Do you want to start an internet cafe business? If YES, here is a complete guide to starting an internet cafe business with NO money and no experience.
Okay, so we have provided you an in-depth sample internet cafe business plan template. We also took it further by analyzing and drafting a sample internet cafe marketing plan backed up by actionable guerrilla marketing ideas for internet cafes. In this article, we will be considering all the requirements for starting an internet cafe.
What is an Internet Cafe?
Internet Cafe, often called Cyber Cafe, is a place that provides customers with hi-speed internet access, other computer services and variety of PC games. This business deals with internet time that can be sold per hour or minute and sometimes longer to customers.
Why Start an Internet Cafe Business?
This lucrative business is popular in the world of business people, travelers and tourists, but it also finds frequent customers in teenagers and adults who spend a lot of time playing computer games. Internet cafes also offer food and drinks to increase profits and to create a meeting place that customers want to return to.
When planned very well, this business has the potential of bringing in steady profits. First you have to start with creating a business plan for your internet cafe. Start by stating the types of computer services and food and drink items you hope to offer your customers.
Don’t forget the benefits of registering the business and don’t forget to apply for a business license through the county clerk’s office or by contacting your local small business administration office. You also need to buy business insurance to protect your business from unforeseen situations. Business insurance may include property, product and general liability to help cover the costs of damage to property, computer equipment or costs associated with a lawsuit or settlement.
We suggest you lease a commercial real space large enough to accommodate computer stations, lounge areas, inventory storage and counter space for cash registers. Local commercial real estate agents can help you find available locations. Then buy equipment such as computers, keyboards, mouse and mouse pads, computer tables, chairs and comfy furniture for lounge areas.
You will also need to get additional computer equipment such as routers, a main computer to use as a server, computer virus software and computer product licenses (if offering online games to customers). You will really benefit from this business financially if you plan your business accordingly, as you can decide to charge by the minute, by the hour or by gaming session.
Read on as we explain extensively the various processes of starting and running a lucrative internet cafe business in the United States.
Starting an Internet Cafe Business – A Complete Guide
- Industry Overview
This business is one of the very few businesses that strive handsomely irrespective of the change in world trends, especially when the business is well located e.g. airports, campus, public facilities or hotels et al. A lot of industry establishments usually provide snacks and drinks, hence the café in the name. In an internet café, fee for using a computer that is connected to an internet facility is usually charged at a time-based rate. Reports have it that the internet café or cyber cafe phenomenon in the United States started in July 1991 by Wayne Gregori in San Francisco when he began SFnet Coffeehouse Network.
He built and installed 25 coin operated computer terminals in coffeehouses throughout the San Francisco Bay Area. The café terminals dialed into a 32 line Bulletin Board System that offered an array of electronic services including FIDOnet mail and, in 1992, Internet mail. The first public commercial American Internet café was started by Jeff Anderson in August 1994, at Infomart in Dallas, Texas and was named The High Tech Cafe. It opened the door for three other internet cafés to be subsequently opened in the East Village neighbourhood of New York City: Internet Cafe opened by Arthur Perley, the @ Cafe, and the Heroic Sandwich.
Industry statistics has shown that this industry is large and there is hardly any airport that you won’t find an internet café that you can either connect your gadget through their Wi-Fi or log on to their computer to surf the net while you wait for your flight; although a lot of industry players prefer to build their call centres in places where they can maximize profits. This business will always remain relevant on this computer age and one good thing about starting an internet café business is that, aside from the fact that people will come in to browse the internet; you can also generate enough income by engaging in the sale of coffee and snacks.
You need to strategically position the business and you will be amazed at the rate people would troop to your café, not only those that want to browse the internet, but also those who may just want to hang out with friends over a cup of coffee and snacks.
Market Feasibility and Research
Demographics and Psychographics
The internet is the fire that shapes our world, and people without their own portable PCs and those who cannot afford the cost of private internet access need to use the internet on a frequent basis. These individuals will have to turn to internet cafes to pay for internet access. This explains why internet cafes are very popular in most parts of the world. Starting this business is a very easy way to generate solid financial returns, but it can backfire if you do not choose the correct systems or adopt the right approach.
One of the things that make businesses breakeven is the number of customers that patronize them per time. The target market for the internet cafe industry is all encompassing because of their service offerings. Below are the people and organizations that you can specifically market your services to;
- Corporate organizations (basically for teleconference and similar web meetings)
- All adults in the locations where the internet café is located
- Students who would need internet facility to fill forms online, to make photocopies and scan documents
- Job applicants who would need to fill online applications and to forward their CVs and documents
- Coffee lovers
- Online gamers
- People with smart phones, tabs and pads who would want to purchase internet bundles and call cards.
Niche ideas in the Internet Cafe Business
Writing a business plan for your internet cafe business has many benefits. A business plan will help you figure out if starting your business will be feasible in the first place. It will help you analyse your market and the competition. This document will serve as your guide through the processes of starting and running your business.
It is very important that you define the services your internet cafe will provide to customers. You have to know if you will be offering add-on services such as printing, photocopying, laminating, faxing, CD/DVD burning, food and drinks, internet phone calls, and so on? Will you be offering wireless internet access to users who have their own PCs with them? But have it in mind that these additional services will need additional costs, but they will be worth the price provided there is decent demand for them.
Level of Competition in Internet Cafe Business
These ever busy cafes are located worldwide, and a lot of people use them when traveling to access webmail and instant messaging services to keep in touch with family and friends. But aside from travellers, in many developing countries Internet cafés are the primary form of Internet access for citizens as a shared-access model is more affordable than personal ownership of equipment. You need to understand that the variation on the Internet café business model is the LAN gaming centre used for multiplayer gaming. We believe that these cafés have several computer stations connected to a LAN. The connected computers are custom-assembled for gameplay, supporting popular multiplayer games. Experts believe that this is reducing the need for video arcades and arcade games, a lot of which are being closed down or merged into Internet cafés.
Reports had also shown that there are also Internet kiosks in public places like public libraries, airport halls, sometimes just for brief use while standing. A lot of hotels, resorts, and cruise ships provide Internet access for the comfort of their guests; this can take various forms such as in-room wireless access, or a web browser that uses the in-room television set for its display (usually in this case the hotel provides a wireless keyboard on the assumption that the guest will use it from the bed), or computer(s) that guests can use, either in the lobby or in a business centre. Just like the telephone service, many mid-price hotels provide Internet access from a computer in the lobby to registered guests without charging an additional fee.
Well-Known Internet Cafes
- Surf n send
- The forest café
- Casa Del Corrigedor
- Café curve
- Café conquet
- The Phlegmatic Dog
- Brain wash
- Box car café
- Télé Centre Polyvalent
Internet cafés are simply a modern version of the traditional café. They started as places for information exchange, and have always been used as places to read the paper, send postcards home, play traditional or electronic games, chat to friends, find out local information. But with the advent of technology and the increasing demand for Internet, a lot of pubs, bars and cafés have terminals, so the distinction between the Internet café and normal café is eroded. We believe that the number of pure Internet cafés is reducing especially since more and more normal cafés offer the same services.
Most Internet cafés are private businesses but a lot have been set up to help bridge the ‘digital divide’, providing computer access and training to those without home access. For example, the British government has supported the setting up of 6000 telecentres. Experts believe that this popularity has helped in establishing a strong demand and a sustainable revenue model for most Internet cafés. But then with the ever growing popularity, there also comes with it a growing responsibility. In fighting for competitive market share, the Internet cafés have started charging less and hence are adopting alternate means to maximize revenue. This includes selling food, beverages, game and telephone cards to its patrons.
Starting your Internet cafe from the scratch or buying a franchise
This business has grown from being just a traditional cafe to a more sophisticated business, which is why buying into a franchise in the Internet cafe industry is far more advisable than starting from the scratch. A franchisee gains more than the right to use a business name: You gain both the advantages of the franchisor’s experience and the business’s formula for success.
It simply means that the franchisor aids you choose the site and negotiate the lease, tells you how to lay out the cafe and where to order furnishings, provides information on what equipment you need to use and what your opening inventory should be, and offers you management and technical training. On the issues of cost, control, expertise, and support, these franchise owners were equally split. A franchise owner incurs more expenses and has less control over her operation, but you gain the experience of the franchisor and other franchisees on what works and what doesn’t.
Possible challenges of Starting an internet cafe
Indeed every successful entrepreneur has made his or her share of mistakes along the road to the top. Here are a few things you should take keen note of before diving into this business venture.
Provide a large range of services
We strongly advice that you not only depend on the revenue from surfing the net as has been the tradition in many internet cafes. You can offer other services such as generating and filling online application forms, photo printing, binding, scanning documents, photocopying, lamination and typesetting. You can as well add some soft drinks and snacks at a later date.
We believe that the key to the success of an internet business is based on where it is located. We suggest you locate it along a busy street to attract walk-in customers or close to a learning institution such as colleges and universities.
Also strive to hook your internet cafe up with a reliable internet connection that can support video streaming without buffering. Speeds of between 2mbps and 5mbps are recommended. Although an unmetered connection is preferred, you can still manage an internet café with a metered internet plan.
Best legal entity for an internet cafe
Choosing the best legal entity for your Internet cafe is one of the major decisions you have to make when starting. But then your decision rests on your individual situation and tolerance for risk. Indeed you can decide to run a successful Internet cafe leveraging any of the available business entity types. You might want to choose between a sole proprietorship and a limited liability company, however, you should consider these differences before you choose.
Forming and running an LLC is more expensive than setting up as a sole proprietorship. But one of the main benefits of starting an internet cafe is the modest upfront investment required. You should know that operating as an LLC can add hundreds of dollars in start-up and maintenance fees to your budget.
A sole proprietorship is a single-owner business by law, so you can’t raise money or resources for your business by selling some of your equity. But an LLC is formed to allow multiple owners. Even if you start off as the sole owner of an LLC, you can bring on partners at any time that can infuse money or resources into the business without needing to change the business structure, but you will have to change your business structure when trying to inculcate a partner as a sole proprietor.
One of the key differences between a sole proprietorship and an LLC is the way business liability is seen and handled. Running your business as a sole proprietorship makes you personally responsible for all business debts and crisis, while an LLC protects owners against personal liability. It all rests on how you set up your Internet cafe, you may be at risk of lawsuits from customers, and if the business can’t pay a judgment, the situation can ruin you financially if you are personally liable.
Troubles and issues
We agree that sole proprietorships are easier to run than LLCs. If you remove the liability factor, sole proprietors have less paperwork to worry about and fewer state and federal obligations. A sole proprietorship may be the best choice if you plan to gradually build up the business and want to spend most of your time on services rather than paperwork.
Catchy business names for an internet cafe
- Eagle Point
- Black Lotus
- Master cafe
- The Surf
- Star cafe
- Clean Internet
- Surf point
- Crimson cafe
- Internet Redemption
In this business you have yourself, your customers, and your premises to protect, and a flexible policy makes this much easier. When you have the right information and advice, you can choose what’s right for you. Insurance and covers you may need may include…
- Public liability insurance
- Employers’ liability insurance
- Public Liability cover
- Employers Liability insurance
- Contents and Stock cover
- Legal Expenses cover
- Employment Practices insurance
Intellectual property protection
Many entrepreneurs feel not the need to protect their investments, thereby failing to take a similar degree of caution with their designs, ideas, and valuable business information – and leave themselves at risk of theft and counterfeiting. But then new adjustments to the law have strengthened the protection of designs in the world, and the introduction of simpler patenting processes have made it easier for small businesses like an internet cafe to look after their IP and intangible assets. Ways to protect your business may include…
- Identify your intellectual property
- Get help to find the right protection
- Watch the competition – and enforce the law
Customers will always want to know that you know what you’re doing and you are capable of doing your job. Having a prominent certification will go a long way to prove to your customers that you are knowledgeable in the industry.
- GeForce certified iCafe partners
- Certified Wireless Security Professional
- CCNA Certification
- TESDA Certification
- MCP Certification
List of legal documents needed to run an internet cafe
First and foremost, an Internet Cafe just like any other type of business needs a basic business license. This can be the paperwork for a sole proprietorship, a limited liability corporation, or any other type of legal set up for a business. An LLC makes a lot of sense because of liability issues that are taken care of, but it is an individual’s choice. Other documents you may need may include…
A lot Internet cafes also operate as coffee houses which is why there may be additional business licenses needed to run the business. Have it in mind that the exact licenses needed can vary from location to location, but almost anywhere some type of specific health license must be received in order to serve food of any kind.
A seller’s license is not always needed in all places, or in all types of Internet cafes. Sometimes they are needed if there are physical products that are sold; some states will seek a seller’s license in addition to all the other business licenses for your Internet cafe to run legally. This is why if the Internet cafe is set up to sell video games, software or any other type of physical equipment, then it would be a good idea to check with the state requirements to make sure you’re fully covered to operate.
Financing your Internet cafe
It is your duty to estimate accurately how much start-up capital you’ll need to start up this business. You have to determine your projected annual expenses and gross income using financial projections. You’ll need to have enough capital to cover both your start-up and operating expenses. If you do not, you will need to take out a loan. Have it in mind that your operating expenses include licenses, permits, insurance, rent or mortgage, a security system, employees’ salaries, computer equipment and software, and professional services such as an accountant or bookkeeper. You can lease equipment or purchase used equipment to save money on operating costs.
- Use Your Own Savings and Assets for Financing
- Family members and friends
- Venture Capitalists
- Angel investors
- Credit Cards
- By using Money broker and finder
Choice of Location
In this business, you will definitely need a location that will attract stable as well as casual customers. Locating near a school or college may attract younger customers, or if you locate near other food cafés or small shops you might be able to catch pedestrians in the area. It could also be advantageous to locate near large hotels where many business travellers stay. We also suggest that you work with an agent experienced in commercial businesses, who will be able to show you properties that might meet your needs.
We also suggest that you carry out research on your potential business location. Start by searching public records on how the location was used previously and statistical data such as the average income in the area. Find out if there are competitors and similar ventures nearby. We also suggest that you observe the area for a few hours and analysis the foot traffic in the neighbourhood. You also have to analyze the demographics of the area. Does the income level match the type of clientele you hope to attract? Your local librarian or commercial real estate broker can help provide this information.
Technical and Manpower requirements
The cost of starting your Internet Cafe rests on the number of client computers and services you plan to offer to your customers. You will definitely need Internet connection (ADSL, Cable etc.), Client computers, Server computer that controls the clients and Networking hardware. Networking hardware is not very expensive, but it still rests on the type of network. If you plan to have wired network type, switch or router, and networking cables will be necessary. If you plan wireless network you will need to have wireless access point or router and wireless network cards for your client computers. If required, you can make a combination of wired and wireless network. But then for Internet Cafes that offer only Internet access office programs, there is no need to buy very expensive computers. But if you hope to offer computer gaming, it is largely advisable that you buy high-end graphic cards and processors.
You also have to be very careful when choosing your Internet provider. An internet café’s Internet connection will most likely need a higher grade, more robust connection than a normal household set up. We advise that you negotiate with the ISP as they may offer special deals for businesses, especially Internet cafés. (You also might want to determine if you need a “static IP” address for Local Area Network (LAN) services and or programs). Also have it in mind that a dynamic IP address will provide a different IP address each time you log on to your computer. Having a dynamic IP address means that you are sharing an IP address with several other customers. You also have to deliberate on your hours of operation, wages and applicable overtime and anti-discrimination laws. Also when hiring employees, we suggest you hire those who not only are technically savvy and have good references, but are also friendly and easy to work with. Make sure to run a background check on each potential employee before hiring.
Hoping that you have your business location and you also have the four client computers set up on the desks and the main server computer too. Now with your internet cables or LAN cables, it’s now time to connect and get them together. You have to start by connecting all the four client computers and the Main server computer to the Network switch or the TP link using the network cables or the LAN cables. You also need to connect the printer to the same network on the TP-link so that it can communicate to all the computers in the network. After that you will then have to install the printer to every computer in the network so that you are able to print from every client station and the main server too.
After you must have had the computers on the same network and if you have the internet on the main server, make it shareable, then the rest of the client computers will have internet access. From the simplest of devices, one can choose to simply plug in a 3G or 4G modem into the main server computer and it will serve the other clients. Alternatively, some d-link or TP-link devices have internet support. You just have to plug the network cable into the network switch and you are done. Don’t forget that security is key for any internet based service. The security can be tightened further in the security settings of your network router. You can contact your network provider for further explanations.
The Marketing plan
Marketing strategies for an internet cafe
Making your business successful involves more than just your ideas and the services that you provide. It is advisable that you pay close attention to the business side of things and learn how to actively promote your business.
- Have unique Business cards
- Gift cards
- Referral programs
- Learn to use the newspapers
- Get your Networking skills together
- Make use of the internet
Winning competitors in the Internet cafe industry
Striving and working hard to win and overtake your competitors is very crucial in running a profitable Internet cafe. For you to remain profitable, you need to gain more customers than they do. Ways to do that may include;
- Be creative
- Use the Internet
- Create an intimid
- Give out free things like free computer related books
- Strive to get new customers and retaining the ones you already have
- Give out punch cards
- Update your marketing strategy
Increasing customer retention in your Internet cafe
The business world revolves around retaining current customers and attracting new clients to help increase money flow and success. This is why you need to analyse your Internet cafes current offerings and service quality to identify areas you can make amends. We believe that some of the options for increasing your income are low-cost, which means they are easy to implement regardless of how much extra cash you have at hand. Other ways to increase customer retention may include…
Keep fresh client computers for your next user
You shouldn’t allow file saving anywhere on client computer hard disk. This is why it is advised you use Internet Cafe software to block ‘Save’ command completely or just allow ‘Save’ in one hard drive partition and make all other partitions invisible for the customer. After client computer is once used, Internet Cafe software has the ability to close all previously opened programs or automatically restarts the client’s computer. In this way it always keeps it fresh for your next customer
Give discounts for selling more login tickets in your Internet cafe
We suggest that you make special pricing plans for your members. Try to give discounted prices to your regular members and they will always come back to your Internet Cafe for your services. We also suggest that you attract new members with discounted pre-paid login accounts. Sell more pre-paid time for lower price.
Extra-charging for special and additional services
A lot of people come to Internet Cafes to use the external hardware offered there, maybe because they are not well equipped at home or they simply do not have these electronic privileges. So if you have an Internet Cafe in a place attractive for tourists or a holiday resort, it is fully recommended to allow transferring data from digital camera to cd or flash drive and charge additionally for these services..
Increasing your Internet cafe Brand Awareness and creating a corporate identity
You need to understand that your brand awareness is what makes you a relevant entrepreneur in any business industry. It is also what makes people know that you exist, what you do and how you do it.
Make your own city network of Internet Cafes
Indeed an Internet Cafe software provides you the ability to network all Internet Cafes via the Internet and share member account database. So with this option, member accounts, created in any networked Internet Café, can be used in all other Internet Cafes. We suggest that you open a few Internet Cafes in different city areas and sell pre-paid tickets everywhere (in Internet cafe, newsagents, hotel receptions etc.). This way your Internet Cafe business will become very popular and citizens will be happy because of the possibility to use the same login ticket whenever and especially wherever they want.
Provide various items to increase your profit
Internet access and computer gaming are the basic services that can be sold in Internet cafes. Apart from these basic services, we suggest you add items common in coffee and small computer shops. We believe that while surfing the web or playing games, people would like to take something. Customers will also appreciate full services like ordering drinks without leaving their seats. Have DVDs and flash drives for your sale so your customers can save downloaded files in your Internet cafe.
Share PC game license on your computers to reduce expenses
Note that all Internet Cafes, even home users are allowed by EULA (end user license agreements) to use only the licensed games or programs on their computers. As a small Internet cafe you may not find it expensive, but a bigger cafe will need to buy 50 licenses in the same game, this is will be a huge expense for your business. But then comes License Key Management option that helps to save money on purchasing license. License Key management service checks the network if there is a license key that is not used and transfer it to the client computer. In this way you can offer the same game to all your client computers with few licensed copies.
Allow multi-player games to increase your membership
We agree that multi-playing is really popular and fashionable these days. Multi-player games can be played over the internet or in local networks. Teenagers and younger children mostly have computers at home and have the ability to play these games over the net. But a lot of them believe it is much more interesting to play multi-player games with the friends at the same location. Allow multi-player games and customers will come to your cafe in groups.