Prepared by: Name Id
1 Wondosen Tesfaye RAMIT/1595/05
2 Tesfalidet Shambel RAMIT/1575/05
3 Yonatan Ayana RAMIT/1607/05
4 Tsehay Gudeta RAMIT/1592/05
5 Temesgen Ayana RAMIT/1569/05
6 Yalemzewede Ambaw RAMIT/1599/05
7 Tigist Markos RAMIT/1585/05
8Zerihun Wondu RAMIT/1617/05
9 Temesgen Tona RAMIT/1572/05
10 Sendu Teshome
RAMIT/1782/05
11 Birtkuan Gemechu
RNS/082/01
Group: - 6
Section: - B
Submitted to:-Lecturer Amlake M.
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1. Executive summary
Sunlight internet café is an internet establishment focusing on providing the
community with a social, educational, entertaining, atmosphere for
worldwide communication.
Sunlight will provide services such as access to email, www, FTP, and other
internet application for the community inside campus.
The primary market for Sunlight is the university student population, which
normally has a turnover/growth of approximately 15% each year. The
secondary market is the university faculty employee. The project is
proposed to be located at Arbaminch University main campus, in Ethiopia.
Sunlight internet café will be founded by the group G3comp05. The group
will be new to business, and they are not that much experienced.
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. The capital is secured in the form of loan from bank and
personal savings.
2. Business Description (Concept)
2.1 purpose of the venture & nature of the venture
(business)
In its most basic form, Internet Café is a business that provides access to
the internet via desktop computers and earns revenue based on usage. The
café itself is usually a single room. Many cafes provide printing services in
addition to internet access. Sunlight start-up costs will cover renovation,
furniture, computers, coffee machines and cooking equipment, and running
capital to cover expenses in the first year.
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The equipment provided to Sunlight customers with high-speed connection
to the Internet forms a large portion of the start-up costs. These costs will
include computers, two laser printers and a scanner.
Startup summary will be:-
Start-up Costs birr
Legal Fee 642
Stationeries 642
Tableware 642
Consultants 2,565
Insurance 900
Rent 1,853
Coffee Machines 13,718
Bean Grinder 1,020
Computer Systems (x11), Software, Printer, Scanner
31,167
Internet Lines 1,077
Fixtures/Renovation 25,642
Total startup cost 79,868
Startup Assets
Running cash 30,770
Startup inventory 2,565
Total Assets 33,335
Total requirements 113,203
2.2 Objectives of the venture
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Sunlight seeks to achieve the following goals:
Providing student high speed internet access
The creation of a unique, upscale, innovative environment
Affordable access to the resources of the Internet and
other online services.
Educating the community on what the Internet has to offer.
The formation of an environment that will bring people
with diverse interests
2.3 Distinctive competency of the firm (business)
Sunlight will be the first Internet cafe in AMIT main campus. It will
differentiate itself from internet cafe in AMIT by providing its
customers with coffee services.
[Link]
3.1 Functions & nature of the products or services
Sunlight will provide its customers with full access to the Internet and
common computer software and hardware. Some of the Internet and
computing services available to the future internet-café 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 browser.
Access to laser and color printing.
Access to popular software applications like Adobe Photoshop and
Microsoft Word.
Next to these computer services, the internet-café will provide the
possibility to attain computer courses. During these courses the costumer
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can learn how to use a computer and learn some possibilities, including web
surfing.
3.2 Characteristics services
Sunlight will obtain computer support owner, and Internet access from
Ethiotelecom. EthiotelecomCompanywill provide the Internet connections,
network consulting, and the hardware required. The owner will provide
Sunlight with paper supplies and other. Electricity shall be provided by the
campus.
3.3 How it is used ( it is make)
Sunlight 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. Sunlight 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.
3.4 Expansion or Diversification plans for the
products or services
In the future the internet-café will be able to expand or improve its services.
When expanding the needed amount of hardware should bepurchased
however what should be kept in mind is how far the internet-café will be
able to expand.
The location may not be big enough toprovide an excessive expansion of
[Link] improvement of service however could be made possible by
providingthe customer with additional services. A drink- and/or snack
machinecould be purchased for satisfying the customer, which would
attract morecustomers and which could make the current customers stay
longer.
4 Market Research & Analysis
4.1 Potential customers
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The main potential customer of sunlight internet café is university student,
and employee in the campus. Sunlight target potential customers falls
anywhere between the ages of 16 and 70.
4.2 Market segmentation strategies
Sunlight 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.
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, Sunlight Café’s target market can be divided into more specific
market segments. The majority of these individuals are students and
employees of the campus.
Potenti Growt Year Year Year
al h 1 2 3
custom
er
Student 5% 20,00 2121 2040
s 0 0 0
Employ 3% 1000 1030 1060
ee
Other 1% 500 505 510
4.3 Competitors
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Based on the current intelligence, there is no private company that provide
internet café service for community in the campus. No single company is
known to be employing a concept of establishing a single point of presence
on the Internet for consumers to claim returns. The current situation allows
the Sunlight to gain the first-mover advantage and build entry barriers for
any possible new entrants. Sunlight will offer substantial computing
services to its customer which these competitors are not providing at the
moment.
The fact that no internet cafes are established in campus, presents Sunlight
with a chance to enter the window of opportunity and enter into a profitable
niche in the market. Sunlight will be the first Internet cafe in campus.
4.4 Assumptions about the new venture
4.4.1 Sales forecasts
Sales: Internet sales were estimated by calculating the total number of
hours each terminal will be active each day and then generating a
conservative estimate as to how many hours will be purchased by
consumers.
Cost of Sales: The cost of Internet access is paid to Ethiotelecom
Computers for networking fees. The cost of e-mail accounts is greater
than half of the selling price.
Sales forecast Year 1 Year 2 Year 3
unit sales
Hourly Internet 53,844 64,990 71,490
Fees
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Email 40,135 48,350 49,706
Memberships
Coffee 20,420 26,344 23,182
Total unit 114,399 139,684 144,378
sales
Unit price
Internet fee 2.60 2.60 2.60
Email 3.20 3.20 3.20
Memberships
Coffee 2.60 2.60 2.60
Sales
Hourly Internet 138,063 166,642 183,308
Fees
Email 128,639 154,970 159,315
Memberships
Coffee 52,361 67,549 59,443
Total 319,063 389,161 402,066
Direct cost of
sales(based on
average)
Hourly Internet 34,515 41,659 45,827
Fees
Email 32,161 38,744 39,829
Memberships
Coffee 13,090 16,888 14,862
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Subtotal direct 79,766 97,291 100,518
cost
5. Market plan
5.1. Market Strategy to compete
Sunlight will position itself as upscale Internet service provider. It will
serve high-speed internet access at competitive prices. Sunlight sets
fair prices for its products. Sunlight will use coupon as its main source
of promotion. Advertisements placed in food magazines will help build
customer awareness.
5.2. Pricing system
Determining a fair market, hourly price, for online use is more difficult
because there is no direct competition from another internet café in
campus. Therefore, Sunlight considered different 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 [Link] Internet
access provider’s use charge monthly fee. Second, Sunlight looked at how
internet cafes in other markets such as Arbaminch city went about pricing
Internet. Evaluating these two factors resulted in Sunlight hourly price of 9
birr.
5.3. Promotional mix
Sunlight will implement a pull strategy in order to build consumer
awareness and demand. Initially, Sunlight has budgeted 1,000 birr for
promotional efforts. Sunlight 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. Distribution channels
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Sunlight service will be directly delivered to customers.
5.4 . Services and/ or Warranties
It is important to note that during the interaction process with consumers,
Sunlight does not ask for or tries to obtain consumer's credit card numbers.
The company therefore avoids consumer security concerns and substantially
limits its possible liabilities.
5.5 Marketing leadership
With the growing trend of mobile computing from handheld devices,
phones, laptops and netbooks, it's no wonder Internet café franchises are
becoming more and more popular. And as wireless Internet makes it
convenient to surf the web while enjoying a smoothie, cup of coffee or a
quick snack, owning an Internet cafe franchise is an opportunity to embrace
the digital age and add your own unique flavor to it.
6 Manufacturing or operation plan
6.1 Facilities
Sunlight is currently housed in a 5,000 square foot office in Cambridge,
Massachusetts. Thecompany has an option through its current landlord on
an additional 20,000 square feet ofcontiguous space which will carry it
through its second full year of operations. Sunlight provides different
facilities such as mobile card, CDs, Sun disk Flash, external hard disks and
software applications. It also provide parking facilities.
6.2 Inventory needed & management
Inventory will be limited to material such as computer, scanner, printer and
network bandwidth. Network bandwidth supplied by Ethotelecom Company
with monthly fee. Other raw materials will be provided Sunlight owners as
required.
6.3 Human Resources Requirement
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The venture, being small in nature, requires a small number of employees.
The staff consist of two employees and one technician who is more
technologically oriented to handle minor terminal repairs/inquiries.
6.4 Operation process
Major processes are flow-charted in the Sunlight’s websites that are geared
to providing quality and responsive services to clients as well as efficient
and effective operations .This includes sufficient internet access are
providing during the peak periods to make sure customers are served in a
timely manner.
6.5 Legal issues
Sunlight has allocated 1,440 for insurance for the first year. As revenue
increases in the second and third year of business, Sunlight intends to
invest more money for additional insurance coverage.
7 Leadership (Entrepreneurial teams)
7.1 Profiles of founders & management roles
Sunlight is owned and operated by group called G3compo5. The company,
being small in nature, requires a simple organizational structure.
Implementation of this organizational form calls for the owner group,
G3comp05, to make all of the major management decisions in addition to
monitoring all other business activities.
7.2 Contribution of the personnel to the venture
The staff will consist of two employees working thirty hours a week. 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.
8. Financial Documentation
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This business plan is prepared to obtain financing in the amount of 61,539.
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. This amount is planned to be repaid by 15,385 each year
by four years.
Start-up Expenses to Fund 79,859
Start-up Assets to Fund 33,335
Total Funding Required 113,193
Assets
Inventory 2,565
Cash Balance 30,770
Total Assets 33,335
Liabilities
Short Term Bank Loans 11,911
Funds Needed to Raise 61,539
Total Liabilities 73,450
Capital 39,744
8.1 Income & Expenses Statement
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Payroll Expense: The founder of sunlight, the owner, will receive a salary
of 30,770 birr in year one, 33,847 birr in year two, and 37,231 birr in year
three. Sunlight intends to hire two employees by the end of year one at
7/hour and a full-time technician at 12birr/hour.
Rent Expense: sunlight is leasing a 400 square foot facility. The agreement
sunlight signed specifies that we pay 2,565 birr/month for a total of 36
months. At the end of the third year, the lease is open for negotiations.
Utilities Expense: Sunlight also pay for different utilities.
Marketing Expense: 43,270 birr for promotional expenses over the first
year. These birr will be used for advertising in local newspapers in order to
build consumer awareness.
Insurance Expense: sunlight has allocated 1,440 for insurance for the first
year. As revenue increases in the second and third year of business.
Taxes: sunlight is AMIT campus and, as an entity, it is not taxed.
Profit and loss Year 1 Year 2 Year 3
Sales 319,062 389,159 402,065
Direct cost of sales 79,766 97,290 100,537
Gross margin 398,828 486,449 502,582
Expenses
119,604 156,185 165,711
Payroll
Promotion 43,270 51,283 55,129
Rent 30,770 30,770 30,770
Utilities 11,693 11,693 11,693
Depreciation 14,309 14,309 14,309
Startup cost 8,315 0 0
Insurance 7,693 7,693 7,693
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Total Expenses 235,654 271,933 285,305
Income before tax 3,647 19,940 16,247
and interest
Interest expenses 2,981 1,885 1,411
Tax 100 2,709 2,226
Net profit 6,548 24,534 19,884
8.2 Cash flow:-
Cash flow Year1 Year2 Year3
Cash in flow
Cash from operation
Cash sales 319,062 389,159 402,065
Subtotal cash from 319,062 389,159 402,065
operation
Additional cash in
flow
Capital investment 39,744 0 0
Short term bank 11,911 0 0
loan
Long term bank 61,539 0 0
loan
Subtotal cash 432,256 389,159 402,065
inflow
Cash outflow
Cash outflow from 375,732 359,504 375,145
operation
Repayment of short 11,911 0 0
term loan
Long term 15,385 15,385 15,385
liabilities
repayment
Subtotal cash 403,028 374,889 390,530
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outflow
Net cash flow 29,228 14,270 11,535
Cash balance 29,228 43,498 55,033
8.3Balance Sheet Statement
Year 1 Year 2 Year 3
Balance sheet
Asset
57,236 42,927 28,618
Fixed asset
Current asset
Cash 29,228 43,498 55,033
Total Asset 86,464 86,425 83,651
Liabilities
Long term 46,154 30,770 15,385
liabilities
Total liabilities 46,154 30,770 15,385
Net asset 40,310 55,655 68,266
Equity
Capital 39,744 39,744 39,744
Retained 566 15,911 28,522
earnings
Total liabilities
and capital 40,310 55,655 68,266
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8.4Break- even Analysis.
Break-even analysis
Monthly units break-even 7,294
Monthly revenue break-even 18,462
Assumption
Average per-unit revenue 2.53
Average per-unit variable cost 9
Estimated monthly fixed cost 13.847
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