Will a Cyber Café in Wakefield be successful?

AS and A Level Business Studies

Naeem Khalid

1.0 Objective 1

Introduction into the business.

To identify a worthwhile business opportunity and method.

2.0 Objective 2

Secondary research into the market.

To investigate the market potential with past trends and sales forecast.

To identify the local/national competition.

3.0 Objective 3

Primary research into consumer opinions.

To assess the potential success of the business through a questionnaire.

4.0 Objective 4

The marketing mix.

To focus attention on the different elements of marketing in relation to my business.

5.0 Objective 5

Startup and operating costs of the business.

To work out startup costs and direct/indirect costs.

6.0 Objective 6

Financial aspects

To construct a Profit and loss account, a cash flow forecast and carry out break even analysis.

7.0 Objective 7

Conclusions and recommendations

To decide whether it would be worth proceeding with the venture and making justified comments.

8.0 Bibliography and Appendix

Objective 1 – Introduction into the business

1.1 Introduction into a feasibility study

1.2 Research

1.3 Methodology

1.4 Target market

1.5 Requirements for chosen business

1.1

A feasibility study is an investigation into the financial viability of a new business opportunity and it requires independent primary and secondary research to determine this. Some of the things a feasibility study should include are:

Objectives and methods
Primary and secondary research
Business strategies
Costs and financials
Conclusions on the viability of the business

Key features are research, analysis and evaluation to gain high marks and work must be set out clearly.

1.2

Following analysis of my local area, Wakefield, businesses such as cafes, restaurants and café bars are very popular and on the increase due to high demand. I have taken time to visit the Official Wakefield web site and found that there are 12 cafes, 21 restaurants but only 1 Cyber Café in the city centre of Wakefield. Therefore I think there is a gap in the market for a second Internet Café and it is here that I will base my project.

In today’s competitive environment companies look for original and exciting ways to stand out in a crowd. As technology speeds ahead, Cyber Cafés offer new products to provide customers with the best Internet and computer technology. Customers can surf the Internet while they snack and relax.

After much consideration the chosen name for the Cyber café is ‘Mega-Byte’ I chose this name because it incorporates both computers and food and it is also a name that is easy to remember for customers.

1.3

Now that I have identified a business opportunity I will find a suitable location and begin consumer research to see how successful an Cyber Café in Wakefield will be. I will do this by conducting a questionnaire. If there is demand I will look at past sales figures of other Cyber Cafes to get some idea of their success, I will also conduct advertising and promotion to make the public aware of the Cyber Café by adverts and flyers. Staff will needed to be organised by calculating how many staff will be needed per day and advertising for positions which will lead to interviews and training. Prices and costs of stock, wages and overall running of the business will need to be estimated using past sales figures. I will need to assess if there is a good future for the business and if it is worth proceeding with the venture.

1.4

The service will be aimed at mostly students and business people, as it is those types of people who usually take an interest in computers, if not for work purposes, for pleasure. The service will give people the chance to work in an environment that not only offers help and assistance but gives them the chance to enjoy tasty food and drink also. The environment will be more of a working one than a social one, as most customers will need concentration and distractions such as music could result in loss of customers.

To broaden my target market I will make it possible for customers who are not as interested in computers to visit for food/drink purposes only. It will offer a quiet, relaxing place for people to come and unwind. This would help me appeal to older customers.

1.5

The start up of an Cyber Café involves putting together two very different areas of business. A strong knowledge of computers, the Internet and new technology is crucial, as is an understanding of the catering business, customer service and customer satisfaction. If less skilful areas within work schedules can be delegated the business will have a good chance of survival.

Both managers and employees need experience in organisation and communication but also technical factors, as a lot of responsibility is involved in the running of a business. Managers especially need knowledge of business accounts or the process of supplying them to an accountant who will do things such as forecast cash flow and profit and loss. Recruitment is also an important part of a business as the process of interviews and choosing the correct candidates for positions could be a factor that determines whether customers will return and the success of the venture.

2.0 Objective 2 – Secondary research into the market

2.1 Research into eating out

2.2 Sales forecast

2.3 Summary

2.4 Competition

2.5 Map

2.1

Using a book called Regional Trends 1999 I found some government data highlighting that in 1996-1997 the amount of money spent on eating out in Yorkshire and Humber was £5.96 per person per week. The figures are not very recent which is a disadvantage but it is the most recent figures available. However, it still applies for an average for the Wakefield area.

2.2

(* = multiplied by)

The equation for money spent on eating out by everyone in Wakefield is:

Average amount of money spent on eating out per week * Population of Wakefield (not including people under 15yrs) =

£5.98 * 257,600 = £1,540,448 per week

The equation for money spent by one person on eating out, in Wakefield, in one year is:

Average amount of money spent on eating out per week * no. of weeks in one year.

£5.98 * 52 = £310.96 per year per person

To estimate my sales I will work on the assumption that 50 people from the Wakefield area will visit my Internet café per day judging by research into other Cyber Cafes, 6 days per week and spend Wakefield’s average of £5.98.

The equation is:

Average amount of money spent on eating out per week * no. of customers per week.

£5.98 * 300 = £1794 per week

This therefore is my potential sales revenue.

2.3

In conclusion the estimated income for my Cyber café is £1794 per week. This is only estimation, judging by past figures but the past is not always a good predictor of the future because of factors such as change in consumer opinions, seasonal influences and trends at the time of launch. The results may also be weak because cafes are only a small minority of the eating out venues in Wakefield. The data found will also take into account restaurants, fast food, café-bars and possibly takeaways.

I have not taken into account people under the age of 15 in my population because I think they are less likely to visit due to limited income. I must also consider that some days during the week will be busier than others therefore the number of visitors per day may differ. Saturdays and Sundays will most likely be busier because fewer people are at work or college and most of Wakefield’s shops now trade on Sundays.

Even though there are some weaknesses in the prediction of sales it does give some indication of the possible income the business will receive. Hopefully the Internet Café will attract more customers because after staff wages and bills are deducted from the total, the profit will be very low.

2.4

There is only one Cyber café in the Wakefield area, located on Wood Street, a well-known street by residents of Wakefield. I first of all emailed and then visited the Cyber Café but they were unable to provide me with any information, as the present owner was absent. The person running the Cyber café was unable to tell me when the owner was due to return or if he would be able to provide me with any information to assist me with my research. Other Cyber Cafes are all ...