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Blitz Internet Cafe

Proposal

Explain Business logo and name

Business name: Blitz

We form our Business name Blitz, actually its came from one of the unforgettable experience spent with my partner and me, a thunderstorm day my good partner and me are holding an umbrella and walking together on the middle of the field, the sky are dark and full of dark clouds, suddenly we see a long and shine white light are hit the tree in front of us, and the tree are separate with each other. One that time we think that thunder is strongest and fastest weapon in this world, so we form our business name as blitz cause we want our business like the thunder blitz can fight the others competitors in this market and get the top place to let all people in Malaysia can recognizes our company.

Business Plan Proposal

Owners: Lau Kah Seng, Ooi Choon Keong, Tan Si Khai, Ng Qi Han

Business Name: Blitz Internet Café

Address: Lebuh Pekaka 1, Gelugor, 11700, Pulau Pinang

City, State, ZIP: Gelugor, Pulau Pinang, 11700

Telephone: 04-6463634

Cell Phone: 012-4064073

Fax: -

Email: kahsenglau95@hotmail.com

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TABLE OF CONTENT

Title Number of page

Executive Summary 4

Company Summary 7

Services 9

Market Analysis 11

Strategy and Implementation Summary 14

Management Summary 18

Financial Plan 19

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1. Executive Summary

Blitz Internet Cafe, a cyber cafe located in Gelugor, Pulau Pinang, offers a perfect spot for the public in social gathering and leisure. It provides customers free access to the Internet as well as an area for to meet together in a casual environment under an economical manner. The business intends to obtain finance from external equity in the amount of RM500,000 for which the application will be for commencing work on shop renovation, equipment purchases, and as operating cash flow. Preliminary capital injection has already been secured by the initial owners, Lau Kah Seng (RM150,000) and Ooi Choon Keong (RM150,000), Ng Qi Han (RM 100,000) and Tan Si Khai (RM 100,000). Blitz Internet Cafe will be incorporated as a limited liability company. The four initial owners will be the shareholders and their personal liabilities will be subject to a ceiling at the amount of their respective investments. The finance acquired through this business proposal will allow Jedi Café to successfully open and operate as a internet cafe. A comfortable and innovative environment is provided to the customers with a casual atmosphere. Operations in year one will generate Blitz Internet Cafe a regular customer base that will allow it to be self-maintained in year two.

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1.1 Objectives

Blitz Internet Cafe’s objectives for the first year of operation include:

The creation of an exclusive, stylish, innovative environment that will distinguish Blitz Internet Cafe from other coffee shops.

The creation of a comfortable and casual environment that will bring people with different interests and backgrounds together for socialization.

High-quality computer equipment, coffee and bakeries at a reasonable price.

Free access to online services and provide free Wi-Fi.

1.2 Keys to success

The keys to the success for Blitz Internet Cafe are:

The creation of a unique, innovative, good environment that will differentiate Blitz Internet Cafe from other local coffee shops and future Internet cafes.

The establishment of Blitz Internet Cafe as a community center for socialization and entertainment.

The creation of an environment that won't intimidate the novice user. Blitz Internet Cafe 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.

Very few internet cafes at the area.

Potential demand will be high because there are quite some villages in the area.

1.3 Mission

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As Internet has become more popular and grown at an expeditious pace, easy access has become a part of life. Blitz Internet Cafe provides the public free access to the Internet, high-quality computer equipment, food and beverages in a comfortable environment. People from different backgrounds will come to enjoy the exclusive, stylish, and innovative environment that Blitz Internet Cafe offers.

1.4 Risks

The risks involved with Blitz Internet Cafe’s business are:

Insufficient demand for the services provided by Blitz Internet Cafe in Pulau Pinang.

The popularity of the Internet stops to grow. The opening of new cafés in the same area which offers the exact

services

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2. Company Summary

Blitz Internet Cafe, soon to be opened at Gelugor in Pulau Pinang, will provide the public free access to the Internet and a special and innovative environment for enjoying top quality of computer equipment, coffee and bakeries. Individuals of all ages and backgrounds will find Blitz Internet Cafe appealing. The staffs of Blitz Internet Cafe provide not only top quality service but also helpful instructions to customers in computer usage. This educational aspect will attract elderly customers and youngsters who do not own computers at home. The easy access location also provides residents in the same area convenience to their gourmet and online needs.

2.1 Company Ownership

Blitz Internet Cafe will be privately owned by the founder and CEO Lau Kah Seng, and, shareholders Ooi Choon Keong, Ng Qi Han and Tan Si Khai.

2.2 Start-up Summary

Blitz Internet Cafe’s start-up costs will cover renovation, furniture, computers, computer’s equipment, coffee machines and cooking equipment, and running capital to cover expenses in the first year. The equipment provided to Blitz Internet Cafe 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. Besides, the start-up costs will comprise the coffee machines such as one espresso machine, one automatic coffee grinder, and other additional equipment. The shop will also require funds for renovation and modification. Breakdown of the start-up costs is illustrated as follows:

Start-up Costs RM

Legal Fee 1200

Stationeries 1500

Tableware 850

Consultants 2,560

Insurance 900

Rent 1,250

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Coffee Machines 10,000

Bean Grinder 1,020

Computer Systems, Software, Printer, Scanner 30,000

Internet Lines (Unifi 160mb) 2,800

Fixtures/Renovation 25,640

Total Start-up Costs 77,720

Start-up Assets

Running Cash 30,770

Start-up Inventory 2,565

Total Assets 33,335

Total Requirements 111,055

2.3 Company Location

A site has been chosen in Gelugor in Pulau Pinang for the following reasons:

Nearness to the close-by residents. Proximity to stylish, upscale restaurants in the same area. High visibility Near 24 hours shops (7-Eleven, Mc Donald, KFC, Happy Mart)

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3. Services

Blitz Internet Cafe will provide free access to the Internet and computer services such as printing, scanning to customers. It will also provide customers with a unique and innovative environment for enjoying top quality coffee and bakeries.

3.1 Service Description

Blitz Internet Cafe will provide its customers free access to the Internet and common computer software and hardware. Some of the Internet and computing services available to Blitz Internet Cafe’s customers are listed below:

Internet browsers. Laser color printing, copying and scanning. Popular software applications.

Also, top quality food and beverages, and a comfortable environment will provide

Blitz Internet Cafe’s customers with a second home, a place to enjoy the benefits of computing in a comfortable environment.

3.2 Competitive Comparison

Blitz Internet Cafe will be the first cyber café in Pulau Pinang. Blitz Internet Cafe will differentiate itself from the strictly-coffee cafes and others internet cafe in Penang by providing its customers with Internet, computing services, coffees and bakeries

3.3 Fulfillment

Blitz Internet Cafe will obtain its computer hardware from Gadget Zone Computers located in Penang. The installation of the internet will also be provided by the Gadget Zone Computers. Electricity shall be installed by one of the major providers of electricity. At this time, a contract for the bakery items has not been completed, but Blitz Internet Café is currently negotiating with some suppliers to fulfill the requirement.

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3.4 Technology

Blitz Internet Cafe 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. Blitz Internet Café will continue to upgrade and modify the systems to stay with current technologies.

3.5 Future services

In the future Blitz Internet Cafe will be able to expand or improve its services. As Blitz Internet Cafe 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, Blitz Internet Cafe will continue to add new services to keep its customer base coming back for more. The improvement of service however could be possible by providing the customer with additional services such as increase the entertainment equipment – PS4, Xbox One which would attract more customers and make the current customers stay longer

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4. Market Analysis

Blitz Internet Café is facing the opportunity of being the pioneer in the Pulau Pinang cyber café 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 Pulau Pinang.

4.1 Market Segmentation

Blitz Internet Café’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. Blitz Internet Café’s target market falls anywhere between the ages of 13 and 70. 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, Blitz Internet Café’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

Blitz Internet Café’s main intentions are to connect people to the internet, increase their knowledge by having access to sources from all over the world, and to increase their social setting, by a new way of communicating. People will come to this internet café to check their email, socialize with their friends, and gather information not found elsewhere.

4.2.1 Market Needs

Factors such as current trends, addiction, and historical sales data ensure that the high demand for coffee and Internet access will remain constant over the next five years. Further, there is a high demand for people can come to check their email and search the web for information. Also, the customers at the internet café will also enjoy the freedom of accessing different programs like Microsoft Word, Power Point and other applications. Blitz Internet Cafe will enjoy the advantages of name recognition and customer loyalty. Initially, Blitz Internet Cafe will hold a 100 percent share of the cyber café market in Gelugor. In the next five years, competitors will enter the market. Blitz Internet Cafe has set a goal to maintain greater than a 50 percent market share.

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4.2.2 Market Trends

A market survey was conducted recently with key questions asked to fifty potential customers in George town area. Some key findings include:

40 people said they enjoyed free access to the Internet. 44 subjects use the Internet to communicate with others on a daily basis Rm 2 per hour was the most popular hourly Internet fee.

4.3 Service Business Analysis

The retail coffee industry in Penang experienced rapid growth at the beginning of the decade and is now moving into the mature stage of its life cycle. Many factors contribute to the large demand for high-quality coffee in Penang. The climate in Penang is extremely favorable to coffee consumption. Current trends in this high-spending residential area reflect the popularity of fresh and strong coffee.

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

Due to intense competition, café owners must look for ways to differentiate their place of business from others in order to achieve and maintain a competitive advantage. The founder of Blitz Internet Cafe realizes the need for differentiation and strongly believes that combining a café with complete Internet service is the key to success with a great opportunity to enter into a profitable niche in the market.

4.3.1 Distributing a Service

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The dual product/service nature of Blitz Internet Cafe business faces competition on two levels. Blitz Internet Cafe competes not only with coffee shops, but also with Internet service providers. The good news is that Blitz Internet Cafe does not currently face any direct competition from other cyber cafés in the Gelugor market.

Heavy competition between coffee shops in Penang creates an industry where all firms face the same costs. There is a positive relationship between price and quality of coffee. Some coffees retail at RM8.50/cup while other, more exotic beans may sell for as high as RM12.50/cup. Wholesalers sell beans to retailers at an average of a 50 percent discount. For example, a pound of Sumatran beans wholesalers for RM27 and retails for RM54. And as in most industries, price decreases as volume increases.

4.3.2 Competition and Buying Patterns

The main competitors in the retail coffee segment within the same location are Starbucks and KCY Internet Café. These businesses target a similar segment to Blitz Internet Café (i.e. educated, upwardly-mobile students and business people). However, Blitz Internet Cafe will offer substantial computing services and gaming equipment such as PS4 and Xbox One to its customers which these competitors are not providing at the moment.

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5.0 Strategy and Implementation SummaryBlitz Internet Café has three main strategies. The first strategy focuses on

attracting novice Internet users. By providing a novice friendly environment, Blitz Internet hopes to educate and train a loyal customer base.

The second strategy, and most important, strategy focuses on pulling and increasing in power Internet users. Power Internet users are extremely familiar with the Internet and its offerings. This group of customers serves as important function at Blitz Internet Café. 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 Blitz Internet Café customer. A social environment, that provides entertainment, will serve to attract customers that wouldn’t normally think about using the Internet. Once on location at Blitz Internet Café, these customers that came for the more standard entertainment offerings will realize the potential entertainment value the Internet can provide.

5.1 Attracting customersTo attract the intended customers, Blitz Internet Café use different types of advertising to teach each target group. For the adolescents for example some posters could be made. These posters could be placed around places where the adolescents would mainly be present. Places like game-halls and sports club would be perfect for advertising. Another way of attracting the customer is to advertise in the local newspaper. By advertising in the local newspaper the households would get notice of the new Internet Café. This would result in attracting the parents of the adolescents and the middle-aged inhabitants of Penang. These ways of advertising will be stopped after two years. This is because over such a period of time most inhabitants will have noticed the Internet Café and heard about it.

5.1.1 Attract Novice Internet UsersBlitz Internet Café first strategy focuses on attracting novice Internet users. Blitz Internet Café plans on attracting these customers by:- Providing a novice friendly environment. Blitz Internet Café will be staffed by knowledge 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 Blitz Internet Café employee will always be available to serve and assist them.- Blitz Internet Café will offer introductory classes on the Internet and email. These classes will be designed to help novice users familiarize themselves with these key tolls and the Blitz Internet Café computer systems.

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5.1.2 Attract Power Internet UsersBlitz Internet Café second strategy will be focused on attracting power Internet users. Power Internet users provide an important function at Blitz Internet Café. Blitz Internet Café 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.

5.1.3 Social HubThe third strategy focuses on building a social environment for Blitz Internet Café customer. A social environment, that provides entertainment, will serve to attract customers that wouldn’t normally think about using the Internet. Once on location at Blitz Internet Café, these customers that came for the more standard entertainment offerings will realize the potential entertainment value the Internet can provide. For example, customer came for playing computer games or PS4 and Xbox One with good environment and equipment.

5.2 Marketing Strategy

Blitz Internet Cafe will position itself as a stylish coffee house and Internet service provider. It will serve high-quality computer equipment, coffee and specialty beverages at reasonable prices. Due to the number of cafés in Pulau Pinang, it is important that Blitz Internet Cafe sets fair prices for its products and computer service. Blitz Internet Cafe will use advertising as its main source of promotion. Ads placed in food magazines will help build customer awareness. Accompanying the ads will be a coupon for discounted coffee and nice bakeries.

5.2.1 Promotion Strategy

Blitz Internet Cafe will implement a pull strategy in order to build consumer awareness and demand. Initially, Blitz Internet Cafe has budgeted RM5,000 for promotional efforts which will include advertising with food magazines and in-house promotions such as offering customers free drinks. Blitz Internet Cafe realizes that in the future, when competition enters the market, additional revenues must be allocated for promotion in order to maintain market share.

5.2.2 Pricing Strategy

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Determining a fair market for cyber cafe is more difficult because there is no direct competition from another cyber café in Pulau Pinang. Therefore, Blitz Internet Cafe has to base its prices for coffee and specialty drinks on the “retail profit analysis” provided by our supplier, Jenson Coffee, which has been in the coffee business for over 50years and has developed a solid pricing strategy.

5.2.3 Sales Strategy

As a retail establishment, Blitz Internet Cafe employs people to handle sales transactions. Basic computer knowledge and good attitude is a required for Blitz Internet Cafe 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. Blitz Internet Café’s commitment to friendly, helpful service is one of the key factors that distinguish itself from other cyber cafes.

5.2 Competitive EdgeBlitz Internet Café will follow a differentiation strategy to achieve a competitive advantage in the café market. By providing Internet service, Blitz Internet Café separates itself from all other cafes in Penang. In addition, Blitz Internet Café provides a comfortable environment with coffee and bakery items, distinguishing itself from other Internet provides in Penang.

5.3 SWOT AnalysisThis section will focus on the SWOT analysis. The SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. SWOT is an abbreviation for: Strength, Weakness, Opportunity and Threats.

StrengthThe strength that Blitz Internet Cafe will have is its dominant position in the local internet availability. In Penang, the access to internet is very limited however there are some internet cafés which surely will make competing favorably. Secondly, Blitz Internet Cafe should have strength in staying up-to-date with the latest computer software. By keeping the hardware updated with the needed software the customers will enjoy working with the computers present. Staying updated with the newest software is also a cheap 'investment' which again would benefit to the success of the internet cafe.

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WeaknessBesides the strengths each company/business has its weaknesses. Weakness can lead to a decrease of a company's success and development. The weakness of an internet cafe in general is keeping up with the latest hard-ware technology. Staying updated with the latest hardware is not only an expensive investment it is an investment which does not sincerely pays off its prices immediately. Over a period of years such an investment should be needed however it remains expensive.

OpportunitiesAs any other organization an internet cafe has its opportunities. Having certain opportunities offers an organization a possibility to expand their turnover. An opportunity of an internet cafe is that the global population which is requiring access to the World Wide Web is slowly increasing. This increase of internet users should offer the internet cafe a chance to expand the business. Another opportunity from which the internet cafe might benefit is the possibility of a rising demand in the market. This raise would be the outcome of the growing popularity under the inhabitants. Once one is familiar with the World Wide Web one may introduce his or her social environment to the internet. Thereby the popularity of the internet will keep on growing and finally this will reflect in an increasing number of customers for the internet cafe.

ThreatsBlitz Internet Cafe will be one of a few located in the city of Penang. However the internet cafe will face certain threats which can cause a slight decrease in its popularity in the market. One of the threats the cafe will face is the continuous reducing price of the availability of internet itself. Because of the lowering price the internet will become available to a greater population. When this situation occurs more and more people will have an internet connection at their own house. This will make the existence of an internet cafe redundant. Another threat which may threaten the internet-café is the increase of internet-cafés at a local scale. When the consumers get the opportunity to choose from a variety of offers the amount of customers will probably decrease.

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6. Management Summary

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

6.1 Personnel Plan

Blitz Internet Café requires just a handful of employees in order to function. The staff will consist of six part-time employees working thirty hours a week at RM6 per hour. Their job is mainly to support customers with any problems with the computer or internet and next to that they will appoint customer computers. 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 RM8 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 Jedi Café that are common within larger organizational chains. This strategy will enable Blitz Internet Cafe to react quickly to changes in the market.

Employee Monthly salary

Part Timer 1 RM720

Part Timer 2 RM720

Part Timer 3 RM720

Part Timer 4 RM720

Part Timer 5 RM720

Part Timer 6 RM720

Technician RM1280

Total Payroll (8) RM5600

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7. Financial Plan

These are personal financial statements for owners Lau Kah Seng, Ooi Choon Keong, Ng Qi Han and Tan Si Khai. All assets and liabilities are listed.

7.1 Start-up Funding

This business plan is prepared to obtain financing in the amount of RM 500,000. 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. This amount is planned to be repaid by RM40,000 each year by four years.

Owners’ investments have already been secured as follows:

1. RM 150,000 of personal savings from owner Lau Kah Seng.

2. RM 150,000 from the second shareholder, Ooi Choon Keong.

3. RM 100,000 form the third shareholder, Ng Qi Han.

4. RM 100,000 from the fourth shareholder, Tan Si Khai.

5. RM 50,000 in the form of short-term bank loans.

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RM

Start-up Expenses to Fund 77,720

Start-up Assets to Fund 33,335

Total Funding Required 111,055

Assets

Inventory 2,565

Cash Balance 30,770

Total Assets 33,335

Liabilities

Short Term Bank Loans 50,000

Total Liabilities 50,000

Capital

Lau Kah Seng 150,000

Ooi Choon Keong 150,000

Ng Qi Han 100,000

Tan Si Khai 100,000

Total Planned Investment 500,000

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7.2 Projected profit and loss

Profit and Loss

Sales

Estimated customers

Hourly fee

Coffee

Snack

Total Sales

Expenses

Payroll

Technicianl

staff

Legal Fee

Rent

Insurance

Marketing/Promotion

Posters

Furniture

Stationeries

Tableware

Electronics

Coffee Machines

Bean Grinder

Year 1

10,000

RM2

RM6

RM2

RM100,000

RM15,360

RM51,840

RM1,200

RM15,000

RM900

RM420

RM1500

RM850

10,000

1020

Year 2

15,000

RM2

RM6

RM2

RM150,000

RM15,360

RM51,840

RM1,200

RM15,000

RM900

RM420

-

-

-

-

Year 3

20,000

RM2

RM6

RM2

RM250,000

RM15,360

RM51,840

RM1,200

RM15,000

RM900

RM420

-

-

-

-

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Other expenses

Computer Systems,

Software, Printer,

Scanner

7.2 Projected profit and loss

Other expenses

Internet Lines (Unifi 160mb)

Fixtures/Renovation

Additional unexpected expenses

Total Expenses

Total Sales

Total Expenses

Profit

RM30,000

RM 33,600

RM25,640

RM1,000

RM188,330

RM100,000

RM188,330

RM-88,330

-

RM 33,600

-

RM1,000

RM119,320

RM150,000

RM119,320

RM30,680

-

RM 33,600

-

RM1,000

RM119,320

RM200,000

RM119,320

RM80,680

* more than 50 customers a day

*40 computers running 3 hours on a daily basis and 7 hours stand-by

7.3 Break-even analysis

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According to our calculations the expected break-even date will after 1051

days of the second year.

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Daily Profit RM30,680 / 365 = RM84.05

Total Loss 1st year RM 88,330

Loss divided by daily profit RM 88,330 / RM84.05= 1051 days

Conclusion After 1051 days in the second year break-even will be accomplished.

8. Appendix

8.1 Graph

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8.2 Blitz internal Design