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Cafe - Internet Cafe
Business Plan

JavaNet Internet Cafe

1.0 Executive Summary
Highlights
2.0 Company Summary
3.0 Services
4.0 Market Analysis Summary
5.0 Strategy and Implementation Summary
5.1 SWOT Analysis
5.1.1 Strengths
5.1.2 Weaknesses
5.1.3 Opportunities
5.1.4 Threats
5.2 Strategy Pyramids
5.2.1 Attract Novice Internet Users
5.2.2 Attract Power Internet Users
5.2.3 Social Hub
5.3 Competitive Edge
5.4 Marketing Strategy
5.4.1 Pricing Strategy
5.4.2 Promotion Strategy
5.5 Sales Strategy
5.5.1 Sales Forecast
Sales Forecast
Sales Monthly
5.6 Milestones
Milestones
Milestones
6.0 Management Summary
7.0 Financial Plan
 
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5. Strategy and Implementation Summary
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5.0 Strategy and Implementation Summary[back to top]

JavaNet has three main strategies. The first strategy focuses on attracting novice Internet users. By providing a novice friendly environment, JavaNet 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 JavaNet. 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 JavaNet 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 JavaNet, these customers that came for the more standard entertainment offerings, will realize the potential entertainment value the Internet can provide.

5.1 SWOT Analysis[back to top]

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

JavaNet 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 JavaNet must address. These weaknesses include: a dependence on quickly changing technology, and the cost factor associated with keeping state-of-the art computer hardware.

JavaNet'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 JavaNet should be aware of include, the rapidly falling cost of Internet access, and emerging local competitors.

5.1.1 Strengths[back to top]
  1. 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.
  2. 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.
  3. Up-scale 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.
  4. 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.
5.1.2 Weaknesses[back to top]
  1. A dependence on quickly changing technology. JavaNet is a place for people to experience the technology of the Internet. The technology that is the Internet changes rapidly. Product lifecycles are measured in weeks, not months. JavaNet needs to keep up with the technology because a lot of the JavaNet experience is technology.
  2. Cost factor associated with keeping state-of-the-art hardware. Keeping up with the technology of the Internet is an expensive undertaking. JavaNet 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[back to top]
  1. 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 JavaNet offers.
  2. Social bonds fostered by the new Internet communities. The Internet is bringing people from across the world together unlike any other communication medium. JavaNet will capitalize on this social trend by providing a place for smaller and local Internet communities to meet in person. JavaNet 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[back to top]
  1. 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. JavaNet is aware of this threat and will closely monitor pricing.
  2. Emerging local competitors. Currently, JavaNet is enjoying a first-mover advantage in the local cyber-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.
5.2 Strategy Pyramids[back to top]

The following subtopics provide an overview of JavaNet's three key strategies. Strategy pyramid graphics are presented in the appendix of this plan.

5.2.1 Attract Novice Internet Users[back to top]

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

  • Providing a novice friendly environment. JavaNet 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 JavaNet employee will always be available to assist.
  • JavaNet 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 JavaNet computer systems.
5.2.2 Attract Power Internet Users[back to top]

JavaNet's second strategy will be focused on attracting power Internet users. Power Internet users provide an important function at JavaNet. JavaNet 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[back to top]

The third strategy focuses on building a social environment for JavaNet 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 JavaNet, these customers that came for the more standard entertainment offerings, will realize the potential entertainment value the Internet can provide.

5.3 Competitive Edge[back to top]

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.

5.4 Marketing Strategy[back to top]

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.

5.4.1 Pricing Strategy[back to top]

JavaNet bases its prices for coffee and specialty drinks on the "retail profit analysis" provided by our supplier, Allann Brothers Coffee Co., Inc. Allann Brothers has been in the coffee business for 22 years and has developed a solid pricing strategy.

Determining a fair market, hourly price, for online use is more difficult because there is no direct competition from another cyber-cafe in Eugene. Therefore, JavaNet 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 America Online. 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, JavaNet looked at how cyber-cafes in other markets such as Portland and Ashland went about pricing Internet access. Third, JavaNet used the market survey conducted in the Fall of 1996. Evaluating these three factors resulted in JavaNet's hourly price of five dollars.

5.4.2 Promotion Strategy[back to top]

JavaNet will implement a pull strategy in order to build consumer awareness and demand. Initially, JavaNet has budgeted $5,000 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 JavaNet's computer technician.

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

5.5 Sales Strategy[back to top]

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.

5.5.1 Sales Forecast[back to top]

Sales forecast data is presented in the chart and table below.

Sales Forecast
 199920002001
Unit Sales   
Coffee (based on average)12,01514,06815,475
Specialty Drinks (based on average)6,6547,9138,705
Email Memberships8,70410,50511,556
Hourly Internet Fees38,27046,36551,002
Baked Goods (based on average)32,67342,15046,365
Total Unit Sales98,316121,002133,102
    
Unit Prices199920002001
Coffee (based on average)$1.00$1.00$1.00
Specialty Drinks (based on average)$2.00$2.00$2.00
Email Memberships$10.00$10.00$10.00
Hourly Internet Fees$2.50$2.50$2.50
Baked Goods (based on average)$1.25$1.25$1.25
    
Sales   
Coffee (based on average)$12,015$14,068$15,475
Specialty Drinks (based on average)$13,308$15,826$17,409
Email Memberships$87,038$105,053$115,558
Hourly Internet Fees$95,676$115,913$127,505
Baked Goods (based on average)$40,841$52,688$57,956
Total Sales$248,878$303,548$333,903
    
Direct Unit Costs199920002001
Coffee (based on average)$0.25$0.25$0.25
Specialty Drinks (based on average)$0.50$0.50$0.50
Email Memberships$2.50$2.50$2.50
Hourly Internet Fees$0.63$0.63$0.63
Baked Goods (based on average)$0.31$0.31$0.31
    
Direct Cost of Sales   
Coffee (based on average)$3,004$3,517$3,869
Specialty Drinks (based on average)$3,327$3,957$4,352
Email Memberships$21,759$26,263$28,890
Hourly Internet Fees$23,919$28,978$31,876
Baked Goods (based on average)$10,129$13,067$14,373
Subtotal Direct Cost of Sales$62,138$75,782$83,360

Sales Monthly

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5.6 Milestones[back to top]

The JavaNet management team has established some basic milestones to keep the business plan priorities in place. Responsibility for implementation falls on the shoulders of Cale Bruckner. This Milestones Table below will be updated as the year progresses using the actual tables. New milestones will be added as the first year of operations commences.

Milestones

Click to Enlarge

Milestones
      
MilestoneStart DateEnd DateBudgetManagerDepartment
Business Plan1/1/19982/1/1998$1,000Cale BrucknerAdmin
Secure Start-up Funding2/15/19983/1/1998$1,000Cale BrucknerAdmin
Site Selection3/1/19983/15/1998$1,000Cale BrucknerAdmin
Architect Designs4/1/19985/1/1998$1,000Cale BrucknerAdmin
Designer Proposal4/1/19984/15/1998$1,000Cale BrucknerAdmin
Technology Design4/1/19984/15/1998$1,000Cale BrucknerAdmin
Year 1 Plan6/1/19986/5/1998$1,000Cale BrucknerAdmin
Personnel Plan7/1/19987/10/1998$1,000Cale BrucknerAdmin
Accounting Plan7/1/19987/5/1998$1,000Cale BrucknerAdmin
Licensing9/1/19989/15/1998$1,000Cale BrucknerAdmin
Totals  $10,000  

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