ENTREPRENEUR AND SMALL BUSINESS MANAGEMENT BUSINESS PLAN PROJECT

Mekelle University
Mekelle Institute of Technology (MU-MIT)

Department of Computer Science and

Engineering (CSE)

Entrepreneur & Small Business Management

Internet Cafe Business Plan

Habesha Internet Café (START-UP BUSINESS)

Date: 4th Jun 2017

Address: Hawzien city, Tigray, Ethiopia

Phone-no: +251927743775
Email: [email protected]

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Team Members

1. Eframe Gebrewahid
 ID-NO: MIT/0027/05
 Department : Computer Science and Engineering (CSE)
 Phone-no: +251923412412
2. Gebriye Embafresu
 ID-NO: MIT/0047/05
 Department : Computer Science and Engineering (CSE)
 Phone-no: +251914789599
 Email: [email protected]

3. Gebreyohans Hailekiros
 ID-NO: MIT/0047/05
 Department : Computer Science and Engineering (CSE)
 Phone-no: +251927743775
 Email: [email protected]
4. Zenebe Gebreyohans
 ID-NO: MIT/0127/05
 Department: Computer Science and Engineering (CSE)
 Email: [email protected]
 Phone-no: +251937031359

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Contents
1 Executive Summary .................................................................................................... 1
1.1 Objectives ............................................................................................................ 1
1.2 Keys to Success ................................................................................................... 2
1.3 Vision................................................................................................................... 2
1.4 Mission ................................................................................................................ 2
1.5 Risks .................................................................................................................... 2
2 Company Summary .................................................................................................... 3
2.1 Company Ownership ........................................................................................... 3
2.2 Start-up Summary ................................................................................................ 3
2.3 Company Locations and Facilities....................................................................... 4
3 Services ....................................................................................................................... 4
3.1 Service Description .............................................................................................. 5
3.2 Competitive Comparison ..................................................................................... 5
3.3 Fulfillment ........................................................................................................... 6
3.4 Technology .......................................................................................................... 6
3.5 Future Services .................................................................................................... 6
4 Market Analysis Summary ......................................................................................... 6
4.1 Market Segmentation ........................................................................................... 6
4.2 Target Market Segment Strategy ......................................................................... 7
4.2.1 Market Trends ............................................................................................... 7
4.2.2 Market Needs ................................................................................................ 7
4.3 Service Business Analysis ................................................................................... 8
5 Marketing Strategy and Implementation Summary .................................................... 8
5.1 SWOT Analysis ................................................................................................... 9
5.1.1 Strengths ....................................................................................................... 9
5.1.2 Weaknesses ................................................................................................... 9
5.1.3 Opportunities .............................................................................................. 10
5.1.4 Threats ........................................................................................................ 10
5.2 Strategy Pyramid ............................................................................................... 11
5.2.1 Attract Novice Internet Users ..................................................................... 11
5.2.2 Attract Power Internet Users ...................................................................... 11
5.2.3 Social Hub .................................................................................................. 11
5.3 Competitive Edge .............................................................................................. 11
5.4 Marketing Strategy ............................................................................................ 12
5.4.1 Promotion Strategy ..................................................................................... 12
5.4.2 Pricing Strategy .......................................................................................... 12
5.5 Sales Strategy..................................................................................................... 13
6 Management Plan ..................................................................................................... 13
6.1 Personnel Plan ................................................................................................... 13
7 Financial Plan ........................................................................................................... 13
7.1 Start-up Funding ................................................................................................ 13

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1 Executive Summary
Habesha, unlike a typical cafe, will provide a unique forum for communication and
entertainment through the medium of the Internet. Habesha is the answer to an
increasing demand. The public wants: (1) access to the methods of communication and
volumes of information now available on the Internet, and (2) access at a cost they can
afford and in such a way that they aren't socially, economically, or politically isolated.
Habesha's goal is to provide the community with a social, educational, entertaining,
atmosphere for worldwide communication.

This business plan is prepared to obtain financing in the amount of 120,000 ETB. The
supplemental financing is required to begin work on house rent, equipment purchases,
and to cover expenses in the first year of operations. Additional financing has already
been secured in the form of: (1) 47,000 ETB from owners Efrem Gebrewahid,
Gebreyowhans Hailekiros, Gebriye Embafresu and zenebe Gebreyohans (2) 80,000
ETB in the form of short-term loans.

Habesha will be incorporated as privately Limited Corporation which is owned by the

team listed as above. The financing, in addition to the capital contributions from the
owners will allow Habesha to successfully open and maintain operations through year
one. The large initial capital investment will allow Habesha to provide its customers
with a full featured Internet cafe. A unique, upscale, and innovative environment is
required to provide the customers with an atmosphere that will spawn socialization.
Successful operation in year one will provide Habesha with a customer base that will
allow it to be self-sufficient in year two.

1.1 Objectives
Habesha’s objectives for the first three years of operation include:

 The creation of a unique, upscale, innovative environment that will differentiate

Habesha from local coffee houses.
 Educating the community on what the Internet has to offer.
 The formation of an environment that will bring people with diverse interests
and backgrounds together in a common forum.

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 Good coffee and bakery items at a reasonable price.

 Affordable access to the resources of the Internet and other online services.

1.2 Keys to Success

The keys to the success for Habesha are:

 The creation of a unique, innovative, upscale atmosphere that will differentiate

Habesha from other local coffee shops and future Internet cafes.
 The establishment of Habesha as a community hub for socialization and
entertainment.
 The creation of an environment that won't intimidate the novice user.
 Habesha will position itself as an educational resource for individuals wishing
to learn about the benefits the Internet has to offer.
 Great coffee and bakery items.

1.3 Vision
Become a leading” fully fledge best in class” organization in internet café with plenty
of services for the community of Hawzien city and making it the role model to another
cities.

1.4 Mission
As the popularity of the Internet continues to grow at a rapid rate globally, easy and
affordable access is quickly becoming a necessity of life. Habesha provides
communities with the ability to access the Internet, enjoy a cup of coffee, and share
Internet experiences in a comfortable environment. People of all ages and backgrounds
will come to enjoy the unique, upscale, educational, and innovative environment that
Habesha provides.

1.5 Risks
The risks involved with starting Habesha are:

 Will there be a demand for the services offered by Habesha in Hawzien town?
 Will the popularity of the Internet continue to grow, or is the Internet a fad?

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 Will individuals be willing to pay for the service Habesha offers?

 Will the cost of accessing the Internet from home drop so significantly that
there will not be a market for Internet Cafes such as Habesha?

2 Company Summary
Habesha, soon to be located in Hawzien town, will offer the community easy and
affordable access to the Internet. Habesha will provide full access to email, WWW,
FTP, Usenet and other Internet applications such as Telnet. Habesha at coffee, specialty
beverages, and bakery items.

Habesha will appeal to individuals of all ages and backgrounds. The instructional
Internet classes, and the helpful staff that Habesha 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 location will
provide business people with convenient access to their morning coffee and online
needs.

2.1 Company Ownership

Habesha is a privately limited Corporation owned by shareholders Efrem Gebrewahid,
Gebreyowhans Hailekiros, Gebriye Embafresu and zenebe Gebreyohans.

2.2 Start-up Summary

Habesha‘s start-up costs will cover coffee making equipment, house rent , capital to
cover losses in the first year, and the communications equipment necessary to get its
customers online.

The communications equipment necessary to provide Habesha's customers with a

highspeed connection to the Internet and the services it has to offer make up a large
portion of the start-up costs. These costs will include the computer terminals and all
costs associated with their set-up. Costs will also be designated for the purchase of one
laser printer and a scanner.

In addition, costs will be allocated for the purchase of coffee making equipment. One
coffee machine and minor additional equipment will be purchased from electronic

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materials suppliers in Mekelle currently not specified due to the fact that we don’t know
what their name is.

Start-up Expense Details:

 10 computers = 60,000 ETB

 One printer = 10,000 ETB
 one scanner = 10,000 ETB  one coffee machine = 40,000 ETB

 other fixtures and remodeling:

 two coffee/food preparation counters = 20,000 ETB

 one information display counter = 20,000 ETB
 one drinking/eating counter = 10,000 ETB
 sixteen stools = 30,000 ETB
 six computer desks w/chairs = 20,000 ETB
 stationery goods = 10,000 ETB
 two telephones = 1000 ETB
 decoration expense = 26,000 ETB

2.3 Company Locations and Facilities

A site has been chosen at the center of Hawzien town. This site was chosen for various
reasons, including:

 Proximity to the the center of Hawzien business community

 Proximity to trendy, upscale restaurants

 High visibility.
All of these qualities are consistent with Habesha's goal of providing a central hub of
communication and socialization for the Hawzien community.

3 Services
Habesha will provide full access to email, WWW, FTP, Usenet and other Internet
applications such as Telnet and Gopher. Printing, scanning, and introductory courses to

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the Internet will also be available to the customer. Habesha will also provide customers
with a unique and innovative environment for enjoying great coffee, specialty
beverages, and bakery items.

3.1 Service Description

Habesha will provide its customers with full access to the Internet and common
computer software and hardware training. Some of the Internet and computing services
available to Habesha customers are listed below:

 Access to external POP3 email accounts.

 FTP, Telnet, Gopher, and other popular Internet utilities will be available.
 Access to Netscape or Internet Explorer, Mozilla fire fox, google chrome and
other new browsers.
 Access to laser and color printing.
 Access to popular software applications like Adobe Photoshop, Microsoft office
and any other soft wares.

Habesha will also provide its customers with access to introductory Internet and email
classes. These classes will be held in the afternoon and late in the evening. By providing
these classes, Habesha will build a client base familiar with its services. The computers,
Internet access, and classes wouldn't mean half as much if taken out of the environment
Habesha will provide. Good coffee, specialty drinks, bakery goods, and a comfortable
environment will provide .Habesha customers with a home away from home. A place
to enjoy the benefits of computing in a comfortable and well-kept environment.

3.2 Competitive Comparison

Habesha will be the first Internet cafe in Hawzien in providing all the services at the
same place and time. Habesha will differentiate itself from the strictly-coffee cafes in
Hawzien by providing its customers with Internet and computing services.

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3.3 Fulfillment
Habesha will obtain computer support and Internet access from Mesud Ahmed Salih
computers Importer located in Mekelle. Techno will provide the Internet connections,
network consulting, and the hardware required to run the Habesha Network.

3.4 Technology
Habesha 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.
Habesha 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.

3.5 Future Services

As Habesha grows, more communications systems will be added. The possibility of
additional units has been accounted for in the current floor plan. As the demand for
Internet connectivity increases, along with the increase in competition, Habesha will
continue to add new services to keep its customer base coming back for more.

4 Market Analysis Summary

Habesha is faced with the exciting opportunity of being the first-mover in Hawzien
market. The consistent popularity of coffee, combined with the growing interest in the
Internet, has been proven to be a winning concept in other markets and will produce the
same results in Hawzien.

4.1 Market Segmentation

Habesha‘scustomers 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. Habesha’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

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appeal to a variety of people. In addition to these two broad categories, Habesha's target
market can be divided into more specific market segments. The majority of these
individuals are students and business people.

4.2 Target Market Segment Strategy

Habesha 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, Habesha will be attract for local and traveling professionals who
desire to work or check their email messages in a friendly atmosphere. These
professionals will either use Habesha PCs, or plug their notebooks into Internet
connections. Habesha 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.

4.2.1 Market Trends

A market survey was conducted in the fall of 2016. Key questions were asked of fifty
nine potential customers. Some key findings include:

 35 subjects said they would be willing to pay for access to the Internet.
 Nine ETB an hour was the most popular hourly Internet fee.
 24 subjects use the Internet to communicate with others on a regular basis.

4.2.2 Market Needs

Factors such as current trends, addiction, and historical sales data ensure that the high
demand for coffee will remain constant over the next five years. The rapid growth of
the Internet and online services, that has been witnessed worldwide, is only the tip of
the iceberg. The potential growth of the Internet is enormous, to the point where one
day, a computer terminal with an online connection will be as common and necessary
as a telephone. This may be 10 or 20 years down the road, but for the next five years,
the online service provider market is sure to experience tremendous growth. Being the
first internet café in Hawzien, Habesha will enjoy the first-mover advantages of name
recognition and customer loyalty. Initially, Habesha will hold a 100 percent share of the
internet-cafe market in Hawzien. In the next five years, competitors will enter the
market. Habesha has set a goal to maintain greater than a 50 percent market share.

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4.3 Service Business Analysis

The popularity of the Internet is growing rapidly. Those who are familiar with the
Internet are well aware of how fun and addictive surfing the Net can be. Those who
have not yet experienced the Internet, need a convenient, relaxed atmosphere where
they can feel comfortable learning about and utilizing the current technologies. Habesha
seeks to provide its customers with affordable Internet access in an innovative and
supportive environment.

Due to intense competition, cafe owners must look for ways to differentiate their place
of business from others in order to achieve and maintain a competitive advantage. The
founders of Habesha realizes the need for differentiation and strongly believes that
combining a cafe with complete Internet service is the key to success. The fact that no
internet-cafes are established in Hawzien, presents Habesha with a chance to enter the
window of opportunity and enter into a profitable niche in the market.

5 Marketing Strategy and Implementation Summary

Habesha has three main strategies. The first strategy focuses on attracting novice
Internet users. By providing a novice friendly environment, Habesha hopes to educate
and train a loyal customer base.

The second, and most important, strategy focuses on pulling in power Internet users.
Power Internet users are extremely familiar with the Internet and its offerings. This
group of customers serves an important function at Habesha. Power users have
knowledge and web-browsing experience that novice Internet users find attractive and
exciting.

The third strategy focuses on building a social environment for Habesha customers. A
social environment, that provides entertainment, will serve to attract customers that
wouldn't normally think about using the Internet. Once on location at Habesha, these
customers that came for the more standard entertainment offerings, will realize the
potential entertainment value the Internet can provide.

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5.1 SWOT Analysis

The SWOT analysis provides us with an opportunity to examine the internal strengths
and weaknesses Habesha must address. It also allows us to examine the opportunities
presented to Habesha as well as potential threats.

Habesha has a valuable inventory of strengths that will help it succeed. These strengths
include: a knowledgeable and friendly staff, state-of-the-art computer hardware, and a
clear vision of the market need. Strengths are valuable, but it is also important to realize
the weaknesses Habesha must address. These weaknesses include: a dependence on
quickly changing technology, and the cost factor associated with keeping state-of-the
art computer hardware.

Habesha's strengths will help it capitalize on emerging opportunities. These

opportunities include, but are not limited to, a growing population of daily Internet
users, and the growing social bonds fostered by the new Internet communities. Threats
that Habesha should be aware of include, the rapidly falling cost of Internet access, and
emerging local competitors.

5.1.1 Strengths
 Knowledgeable and friendly staff. We've gone to great lengths at Habesha
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 Habesha experience includes access
to state-of-the-art computer equipment. Our customers enjoy beautiful flat
screen displays, fast machines, and high-quality printers.
 Clear vision of the market need. Habesha knows what it takes to build an
upscale internet cafe. We know the customers, we know the technology,
and we know how to build the service that will bring the two together.

5.1.2 Weaknesses
 A dependence on quickly changing technology. Habesha is a place for people
to experience the technology of the Internet.
 The technology that is the Internet changes rapidly.

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 Product lifecycles are measured in weeks, not months. Habesha needs to keep
up with the technology because a lot of the Habesha experience is technology.
 Cost factor associated with keeping state-of-the-art hardware. Keeping up with
the technology of the Internet is an expensive undertaking.
 Habesha needs to balance technology needs with the other needs of the
business.
 One aspect of the business can't be sacrificed for the other.

5.1.3 Opportunities
 Growing population of daily Internet users. The importance of the Internet
almost equals that of the telephone.
 As the population of daily Internet users increases, so will the need for the
services Habesha offers.
 Social bonds fostered by the new Internet communities.

 The Internet is bringing people from across the world together unlike any
other communication medium.

 Habesha will capitalize on this social trend by providing a place for smaller
and local Internet communities to meet in person.

 Habesha will grow some of these communities on its own by establishing

chat areas and community programs. These programs will be designed to
build customer loyalty.

5.1.4 Threats
 Rapidly falling cost of Internet access. The cost of access to the Internet for
home users is dropping rapidly.
 Internet access may become so cheap and affordable that nobody will be
willing to pay for access to it. Habesha is aware of this threat and will closely
monitor pricing.
 Emerging local competitors. Currently, Habesha is enjoying a first-mover
advantage in the local internet-cafe market. However, additional competitors
are on the horizon, and we need to be prepared for their entry into the market.
Many of our programs will be designed to build customer loyalty, and it is
our hope that our quality service and up-scale ambiance won't be easily
duplicated.

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5.2 Strategy Pyramid

The following subtopics provide an overview of Habesha's three key strategies.

5.2.1 Attract Novice Internet Users

Habesha's first strategy focuses on attracting novice Internet users. Habesha plans on
attracting these customers by:

 Providing a novice friendly environment. Habesha will be staffed by

knowledgeable employees focused on serving the customer's needs.
 A customer service desk will always be staffed. If a customer has any
type of question or concern, a Habesha employee will always be available
to assist.
 Habesha will offer introductory classes on the Internet and email. These
classes will be designed to help novice users familiarize themselves with
these key tools and the Habesha computer systems.

5.2.2 Attract Power Internet Users

Habesha's second strategy will be focused on attracting power Internet users. Power
Internet users provide an important function at Habesha. Habesha plans on attracting
this type of customer by:

 Providing the latest in computing technology.

 Providing scanning and printing services.
 Providing access to powerful software applications.

5.2.3 Social Hub

The third strategy focuses on building a social environment for Habesha customers. A
social environment, that provides entertainment, will serve to attract customers that
wouldn't normally think about using the Internet. Once on location at Habesha, these
customers that came for the more standard entertainment offerings, will realize the
potential entertainment value the Internet can provide.

5.3 Competitive Edge

Habesha will follow a differentiation strategy to achieve a competitive advantage in the
cafe market. By providing Internet service, Habesha separates itself from all other cafes

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in Hawzien. In addition, Habesha provides a comfortable environment with coffee and

bakery items, distinguishing itself from other Internet providers in Hawzien.

5.4 Marketing Strategy

Habesha will position itself as an upscale coffee house and Internet service provider. It
will serve high-quality coffee and specialty drinks at a competitive price. Due to the
number of cafes in Hawzien, it is important that Habesha sets fair prices for its coffee.
Habesha will use advertising as its main source of promotion. Habesha will give away
three free hours of Internet use to beginners who sign up for an introduction to the
Internet workshop provided by Habesha.

5.4.1 Promotion Strategy

Habesha will implement a pull strategy in order to build consumer awareness and
demand. Initially, Habesha has budgeted 25,000 ETB for promotional efforts which will
include advertising with coupons for a free hour of Internet time in local publications
and in-house promotions such as offering customers free Internet time if they pay for
an introduction to the Internet workshop taught by Habesha's computer technician.

Habesha realizes that in the future, when competition enters the market, additional
revenues must be allocated for promotion in order to maintain market share.

5.4.2 Pricing Strategy

Determining a fair market, hourly price, for online use is more difficult because there is
no direct competition from another internet-cafe in Hawzien. Therefore, Habesha
considered three sources to determine the hourly charge rate. First, we considered the
cost to use other Internet servers, whether it is a local networking firm or a provider
such as Ethio telecom. Internet access providers use different pricing schemes. Some
charge a monthly fee, while others charge an hourly fee. In addition, some providers
use a strategy with a combination of both pricing schemes. Thus, it can quickly become
a high monthly cost for the individual. Second, Habesha looked at how internet-cafes
in other markets are pricing Internet access. Third, Habesha used the market survey
conducted in the fall of 2016. Evaluating these three factors resulted in Habesha's hourly
price nine ETB.

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5.5 Sales Strategy

As a retail establishment, Habesha employs people to handle sales transactions.
Computer literacy is a requirement for Habesha 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.
Habesha's commitment to friendly, helpful service is one of the key factors that
distinguishes Habesha from other Internet cafes.

6 Management Plan
Habesha is owned and operated by Efrem gebrewahid,Gebreyowhans Hailekiros,
Gebriye Embafresu and Zenebe Gebreyohans. The company, being small in nature,
requires a simple organizational structure. Implementation of this organizational form
calls for the owners, to make all of the major management decisions in addition to
monitoring all other business activities.

6.1 Personnel Plan

The staff will consist of seven part-time employees working twenty five hours a week
at 25 ETB per hour. In addition, one full-time technician (who is more technologically
oriented to handle minor terminal repairs/inquiries) will be employed to work forty
hours a week at 40 ETB per hour. This simple structure provides a great deal of
flexibility and allows communication to disperse quickly and directly. Because of these
characteristics, there are few coordination problems seen at Habesha that are common
within larger organizational chains. This strategy will enable Habesha to react quickly
to changes in the market.

7 Financial Plan
The following section lay out the details of our financial plan for the next three years.

7.1 Start-up Funding

This business plan is prepared to obtain financing in the amount of 36,000 ETB. The
supplemental financing is required to begin work on house rent, equipment purchases,

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and to cover expenses in the first year of operations. Additional financing has already
been secured as follows:

 47,000 ETB of personal savings from owners

 80,000 ETB in the form of short-term loans

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