causing offence.
All hardware and software should be purchased by competitive tender based on architecture that utilises commodity items available from multiple vendors. Any unique business systems must be supported in house. Using yield management we will maximise revenue and keep the stores busy by appealing to both visitors and locals.
The environment in our stores will be clean and safe but fitted out to reduce up-front and on-going costs. We will select busy but inexpensive locations and develop clusters of stores in major international cities in order to control costs. To further reduce costs we will offer part of our real estate to concessionaires, creating a contestable market for the in-store provision of synergistic products to our customers. Outside our clusters we will franchise our brand and expertise in IT and yield management to reputable third parties to increase both profits and global presence.
Any ancillary revenue such as in-store advertising will be subcontracted to outside0 specialists who will retain all the business risk. We will minimise labour intensive processes through automation and outsourcing. We will develop a strong people culture and align the interests of our staff with those of our shareholders in order to create a profitable business and long term value.
The Viability of my business
The reason why my business is viable is because it is achieving its objectives. The objectives of my company are that I would like a high market share and increasing prices. The reason for this is because a have a lot of competitors big and small who could easily drive me, so if I manage to gain a high market share it will be extremely difficult for any other business to drive me out of the market. I will as well have to make a lot of profit in the forth coming months, this again so that I can survive in the business, and obviously as I am a new small business another of my main objectives will just be to survive. The reason why my business has to be viable is because it has to attract new customers and new investors. One way I have shown to my investors that my business is performing well is through my ratios taken from my profit and loss accounts and balance sheets.
The ratios I have taken are debtors collecting day, net profit margin and ROCE. The reason why I have chosen debtors collecting day is because it shows my investors that I am receiving the money back quickly so I will be able to pay them back. The reason why I have a net profit margin is because it shows to my investors that I am doing well and my business is succeeding in gaining money, which they will like to hear. The last ratio I have is the ROCE, the reason why I have included the ROCE is because it is a short look at the way the business is performing.
These three ratios all make potential investors interested to invest their money in the business, so the company is viable to this.
Financial Viability of the business plan
The financial plan for the business is very effective, as it helps businesses to find out where its financial position is and it will help to manage its finances. The financial part of the report firstly contains a two-year cash flow, which shows the businesses income, expenses and also the profit in which the company makes every month for two years. This part of the financial plan is viable as it plays an important part of the business as it enables the business to discover any problems in which they may encounter, this helps them to make any important changes to the running of the company.
As well as the cash flow making the plan financially viable, there is also a profit and loss account. This shows the business opening cash balance and minuses what the businesses purchases as stock. The profit and loss account also takes away the expenses and shows the business net profit at the end of the year. Within the financial part of the year there is also a balance sheet. The balance sheet shows the value of companies' fixed assets, current assets and current liabilities. The balance sheet shows the net worth of the business at the end of the financial year.
The break-even chart puts together the output, fixed costs and total revenue and puts it into a line graph, which shows where the business even and how long it takes the business to make a profit. This helps the business to find out how well it is doing financially.
From the information contained in the financial part of the report it helps the business to run effectively and to manage its money and make important financial decisions. Without the financial part of the report the business would not be able to run properly or manage its finances, which could make problems in the business. Therefore the financial plan is very viable for the business plan as it helps the business to operate effectively.
Business Plan
The reason why I created my Business plan is to tell people how I set up my business and why. I also made it so that it is easier to read for the general public so that they can see exactly what my aims and objectives are and the reasons behind setting the business up, they can also have an insight into the financial side of the business and all other aspects, which I have covered.
The reason I created my business plan the way I did was because I wanted to inform my customers, investors and my employees how the business is performing. So I used ratios such as ROCE, debtors collecting day and net profit margin to show these people how my business is performing. The reason why I used ROCE is because it tells them how much profit I am making. Another reason why I used my ROCE was because the figures were high so this was to persuade stakeholders to invest. The reason why I used the debtors day because it will show that we are getting the money back from debtors.
The reason why the portfolio has a balance sheet, cash flow, profit and loss account is because I want to show how well my business is performing. The cash flow shows the way I am spending money and how I am receiving it. So this is very important for the investor to see because they can see if I am spending my money constructing or am I am just wasting it. The reason why I have a profit and loss account is very simple it is there to show how much profit I have made.
The format I have used is because I want to show them all the things that I want to do and have done. So I have used simple format that is to flow everything along. I did not want to add things every due to the reason it may confuse the reader and may make them think of the wrong thing.
The reason why I used a market model was because it would clearly show that I need to do, and it sets everything out.
