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Coffee Shop & Cafe icon Internet Cafe Business Plan

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JavaNet Internet Cafe

Executive Summary

Opportunity

Problem

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 aren’t socially, economically, or politically isolated.

Solution

JavaNet, unlike a typical cafe, will provide a unique forum for communication and entertainment through the medium of the Internet. JavaNet’s goal is to provide the community with a social, educational, entertaining, atmosphere for worldwide communication.

Market

JavaNet intends to cater to people who want a guided tour on their first spin around the Internet and to experienced users eager to indulge their passion for computers in a social setting. Furthermore, JavaNet will be a magnet for local and traveling professionals who desire to work or check their email messages in a friendly atmosphere. These professionals will either use JavaNet’s PCs, or plug their notebooks into Internet connections. JavaNet’s 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.

Competition

The main competitors in the retail coffee segment are Cafe Paradisio, Full City, Coffee Corner and Allann Bros. These businesses are located in or near the downtown area, and target a similar segment to JavaNet’s (i.e. educated, upwardly-mobile students and business people).

Why Us?

JavaNet will follow a differentiation strategy to achieve a competitive advantage in the cafe market. By providing Internet service, JavaNet separates itself from all other cafes in Eugene. In addition, JavaNet provides a comfortable environment with coffee and bakery items, distinguishing itself from other Internet providers in Eugene.

Expectations

Forecast

We plan on getting more than 500,000 sales in year 1 and nearly 1,000,000 sales in year 3. We will have earnings year 2 and year 3 

Financial Highlights by Year

Chart visualizing the data for Financial Highlights by Year

Financing Needed

Our financing has already been secured as follows:

  1. $24,000 from the Oregon Economic Development Fund
  2. $19,000 of personal savings from owner Cale Bruckner
  3. $56,000 from three investors
  4. and $10,000 in the form of short-term loans
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Opportunity

Problem & Solution

Problem Worth Solving

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 aren’t socially, economically, or politically isolated.

Our Solution

 JavaNet will provide full access to email, WWW, FTP, Usenet and other Internet applications such as Telnet and Gopher. JavaNet will also provide customers with a unique and innovative environment for enjoying great coffee, specialty beverages, and bakery items.

JavaNet will appeal to individuals of all ages and backgrounds. The instructional Internet classes, and the helpful staff that JavaNet 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.

Target Market

Market Size & Segments

  Target Market Segment Strategy

JavaNet intends to cater to people who want a guided tour on their first spin around the Internet and to experienced users eager to indulge their passion for computers in a social setting. Furthermore, JavaNet will be a magnet for local and traveling professionals who desire to work or check their email messages in a friendly atmosphere. These professionals will either use JavaNet’s PCs, or plug their notebooks into Internet connections. JavaNet’s 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 Segmentation

JavaNet’s customers can be divided into two groups. The first group is familiar with the Internet and desires a progressive and inviting atmosphere where they can get out of their offices or bedrooms and enjoy a great cup of coffee. The second group is not familiar with the Internet, yet, and is just waiting for the right opportunity to enter the online community. JavaNet’s 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, JavaNet’s target market can be divided into more specific market segments. The majority of these individuals are students and business people. See the Market Analysis chart and table below for more specifics.

Competition

Current Alternatives

The main competitors in the retail coffee segment are Cafe Paradisio, Full City, Coffee Corner and Allann Bros. These businesses are located in or near the downtown area, and target a similar segment to JavaNet’s (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 Eugene. 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 JavaNet. Due to the nature of the Internet, there are no geographical boundaries restricting competition.

Our Advantages

Our advantages are best explained as our strengths: 

Knowledgeable and friendly staff. We’ve gone to great lengths at JavaNet to find people with a passion for teaching and sharing their Internet experiences. Our staff is both knowledgeable and eager to please.

State-of-the art equipment. Part of the JavaNet experience includes access to state-of-the-art computer equipment. Our customers enjoy beautiful flat-screen displays, fast machines, and high-quality printers.

Upscale ambiance. When you walk into JavaNet, you’ll feel the technology. High backed mahogany booths with flat-screen monitors inset into the walls provide a cozy hideaway for meetings and small friendly gatherings. Large round tables with displays viewable from above provide a forum for larger gatherings and friendly "how-to" classes on the Internet. Aluminum track lighting and art from local artists sets the mood. Last, but not least, quality cappuccino machines and a glass pastry display case provide enticing refreshments.

Clear vision of the market need. JavaNet knows what it takes to build an upscale cyber cafe. We know the customers, we know the technology, and we know how to build the service that will bring the two together.

     

Keys to Success

Keys to Success

The keys to the success for JavaNet are:

  • The creation of a unique, innovative, upscale atmosphere that will differentiate JavaNet from other local coffee shops and future Internet cafes.
  • The establishment of JavaNet as a community hub for socialization and entertainment. We want people to meet, have study groups, hit our place to and from work, think of us when they want breakfast and online news. We won’t be closed so we can be a haven. 
  • The creation of an environment that won’t intimidate the novice user. JavaNet will position itself as an educational resource for individuals wishing to learn about the benefits the Internet has to offer. This will be measured by our chairs being full, customers using their email accounts and our staff answering questions. We want our community engaged and our sales and popularity will reflect we are able to make our customers comfortable. 
  • Great coffee and bakery items. This will be indicated by customer reviews as well as inventory turnover. We need our inventory to turn over once a week or once every 2 weeks. 
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Execution

Marketing & Sales

Marketing Plan

JavaNet 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 Eugene, it is important that JavaNet sets fair prices for its coffee. JavaNet will use advertising as its main source of promotion. Ads placed in The Register Guard, Eugene Weekly, and the Emerald will help build customer awareness. Accompanying the ad will be a coupon for a free hour of Internet travel. Furthermore, JavaNet will give away three free hours of Internet use to beginners who sign up for an introduction to the Internet workshop provided by JavaNet.

Sales Plan

As a retail establishment, JavaNet employs people to handle sales transactions. Computer literacy is a requirement for JavaNet employees. If an employee does not possess basic computer skills when they are hired, they are trained by our full-time technician. Our full-time technician is also available for customers in need of assistance. JavaNet’s commitment to friendly, helpful service is one of the key factors that distinguishes JavaNet from other Internet cafes.

Operations

Locations & Facilities

A site has been chosen at 10th and Oak in downtown Eugene. 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 Eugene Station. Parking availability.
  • Low cost rent – $.85 per square foot for 1700 square feet.
  • High visibility.

All of these qualities are consistent with JavaNet’s goal of providing a central hub of communication and socialization for the Eugene community.

Technology

JavaNet 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. JavaNet 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 PC in their home or office.

Milestones & Metrics

Milestones Table

Milestone Due Date
Business Plan
Mar 07, 2020
Secure Startup Funding
Apr 04, 2020
Site Selection
May 09, 2020
Architect Design
June 06, 2020
Designer Proposal
July 18, 2020
Technology Design
Aug 08, 2020
Year 1 Plan
Sept 05, 2020
Personnel Plan
Oct 10, 2020
Accounting Plan
Nov 07, 2020
Licensing
Dec 12, 2020

Key Metrics

Our Key Metrics are: 

  • Sales, gross margin, operating profit, profit, cash flow, of course. 
  • Average sales per customer per month
  • Monthly subscribers 
  • Average time per customer session
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Company

Overview

Ownership & Structure

JavaNet is a privately held Oregon Limited Liability Corporation. Cale Bruckner, the founder of JavaNet, is the majority owner. Luke Walsh, Doug Wilson, and John Underwood, all hold minority stock positions as private investors.

Team

Management Team

JavaNet is owned and operated by Mr. Cale Bruckner. The company, being small in nature, requires a simple organizational structure. Implementation of this organizational form calls for the owner, Mr. Bruckner, to make all of the major management decisions in addition to monitoring all other business activities.

Personnel Table

2020 2021 2022
Owner $57,600 $58,752 $59,927
Manager (0.78) $14,400 $48,000 $50,400
Technician $33,600 $34,272 $34,957
Part Time (6) $129,600 $132,192 $134,838
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Financial Plan

Forecast

Key Assumptions

Our Key assumptions: 

1 – Certain members s of the community are intimidated by the internet. They want to use email and the internet but find it intimidating. They will use the internet if there is a place that comes with someone to explain it. 

2 – Students need a place to have study groups and use the internet. There are many students at the u of o, there are a shortage of resources. 

3 – Certain members of the community cannot afford to own their own computer or wifi. We are happy to let them use our place for a small fee they can afford. 

Revenue by Month

Chart visualizing the data for Revenue by Month

Expenses by Month

Chart visualizing the data for Expenses by Month

Net Profit (or Loss) by Year

Chart visualizing the data for Net Profit (or Loss) by Year

Financing

Use of Funds

Our list of startup expenses are $56,000 dollars, as follows: 

  • 11 computers = $22,000
  • two printers = $1,000
  • one scanner = $500
  • software = $810
  • one espresso machine = $10,700
  • one automatic espresso grinder = $795
  • other fixtures and remodeling:
    • two coffee/food preparation counters = $1,000
    • one information display counter = $1,000
    • one drinking/eating counter = $500
    • sixteen stools = $1,600
    • six computer desks w/chairs = $2,400
    • stationery goods = $500
    • two telephones = $200
    • decoration expense = $13,000

Sources of Funds

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 as follows:

  1. $24,000 from the Oregon Economic Development Fund
  2. $19,000 of personal savings from owner Cale Bruckner
  3. $66,000 from three investors
  4. and $10,000 in the form of short-term loans

Statements

Projected Profit & Loss

2020 2021 2022
Gross Margin $455,890 $546,600 $636,450
Operating Expenses
Salaries & Wages $235,200 $273,216 $280,122
Employee Related Expenses $47,040 $54,643 $56,025
Rent $24,000 $24,000 $24,000
Utilities $9,120 $9,120 $9,120
Marketing / Promotion $48,000 $48,000 $48,000
Insurance $7,200 $7,200 $7,200
Startup Expenses – Listed in Use of Funds $56,000
Interest Incurred $699 $482 $303
Depreciation and Amortization
Gain or Loss from Sale of Assets
Income Taxes $2,004 $9,096 $14,817
Total Expenses $664,584 $703,157 $763,637
Net Profit $26,626 $120,843 $196,864

Projected Balance Sheet

2020 2021 2022
Cash $103,840 $215,760 $407,985
Accounts Receivable $0 $0 $0
Inventory $23,115 $27,002 $27,002
Other Current Assets
Total Current Assets $126,955 $242,762 $434,987
Long-Term Assets
Accumulated Depreciation
Total Long-Term Assets
Accounts Payable $4,571 $5,154 $5,154
Income Taxes Payable $2,004 $2,275 $3,705
Sales Taxes Payable $0 $0 $0
Short-Term Debt $5,890 $6,069 $6,254
Prepaid Revenue
Total Current Liabilities $12,465 $13,498 $15,113
Long-Term Debt $12,864 $6,795 $541
Long-Term Liabilities $12,864 $6,795 $541
Paid-In Capital $75,000 $75,000 $75,000
Retained Earnings $26,626 $147,469
Earnings $26,626 $120,843 $196,864

Projected Cash Flow Statement

2020 2021 2022
Net Cash Flow from Operations
Net Profit $26,626 $120,843 $196,864
Depreciation & Amortization
Change in Accounts Receivable $0 $0 $0
Change in Inventory ($23,115) ($3,887) $0
Change in Accounts Payable $4,571 $583 $0
Change in Income Tax Payable $2,004 $271 $1,430
Change in Sales Tax Payable $0 $0 $0
Change in Prepaid Revenue
Investing & Financing
Assets Purchased or Sold
Investments Received $75,000
Dividends & Distributions
Change in Short-Term Debt $5,890 $179 $185
Change in Long-Term Debt $12,864 ($6,069) ($6,254)
Cash at Beginning of Period $0 $103,840 $215,760
Net Change in Cash $103,840 $111,920 $192,225
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