RIFTVALLEY UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF BUSINESS MANAGEMENT
MBA PROGRAM

PROJECT OF ENTRPRENUERSHIP
BUSINESS PLAN ON INTERNET-CAFÉ

Prepared by: ID No

1. Kubsa Abdulaziz Ebrahim ………………………….0219/2013

February, 2022
Harar, Ethiopia
Name Of business: Minnesota Internet-Café
Business Owner: Mr Kubsa Abdulaziz
Type of Business: Private Company
Address: Harar
Year of the Plan: 2014 to 2020
 Table of Content
Content Page No
1.0 Introduction ................................................................................................................................ 1
Objectives ........................................................................................................................................... 1
Mission ................................................................................................................................................ 1
Keys to success.................................................................................................................................... 2
Risks .................................................................................................................................................... 2
2.0 Company summary ..................................................................................................................... 2
Company Ownership........................................................................................................................... 3
Start-up Summary ............................................................................................................................... 3
Company locations and facilities ........................................................................................................ 3
3.0 Services ....................................................................................................................................... 4
Services description ............................................................................................................................ 4
Competitive Comparison .................................................................................................................... 4
Fulfilment ............................................................................................................................................ 4
Technology .......................................................................................................................................... 5
Future services .................................................................................................................................... 5
Market Analysis................................................................................................................................... 5
4.0 Target Market Segment Strategy ................................................................................................ 5
4.1 Promotion Strategy ....................................................................................................................... 5
4.2 Market needs ................................................................................................................................ 6
4.3 market segmentation.................................................................................................................... 6
5.0 Strategy and implementation summary ........................................................................................... 7
5.1 Strategy pyramids ...................................................................................................................... 7
4.1.1 Attract novice internet users .......................................................................................... 7
4.1.2 Attract power internet users .......................................................................................... 7
4.1.3 Social hub ........................................................................................................................ 8
5.2 SWOT analysis ........................................................................................................................... 8
4.1.4 Strength........................................................................................................................... 8
4.1.5 Weakness ........................................................................................................................ 8
4.1.6 Opportunities .................................................................................................................. 9
4.1.7 Threats ............................................................................................................................ 9
6.0 Management summary .................................................................................................................. 9

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 6.1 Personnel plan ............................................................................................................................ 9
6.2 Financial plan .............................................................................................................................. 10
7.0 Start-up funding ........................................................................................................................... 10
7.1 Projected profit and loss ............................................................................................................. 10
7.2 break-even analysis..................................................................................................................... 11
7.3 Cash Flow ................................................................................................................................. 12
7.4 Balance sheet .............................................................................................................................. 12

Projected Balance Sheet........................................................................................................... 12

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1.0 Introduction

This is the business plan of MBA students created to help starting an internet-cafe. This
business plan is part of our project for our entrepreneurship course at RVU Harar Campus.
At first the task was to create a business plan for Minnesota internet-café. This internet-café
was established in 2013EC to give many several services for RV University Harar campus
students, employees, staff workers and other customers who live in Harar town and guests.
The task which we got appointed was to create a business plan for an
Internet-cafe. In this business plan we have tried to make a plan to realize the internet-cafe
and keep it running while making some profit.
Furthermore this business plan will show how the internet-cafe itself will be built and
realized. And what the expected costs and upkeep costs will be.

Objectives
Minnesota internet-café objectives include:
1. Educating the community that nearby RVU Harar campus and other Harar town
peoples on what internet has to offer.
2. Good coffee, tea and other delicious food items with reasonable price.
3. Affordable access to the resources of internet and other online services.
4. The creation of a unique, upscale and innovative environment that will differentiate
Minnesota internet-café from local coffee houses.

Mission
 As the popularity of internet continues to grow an exponential rate,
easy and affordable access is becoming a necessity of life.
 Minnesota internet-café provides communities with the ability to
access the internet, enjoy a cup of coffee and soft drinks and share
internet experiences in a comfortable environment.
 To make the internet available to a greater population.
 People of all ages and backgrounds will come to enjoy the unique,
educational and innovative environment that Minnesota provides.

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 Keys to success
The keys to the success for Minnesota provides:
 The creation of unique, innovative, upscale atmosphere that will
differentiate Minnesota from another coffee shops and future internet-
café.
 The establishment of Minnesota as a community hub for socialization
and entertainment.
 The creation of an environment that will not intimidate the notice user.
Minnesota will position itself as an educational resource for
individuals wishing to learn about the benefits the internet has to offer.
 Great hot drinks (coffee, tea…) and soft drink items.

Risks
The risk involved with starting Minnesota is:
 Will the popularity of the internet continue to grow?
 Will there be a profit?
 Will there be enough demand for my product, will there be enough
interest in it?
 Won't we go bankrupt due to lack of interest?

2.0 Company summary

The internet-cafe which will be realized will offer all customers easy and affordable access to
the internet. The internet-cafe will appeal to individuals of all ages and backgrounds.
Minnesota will provides customers with a unique and innovative environment for enjoying
great coffee, specialty beverages (soft drink) and other items.
The instructional internet classes, and the staff that the internet-cafe 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.

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Company Ownership

Minnesota is a private corporation (company). Kubsa Abdulaziz, the founder of Minnesota, is

the major owner. Mr Kubsa a graduate of Addis Ababa University has an undergraduate
degree in Management and he give minority stock positions for all private investors.

Start-up Summary

The Minnesota cafe will have seating for 6 patrons. The rent is 2,000 birr a month, with a ten
year lease available. The site consists of 500 square feet of leased space consisting of an
internet room, a coffee bar and a storage room in back.

Start-up expense details:

6 computer 4500 birr each 27,000 birr

1 commercial printer 4200 birr
1 commercial scanner 4000 birr
8 chairs 400 birr each 3200 birr
8 computer stands 300 birr each 2100 birr
1 air-conditioner 1500 birr
Labour for fixing the computer and furniture 900 birr
Automatic coffee machine 11,500 birr
Electricity 950 birr
Internet + router 450 birr
Water 750 birr
Total 56,550 birr

Company locations and facilities

The site where the internet-cafe will be located was already decided
before the making of this business plan. The location is Harar. This site was chosen for
various reasons
Those reasons are:
1. Proximity to RV University Harar Campus.
2. Proximity to the town entrance.

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 3. High visibility.
4. Low cost rent for rooms.
3.0 Services
The internet-café:

1. Will grant the customers access to the internet and World Wide Web.
2. Will provide the opportunity to use the scanner and printer
3. Will provide basic computer classes.

Services description
The internet-cafe 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
Minnesota customers are listed below:
 Access to external POP3 email accounts.
 FTP, Telnet and other popular Internet utilities will be available.
 Access to Internet Explorer browser or other browsers.
 Laminating, scanning and printing services.
 Access to popular software applications like Microsoft Word, Adobe
Photoshop and other often used applications.
Next to these computer services, the internet-cafe will provide the
Possibility to attain computer courses. During these courses the costumer can learn how to
use a computer and learn some possibilities, including web surf in

Competitive Comparison
The internet-cafe which will be located near the School of RV University will not be the first
internet-cafe to settle in Harar. We expect that there are more internet-cafes in Harar
however; we do not think many cafes will be present that gives such affordable services.

Fulfilment
The internet-cafe will obtain its computer hardware from local stores which can be found in
or in the neighbourhood of robe. The installation of the internet will also be provided by the
local resources.

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 Technology
The internet-cafe will be providing its customers with computers which will be up to date
with today’s system requirements. The computers will be able to provide the customers with
a variety of application to serve their needs. These applications will mainly be the mainly
used ones which everyone will be familiar with such as Microsoft Office.

Future services
In the future the internet-cafe will be able to expand or improve its services. When expanding
the needed amount of hardware should be purchased however what should be kept in mind is
how far the internet-cafe will be able to expand. The location may not be big enough to
provide an excessive expansion of hardware. The improvement of service however could be
made possible by providing the customer with additional services.
A drink- and/or snack machine could be purchased for satisfying the customer, which would
attract more customers and which could make the current customers stay longer.

Market Analysis
 The main goal of any business is to make a profit by providing services. To
achieve this however, certain requirements have to be met,
 What is the average price?
 How can a profit be achieved?
 What does the market want?
4.0 Target Market Segment Strategy
Our main purposes are:
 To build customer awareness and demand.
 To connect people to the internet.
 Increase their knowledge by having access to sources from all over the world.
 To increase their social setting, by a new way of communicating.
People will come to this internet-cafe to check their email, socialize with their friends (like
Facebook, viber, WhatsApp, etc.), and gather information not found elsewhere.

4.1 Promotion Strategy

Minnesota will implement a pull strategy in order to build customer awareness and
demand. Initially, Minnesota has budgeted 10,000 birr for promotional efforts which will
include advertising with coupons for a free hour of internet time in a 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 Minnesota computer technician.

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

4.2 Market needs

Harar region firstly needs an internet-cafe since there is a small amount of Internet-cafe’s
present in the robe area. So there is a high demand for an internet-cafe where people can
come to:
 Check their email and search the web for information.
 Also, this cafe is designed to be an additional source of income for a local school like
RV University Harar Campus, which is a need for the school itself.
The customers at the internet-cafe will also enjoy the freedom of accessing different
programs like Microsoft Word and other applications.

4.3 market segmentation

Since our internet-cafe is situated in a Harar region in Ethiopia, we expect the population to
increase and decrease with the same speed. Therefor we can state and use the population
pyramids to predict the amount of Customers that would be suitable for our market, by
looking at the Average growth and applying this to the market, we can predict how many
customers we will get.
As can be seen, mainly the age groups between 15 and 40 have the largest growth. This is our
main target market; therefore we can make an estimated growth of about 1.6% customers per
year. We make an assumption of around 500 customers a year, mainly being university
students and business people, looking for an opportunity to go online and explore the World
Wide Web.

Market analysis
Potential customers growth 2014 2015 2016 CAGR
University students 3% 500 550 700 3.00%
Office workers 2% 250 300 320 2.00%
Seniors 4% 600 740 800 4.00%
Teenagers 1% 100 150 200 1.00%
Others 0% 600 600 600 0.00%
Total 2.48% 2050 2340 2620 2.48%

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5.0 Strategy and implementation summary
Minnesota has three main strategies.
 The first strategies focus on attracting novice internet users. By providing a
novice friendly environment, Minnesota 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 Minnesota. Power users
have knowledge and web-browsing experience that novice internet users find
attractive and exciting.
 The third strategy focus on building a social environment for Minnesota
customers. A social environment, that provides entertainment, will serve to attract
customers that wouldn’t normally think about using internet. Once on location at
Minnesota, these customers that came for the more standard entertainment offering,
will realize the potential entertainment value the internet can provide.

5.1 Strategy pyramids

The following subtopics provide an overview of Minnesota three key strategies. Strategy

pyramids graphics are presented in the appendices of this plan.

4.1.1 Attract novice internet users

Minnesota first strategy focuses on attracting novice internet users. Minnesota plans on
attracting these customers by:
 Providing a novice friendly environment. Minnesota 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 Minnesota employee will always be available to assist.
 Minnesota will offer introductory classes on the internet and email.
4.1.2 Attract power internet users
Minnesota second strategy will be focus on attracting power internet users. Minnesota 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.

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 4.1.3 Social hub
The third strategy focus on building a social environment for Minnesota customers. A social
environment, that provides entertainment, will serve to attract customers that wouldn’t
normally think about using internet. Once on location at Minnesota, these customers that
came for the more standard entertainment offering, will realize the potential entertainment
value the internet can provide.

5.2 SWOT analysis

This 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.
4.1.4 Strength
The strength that the internet-café will have is:
 Its dominant position in the local internet availability.
 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 cheap 'investment' which
again would benefit to the success of the internet-café.
4.1.5 Weakness
Besides 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-café 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.

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 4.1.6 Opportunities
As any other organisation an internet-café has its opportunities. Having certain
opportunities offers an organisation a possibility to expand their turnover. An opportunity of
an internet-café 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-café a chance to
expand the business.
 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-café.
4.1.7 Threats
The internet-cafe will be one of a few located in the city of robe.
However the internet-café 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:
o 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.
o The increase of internet-cafe’s at a local scale. When the consumers get the
opportunity to choose from a variety of offers the amount of customers will probably
decrease.
6.0 Management summary
Minnesota is owned and operated by Mr. Kubsa Abdulaziz. The company being small in
nature, requires a simple organizational structure. Implementation of this organizational form
calls for the owner, Mr. Kubsa, to make all of the major management decisions in addition to
monitoring all other business activities.

6.1 Personnel plan

The internet-cafe requires just a handful of employees in order to Function. In total the
internet-cafe will count a staff of a least two persons. These two can be divided in two
groups. At first there is one teachers which will be spending his/her time teaching customers

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and children how to manage handling a computer. Besides these teaching employees there is
another group of employer.
These employer will fulfil the role of supporting staff. Their job is Mainly to support
customers with any problems and next to that they will Appoint customers computers.

Personnel plan Monthly salary

Teacher 1 2000 birr
Supporting staff member 1 1500 birr
Total 3500r

6.2 Financial plan

The financial plan will cover the following:

 Required Cost of Start-Up

 Profit and Loss
 Cash Flow
 Balance Sheet

7.0 Start-up funding

The internet-cafe will not have the pleasant condition of a start-up fund.
Thereby the internet-cafe should be self-providing and also earn back the made costs.

7.1 Projected profit and loss

Profit and loss Year 1 Year 2 Year 3

Sales
Estimated custom 2050 2340 2620
Hourly fee 8 birr 10 birr 10 birr

Total sales 65,545 birr 68,900 birr 70,230 birr

Expenses
Payroll
Teacher 24,000 birr 24,000birr 24,000birr
Supporting staff 18,000 birr 18,000 birr 18,000 birr

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Marketing/promotion
Posters 150 birr 100 birr 50 birr
Advertising 5000 birr - -
Furniture
Chairs 3200 birr - -
Computer stands 21,000 birr - -

electronics
Scanner 4000 birr - -
Printer 42,00 birr -- -
Computers 27,000 birr - -

Other expenses
Computer electricity** 950 birr 950 birr 950 birr
Internet 1600 birr 1600 birr 1600 birr
Additional unexpected 3500 birr 3500 birr 3500 birr
expenses

Total expenses 107,608 birr 48,150 birr 48,100 birr

Total sales 85,545 birr 92,900 birr 93,230 birr

Total expenses 107,608 birr 48,150 birr 48,100 birr
Profit -22,063 birr 44,750 birr 45,130 birr

7.2 break-even analysis

According to our calculations the expected break-even date will after 180
days of the second year.

Daily profit 44,750 birr/365 = 122.60 birr

Total loss first year 22,063 birr
Loss divided by daily profit 22,063 birr/122.60 birr = 180 days
Conclusion After 180 days in the second year

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 Break-even will be accomplished.

7.3 Cash Flow

Cash flow data is presented in the table below.

Table: Cash Flow

Cash received 2014EC 2015EC 2016EC

Cash from operations
Cash sales 248,878 birr 303,548 birr 333,903 birr
Subtotal cash from operations 248,878 birr 303,548 birr 333,903 birr
Additional cash received
Sales tax, VAT received - - -
New current borrowing 2000 birr 5000 birr -
Subtotal cash received 250,678 birr 308,548 birr 333,903 birr
Expenditures
Expenditures from operations
Cash spending 14,345 birr 15,972 birr 17,218 birr
Payment of accounts payable 224,30 birr 282,485 birr 302,556 birr
Subtotal spent on operations 238,705 birr 298,457 birr 319,773 birr
Additional cash spent
Principal repayment of current 9290 birr 2000 birr -
borrowing
Long term liabilities principal 9600 birr 5000 birr 4800 birr
repayment
Sub total cash spent 257,595 birr 305,457 birr 324,573 birr
Net cash flow 6,717 birr 3,091 birr 9,330 birr
Cash balance 17,283 birr 20,374 birr 29,704 birr

7.4 Balance sheet

Projected Balance Sheet
Our project balance sheet is presented in the table below.

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Table: Balance Sheet

Assets 2014EC 2015EC 2016EC

Current Assets
Cash 50,523 birr 74,987 birr 98,459 birr
Inventory 475 birr 650 birr 958 birr
Other Current Assets - - -
Total Current Assets 50,998 birr 75,637 birr 99,417 birr
Long-term Assets - - -
Accumulated Depreciation - - -
Total Long-term Assets - - -
Total Assets 50,998 birr 75,637 birr 99,417 birr
Liabilities and Capital
Accounts Payable 23,050 birr 27,345 birr 30,289 birr
Current Borrowing 5,000 birr 9050 birr 15,000 birr
Subtotal Current Liabilities 28,050 birr 36,395 birr 45,289 birr
Long-term Liabilities 30,450 birr 18,580 birr 11,200 birr
Total Liabilities 58,500 birr 54,975 birr 55,489 birr
Paid-in capital 85,000 birr 85,000 birr 85,000 birr
Retained Earnings 97,890 birr 93,600 birr 87,200 birr
Earnings 12,000 birr 18,900 birr 24,890 birr
Total Capital 15,450 birr 9400 birr 31,100 birr
Total Liabilities and Capital 55,489 birr 59,000 birr 70,150 birr
Net Worth 15,450 birr 9400 birr 31,100 birr

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KEY TERMS:
Cash Flow Balance Sheet Personnel POP3
VAT (Value add tax) SWOT Novice Social hub
Segmentation Strategy Pyramids Market
Technician Promotion Target Technology
Competitive WWW Delicious Facilities
Location dwellers Objectives Risks
Mission Vision Company Start-up

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