06.10.2020

Internet Cafe Business Plan

Every business starts with research and planning. The main purpose for writing a business plan is to get aware of those things that you might not have known or thought of yet. Depending on your case, you might be interested in devising a gaming lounge business plan or an eSports arena business plan. As these are very close to the concept of Internet cafe we offer to use this as a template, expanding it with additional points where necessary. Besides, in this article you will find many useful information to assist you on the way.

Executive summary

Starting an internet cafe business can be a challenging task, especially if you lack entrepreneuring experience. However, devising a business plan will greatly facilitate you along the way. First of all, it will help you to gather many important information and facts, come up with a variety of internet cafe business ideas, decide on the format, consider pros and cons of this business, and even think about its future development. When getting down to work, the first questions coming to your mind might be whether it is a profitable business, how much does it cost to open an Internet cafe or what equipment do you need to start an internet cafe? This article probably won't furnish you with a full answer, rather it will give you a general description of internet cafe business, while adding more questions for you to consider.

Internet cafe business overview

An Internet cafe (also cybercafe) is by no means new, yet a still relevant idea. The service of providing the public with a PC along with access to the Internet for a charge has been in expanding request since a long time ago. The first online cafe was launched in 1988 in Seoul and had only two 16-bit-computers connected to the online system of networks. Today internet cafes can be found all around the globe, while their purpose has evolved from basic webmail and instant messaging to multiplayer gaming. Since modern games often require modern computers and expensive gadgets more and more gamers prefer shared-access models over personal ownership.

Depending on location, target audience, and social agenda of the proprietors, cybercafés come in a wide range of formats and can be quite a profitable business. Internet cafes also appear as gaming lounges, cybersports arenas, or PC bangs - equipped with VR headsets, gaming consoles like Xbox and Playstation, and broadcasting eSports tournaments on a big screen.

The majority of the entrepreneurs, engaged in this field are men of 22 - 50 years old, who understand computers at the level between the advanced user and system admin. Most of them also enjoy playing online games, keep abreast of new developments in the realm of computers and gaming equipment, be up to date with the latest developments in the cyber industry, follow the news about gaming teams and tournaments. As a rule, these people don’t have a wage job. Their work is focused on Internet cafes, gaming lounge business, bets, and sometimes other related businesses. Usually, these people start with a small budget and gradually increase their income.Those who managed to properly organize their business and make a profit, begin to open a chain of Internet cafes, some sell franchises.

On rare occasions, there are businessmen, possessing entrepreneurial experience from other projects, with a million-turnover, who open Internet cafe out of curiosity and desire to try something new. In this case, they invest a lot of money at once. Often, these business owners are interested in holding tournaments in specially equipped cyber arenas.

There are also those who don't know anything about this kind of business, rather they’ve been told that opening an Internet cafe business is a way to make money easily and fast.

No matter which group you belong to if you are considering launching an Internet (cyber) cafe you will need to devise a business plan. Hereby we introduce an example of an internet cafe business plan, which can be modified according to your geographies and goals.

esports gamer plays games at cyber arena

Pros & Cons of starting an Internet Cafe

Before establishing a business it is always useful to make up a list of advantages and disadvantages. We have gathered some of them, which are relevant for an Internet cafe business, yet keep in mind, that it might look different in each case, depending on the particular market and the entrepreneurial experience of yours.

Cons:

  1. Business works 24/7. In practice this means that as an entrepreneur you have to be constantly in touch to solve problems that may arise (e.g., violation of the rules by clients, various unforeseeable situations etc.) At least in the beginning you need to be fully involved in order to understand the specifics of the business, the target audience, identify weak spots etc. It is also necessary to be aware of the latest innovations in the field of gaming and eSports.
  2. It is difficult to scale the business. Internet cafe business has its limits. Once a company is launched, pays back and starts to bring net profit, there are just a couple of options to scalet: either to sell franchises or open a network of Internet cafes. You can establish a business and get a stable income, yet it will always remain at the same level.
  3. Regular update/replacement of equipment. Each product has its life cycle. Since computers in Internet cafes are used constantly, their wear and tear happens way faster. Besides regular maintenance, cleaning, and minor repairs of the computers, it is necessary to completely replace the equipment every 2-4 years. First of all, because of its wear and secondly, due to outdated parameters. Every year new games are released, increasing the requirements to the computer components - processor, video card, memory etc. Fast and powerful computers are one of the reasons why gamers visit cyber cafes. Thus, if you do not update the equipment, you risk to lose part of the target audience.

Pros:

  1. Low budget needed for start. Compared to other businesses, cyber cafes are generally simple to set up. Main costs for launching an Internet cafe comprise computers, monitors and consoles. An average business with 15-20 computers, will require between $30,000 and $50,000. This is a rather small budget for business, which in time will bring you regular income.
  2. Payback after 12 months (average). Cyber cafe business, you can quickly setup and configure all the processes, provided you thought everything through and made preliminary calculations. The payback of such a business can take from 9 to 14 months. Then you get a net income and can plan to expand. Of course, everything depends on your particular case, and if you add a bar and kitchen in parallel, then it may take more time.
  3. Little competition. 15 years ago, when Internet cafes were very popular, there was a big competition. There were many cybercafes where one could go, and there were a few or no empty seats. Today, the focus has shifted, as everyone has a computer at home. Cyber cafes are made for the atmosphere, community, and a possibility to play on professional PCs. The second wave of popularity of cybercafes has just begun, yet still few competitors, which makes it possible to quickly attract the target audience to your place. At the same time, more tournaments are being held every year.
  4. Combination with other types of business. As a rule, the main service of your business will be providing access to the Internet, and/or new games on PCs and consoles. In addition, you can expand your business with related services. If you decided to start a cybercafe business you might face the situations when some of your clients ask for photocopies, printing documents, photos, etc. By simply buying a printer-scanner you can get additional income, while it will also be useful in the daily work of the cybercafe. Also, when players spend more than 3-4 hours in the Internet cafe, they need at least one break to eat and drink. Thus, building a coffee area will bring extra income and allow your clients to spend more time in your cybercafe.

What products and services cybercafe business provides?

When devising a business plan for your Internet cafe it is helpful to distinguish between the primary and additional services.

Primary service – within this section think of the core service that your cyber cafe company provides. Is it good connection to the Internet, gaming facilities, possibility to use expensive software for a small price, or an equipped coworking space? Pick out one thing that will serve as a pillar for your business, think of it as your unique selling proposition (USP).

While choosing a core service mention in your business plan the impact that it will cause. Speculate on how your customers’ life will be affected by the service(s) that you provide? Maybe you make people happy, satisfied, productive, entertained. You help the local community to stay connected with the rest of the world and fulfil their goals by the help of Internet connection / modern computers / gaming facilities etc.

It might be that your core service will be focused on eSports. This field is getting more and more popularity, encouraging e-Sports schools being opened around the world. With this regard, many cybercafes nowadays also provide separate rooms for training eSports teams.

Additional products/services. Now time to brainstorm further. Make up a list of accompanying services that will be offered in your Internet (cyber) cafe and one-by-one write about the impact they are supposed to make for your customers. You can also use the items that were mentioned above, yet were not defined as a primary service. Additionally, you can include the following options to your service list:

  • Cafe serving beverages / snacks / healthy meals
  • Copy center services
  • Private working space (rooms)
  • Kicker, darts, etc.

Once your list of primary and additional services is ready keep it at hand. The next step would be to define their prices. Easily said, but this task will require thoughtful consideration. Besides checking the prices of your competitors and willingness of customers to pay, you will also need to count your expenses and comply with financial goals you set. You should also observe the habits of your customers, and possibly introduce a dynamic pricing scheme (when prices are flexible and depend on the day time and demand). You should also consider introducing system of discounts, special offers for loyal customers etc.

Comparison to competitors

Check your competitors, define their market share, strong and weak spots. This will then help you to find your position or niche on the market, as well as set more realistic goals on sales and profit.

Why should customers choose you over your competitor? This question is very important for defining your unique selling proposition (USP), discovering the pillars of your internet cafe. Check the list below, pick the points that are relevant for your case and expand if necessary.

  • Upscale equipment (laptops, computers, printers, scanners, headsets, consoles (Xbox, Playstation), gaming mice, professional keyboards, additional gadgets- VR glasses, Gaming wheels, controllers etc.)
  • Comfortable gaming chairs
  • Fast and reliable Internet & Wi-Fi hotspots
  • Besides state-of-the-art hardware the computers will also come with professional software (e.g., Adobe Cloud Programs) and gaming platforms (e.g., Steam). Upon customer request, the Internet cafe business can also acquire a license for a particular software.
  • Possibility for open space and private working rooms/cabins
  • Convenient (central, unique, extraordinary) location
  • Fair prices, convenient booking system and payment options, bonuses, client discounts etc.
  • Open 24/7

Internet cafe business plan introduction

Business name. Give your internet cafe a name. Be creative, make sure it fits into the whole picture of your business concept. Double-check that it’s different from those of your competitors and easy to remember for your customers. Here you can also consider buying a franchise. In this case, you will build your institution based on the existing internet cafe business model which proved its success. Basically, you will get a ready-to-use guide on how to open an Internet cafe, which will save you time, resources and efforts. However, keep in mind that along with convenience and support that you get as franchisee, you are limited to a certain level in strategic and managerial decisions. Thus, for experienced and ambitious entrepreneurs, nurturing novel and fresh business ideas in mind, franchising won’t be a suitable option.

Legal business structure. Every business is a legal unit with a specific structure. Think of yours. Will it be a sole proprietorship or a partnership, Limited Liability Company (LLC) or a corporation? Are there any investors involved? While choosing a structure for your business consider such impacting factors as flexibility, complexity, control, permits, licenses, taxes and other regulations.

Brief description of what your business does. Here you should be able to explain in a nutshell your business concept.

Mission. Besides making profit your internet cafe first of all should serve a public good. Think of those social solutions that you bring. Your cybercafé can, for example, fulfill the following missions:

  • It provides an easy, reliable, safe and affordable access to the Internet.
  • It serves a meeting place for sharing online experiences.
  • It accommodates a creative and comfortable environment for people to learn, work, play and relax.

What problem does your Internet cafe solve for your customers? Possible answers here might be the following:

  • bad PCs at home that do not allow people to play at maximum settings or in the latest games;
  • no privacy at home (parents/ partner or children interfere, etc.)

Think of any other relevant points, depending on your case. Maybe it is also useful to conduct a focus group to identify other customer needs.

What results does your internet café create?

  • Customers get things done by means of having a quick, reliable safe and affordable access to the Internet
  • Customers enjoy being in a creative environment, using affordable upscale equipment for their studies, work, gaming or entertainment
  • Customers are happy to have another place for making friends and connections, while sharing their online experiences.

Think of any other relevant points, depending on your case.

How does your internet cafe create those results? By means of providing necessary equipment (computers, software and access to the Internet) in comfortable premises at a convenient location, offering other services (e.g., food & drinks, open-space and private rooms) to meet customer needs and ensure best-in-class user experience.

Who does your company serve? Again, think of your Personas. Which customer cluster reflects the main target audience? Are these travelers, students, professionals, gamers etc.? What is their average age? What are their core needs? It is important to remember that the choice of business model and related services will change the target audience, and vice versa. As a rule, the majority of players in cyber cafes are pupils and students. At the same time the related services a cybercafe provides will directly influence the target audience. In case the cyber cafe also sells alcohol, hookahs, etc., the clients will then be different. You can also expand the target audience by means of equipping your Internet cafe with gaming consoles, e.g. Xbox or Playstation.

Why do you do what you do? Reasons for you to run an internet cafe might be numerous and diverse. Yet try to figure out what it means to you. Maybe you’re an expert in the field of cybercafes or you possess suitable resources for this business. Maybe there is a sharp demand for such a place, but none or little supply. Maybe you yourself belong to the target audience and know the needs of the customers as no one else. Or it has always been your dream to own an internet café. Sincere answer to this question will help you to understand your motives and plan more realistically not just in a short term, but in a long-term perspective.

PC and console components for an internet cafe

Internet cafe setup requirements

Think here on your step-by-step plan or proprietary system. List a complex of providers, suppliers, processes, tools, or systems that you own, granting your internet cafe a benefit or competitive advantage. As a basic think of the following:

  • Location (rent or buy or build)
  • Design and renovation of the premises
  • Supply of furniture (tables, chairs, sofas, bean bag chairs) and equipment (coffee machine, vending machines, etc.)
  • Provider of the Internet
  • Supplier of computers, and other devices
  • Software Licenses
  • Insurance
  • Supply of additional services (drinks, catering)
  • Team - number of employees, their roles, responsibilities, shifts
  • Internet cafe management software

Here it is relevant to remind that provided you go with the franchise option, the proprietary system as well as the main cyber cafe requirements will be provided by franchisor for you to use. Of course, the terms and conditions might be different depending on the agreement, but the fundamental restrictive unit for the beginning you will get in most of cases.

What are your objectives? (define your goals) Last but not least - schedule your goals. Elaborate some plans regarding sales, revenue and profit you intend to make. Devise a roadmap of future development of your business. Think of your goals in terms of short-and long-time perspectives. Draft them for 1-year, 2-years, 5-years time span or longer. While setting your goals on the paper use the rule of S.M.A.R.T. In other words, keep your goals Specific, Measurable, Achievable, Relevant and Time-bound.

Marketing analysis and strategy

Market analysis

At this stage, make sure to gather as much information about the market, as possible. Invest enough time to research the general state of matters and trends. A useful technique to apply at this stage would be PESTLE analysis. The name stands for the abbreviation of the components of the analysis and is used to scan the following macro-environmental factors - political, economic, social, technological, legal and environmental. When analysing the above mentioned factors, try to identify the elements within each of them, as well as seek to understand what is their business impact. For example, does the current political situation create a solid basis for you to start the internet cafe business? Is the economic condition favourable for introducing your service to the market? Is the society open/ willing to pay for your service etc.? The following table provides the respective questions to assist you in conducting PESTLE analysis.

Element

Factor

(List here all factors that have been identified)

Business Impact

(Think on what impact each of the identified factors has on your business?)

Political

  • What is the level of corruption?
  • At what level is the Rule of Law in the country ?
  • How big are risks from political instability, threat of violence or terrorism in the country?
  • Does it create favourable conditions for leading fair and transparent business?
  • Does it serve as a solid basis for business activity?

Economic

  • What is the level of income in the country?
  • How high is the GDP per capita?
  • Does it create better possibilities for price policy?
  • Does it make favourable conditions for introducing a premium product to the market?

Sociological

  • How much do households spend on entertainment / gadgets / gaming?
  • What is the level of human and intellectual development in the country?
  • What is the average education level in the society?
  • How likely it is that people will pay for your service?
  • What impact it will have on your marketing campaign and key messages?
  • Does it correspond to the service you plan to offer?

Technological

  • What share of the population use the Internet / computers / smartphones / VR?
  • What are the standards of (mobile) Internet in the country?
  • How likely is that people will use the services of Internet (cyber) cafe?
  • What speed of Internet are you able to provide?

Legal

  • How long does it take to start a business?
  • What are the internet cafe legal requirements?
  • What is the level of regulatory quality in the market?
  • How does it affect your plans to open an Internet (cyber) cafe?

Environmental (if applicable)

  • What is the general opinion on sustainability topics of the society?
  • What is the Sustainability Image Score of the country?

How can it be used for the business /services of Internet (cyber) cafe?

Additionally, you can make a SWOT analysis to identify strengths, weaknesses, opportunities and threats for your business.

Market trends & needs

To gather information about your target market turn to statistical data, relevant market reports, professional periodicals, marketing research agencies. While doing your research check the related industries and fields - Online Gaming, Video Streaming, Cyber Security, eSports etc. Also look at associated issues in the respective fields: Internet penetration, number of available commercial wi-fi locations and hotspots, number of Internet users, reasons for using Internet etc.

Some introductory data and insights can be found at statista.com. For example, the eSports market has been consistently developing in recent years. It is expected to grow further in the next 3-5 years. More and more people nowadays come to watch how their favourite games are being played by world recognized gamers. As indicated by the Newzoo there are determined to be 646 million viewers of eSports worldwide by 2023, which is over 30% expansion from the 395 million in 2018.

eSports audience size worldwide 2018-2023 - graphic statistic by statista

The fans are spread over the world, yet the Asia Pacific area is by all accounts a specific hotspot for eSports. In the USA, meanwhile, some 9.2 % of web users in 2019 viewed eSports, with the figure expected to rise to 15.5 % by 2023.

distribution of eSports viewers worldwide in 2019, by region - graphic statistic by statista

As the statistics show every year more and more tournaments are held, bigger audience is attracted. Thus, while planning a cybercafe business one should keep in mind that the majority of gamers also make bets in the field of gaming and eSports.

eSports viewers in United States 2018-2023 - graphic statistic by statista

Internet cafe marketing plan and strategy

Every marketing action - be it a message, flyer, social post or event - is aimed at people. Thus, when devising an internet cafe marketing plan it is crucial to gather as much information about your audience as possible.

Demographics & Psychographics. Define the demographics of your target audience – what is their age, gender, income, place of living etc. Then collect their psychographic characteristics – such as interests, desires, fears etc. In the process of collecting these data you might come up to the fact that there are several groups / clusters of you TA. Use Personas method to differentiate them. This will help you achieve the goal of your marketing campaigns, improve your lead generation and conversion strategy, as well as offer more suitable products/ services to your clients.

Remember, that a slight detail can make a huge difference. What if a significant part of your customers are vegans, environmental activists living a sustainable life? How can you make their experience in your cafe more comfortable - provide vegan snacks, supplying the place with renewable energy sources, equipping it with eco-friendly furniture etc. The variations are endless here. Your task is to identify the factors that will signify the interest and bonds of the customers to your Internet cafe.

Where can you find your clients? Where can you find each of them - online or off-line? Think on which online services and social media they use. Do they actively participate in social media groups, do they read expert magazines or do they attend festivals? The clearer picture you will get on this stage the easier it will be for you on the next steps - when drawing marketing strategy (visibility, lead generation and conversion).

Visibility (awareness) strategy. How people will learn about your Internet cafe - via ads in Google or social media, through paid commercials on TV or in YouTube, by means of influencers, flyers or word-of-mouth? Options and combinations can be numerous. The key factors here are budget and efficacy. You can spend thousands and get zero results, or you can spend almost nothing but hit the target. Look first at the answers from the previous step, identify the channels through which you can reach your audience, compare the prices of the channels. And then build your strategy. Remember, that the advantage(benefit) of digital marketing is that you can test different strategies with relatively low budget, see what works best and then rise the costs. Consider turning to a digital marketing agency if that corresponds to your needs.

Additionally, brainstorm for info drivers and events that can be part of your cybercafe marketing strategy. One of the possible promotion steps for your business can be hosting eSports tournaments.

This step requires much thought and effort. The core question here is “How will you establish contact with potential customers?” It is most likely that you will apply digital tools and online marketing. In this case your lead generation will comprise the following elements: content, SEO, promotion, conversion and analytics. Let’s briefly look into each of these.

lead generation strategy graphic that contain: content, seo, promotion, conversion, analytics strategy lists

Content strategy comes first. This will characterize the story behind your services, the key messages you send to your target audience and, also, the tone of voice in which they will be articulated. The content will be sent through all possible channels you decide for: website, landing pages, emails, social media, blog post as well as Call to Action.

Website strategy. If your internet cafe can't be discovered on the web, then it doesn’t exist. In other words to make your cybercafe visible you need to have a website. Besides raising the rating of your Internet cafe, a website is also an excellent informative tool, that helps to attract more clients from organic search. Generally, a website will build trust to your institution from clients and partners. Thus, if one day you decide to grow by selling cyber cafe franchises, a website will be a big plus.

Promotion strategy as a rule starts nowadays with Social Networks - Facebook, Twitter, Instagram, YouTube, TikTok, Snapchat. Check the most relevant for your type of business. For example, TikTok and Snapchat are the main channels for attracting teenagers, while adults are bound to be found elsewhere. Some question here to help you with the decision are the following:

  • Where can you gather most of your TA (target audience)?
  • Which of those are most efficient with regard to available budget?
  • Which Social Media fits the best to your content strategy and chosen tone of voice?

In case you identify several platforms which are relevant for your internet cafe business it’s then worth trying to try all of them and see which ones work best in your field, region, market. Within your promotion activity you also manage social posts and email communication.

Conversion strategy. Once you’ve got your leads it’s time to convert them into prospects or customers. The method of communication you decide - be it a phone call, email or personal message in social media. Within this stage you should look at the lead nurturing lifecycle and devise a complex of measures to acquire, keep and grow your customers - e.g. outreach programs, loyalty programs, organisation of events, system of upselling, cross-selling etc.

Analytics strategy. The essential part of every strategy are the metrics and indicators that help to measure and analyse the results of the steps having been taken. Principal performance indicators are CTR, CPL, (Website) Rate of Conversion, Leads to qualified leads, Leads per channel etc. All the necessary info regarding these and other indicators can be found in the Internet, thus we shall not focus on them within this article.

What you need to keep in mind however, that analytics is an important task, which you better not skip. Once you identify the cost of a lead from each channel, try to reduce it to a minimum without loss in quality. Check the reports and regularly manage your advertising budget. After six months, compare the figures, analyse the amount of money spent on acquired leads to the quality of these leads.

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