Discover how to capitalize on the growing demand for cyber cafes with our business guide
You should think about the following when starting an internet café:
Do you know what an Internet cafe is??
On Whitfield Street, London, Cyberia opened 17 years ago as the first internet cafe in the UK. The number of such cafés in the country has grown dramatically, with the most remote areas featuring internet access.
Internet cafes, however, face an uncertain future when it comes to their future. Almost 73% of British households are now online, which has led to a reduction in demand for internet cafes, which has been exacerbated by the recent economic downturn and the declining popularity of PC games – which enthusiasts used to play with friends in cafes.
Owner Matthew White of @ Cyber Café in Carlisle, Cumbria, began his business in 2003 by installing 10 workstations. He told us in August 2011 that he was considering reducing his terminal count because footfall and occupancy have declined dramatically.
During the holiday season or if their internet connection is down, we see more people coming in, but the numbers are down. Occasionally we have die-hard gamers, but these people are mature and grown up now. Console gamers are now the majority; not PC gamers.”
In order to survive and grow in this tough market, prospective internet café owners must diversify, offering a variety of services beyond just connectivity. Matthew White diversified into PC repairs around 2006, and since then has diversified into web design, database design, and call-out services. He says that the internet café now represents just 15% of his revenue; without the new revenue streams, he may have been forced to close his business.
Some entrepreneurs prosper by using their internet café to connect with other service providers. Jude Jayasuriya, proprietor of the Sun Internet Café in Lincoln, uses his network connection to entice potential customers for his property management business.
We learned from Jayasuriya that, due to the economic downturn and changing customer habits, his internet café has dropped in footfall by more than 50%. However, his property management arm remained robust; in fact, the café’s revenue now accounts for less than half of his company’s total revenues.
Apparently, there is still a place for internet cafés as long as entrepreneurs are inventive, resourceful, and realistic in their offerings.
Establishing an internet café business is relatively straightforward.
Start-up costs for internet cafes can vary wildly depending on a variety of factors and the additional services you choose to offer to make your venture viable. A significant part of your budget will be taken up by the premises you choose – learn more about this in our business premises channel.
As soon as you’ve picked out a space for your cafe, you will need to decide how much you’d like to spend on additional equipment and add-ons.
Founder of internet cafe chain Quarks, Jason Deane, says that his company’s own branches have cost between £17,000 and £150,000 to start.
Personally, I think the minimum should be around £20,000 – as long as you can pull a few favours! I know people who have done it successfully on a shoestring budget, and others who have not managed to do it on a budget at all.
Purchasing an internet cafe’s network connection is relatively cheap: Matthew White, of @ Cyber Café in Carlisle, said that he purchased his connection for just £55, and that the cost can now be as low as £15. However, there are numerous other costs to consider.
It is typical for PC workstations to cost around £400, while networks can range from £500 to £1,000. An internet timing system, designed to prevent customers from exceeding their time limit, can cost another £500, and you may also need to invest in printers, faxes, scanners and CD burners to improve your services.
It is just a guide, as internet cafés vary in size and content. If you just want a few computers and no extras, or if you just want an ordinary café with WiFi access, you can start the business on a shoestring budget.
The business won’t be sustainable, however, with such a limited offering. You’ll need to offer more services to make it sustainable. The cost of your café will depend completely on what additional services you plan to provide – each will have its own particular costs. For example, if you plan to provide food and drink in addition to your internet service, you will need refrigeration equipment, display counters, and a food preparation station, all of which cost hundreds of pounds..
Locating a business location
In addition to the services you wish to offer through your internet café, you must carefully consider your location. Securing the right location for your internet café will be a crucial decision in your business endeavor.
Due to the decline in footfall and revenue suffered by internet cafes over the past few years, you probably aren’t going to be able to afford high rents if you’re planning to offer nothing more than a basic internet facility. A prominent location, such as a high street, will only be feasible if additional services are offered.
You need to find the right location according to your target market. If you are looking to build a core of loyal customers, it might make sense to choose a location that has a community feel. If you expect passing trade and casual business, a more prominent location might be required. Research the pros and cons of different locations for your internet cafe and phone cafe.
Startups member: “We are looking to set up an online cafe, and have found premises in a great location. However, as this is the first time we are renting a property for business, do you have any suggestions about what questions we should ask the rental/estate agent at the first viewing, and how the process works?”
Chris Learmonth responds: There were a couple of retail clients who got caught out by business rates & rent reviews. Make sure you know exactly what the property’s outgoings are at the time of taking it on & when they might change. I would also suggest you don’t lock yourself into the lease for too long, so that you can walk away early should your plans change. If you’re able to identify them, contact a local business association. They tend to know the local landlords pretty well and should be able to help you with their particular quirks..
The best way to make money from an internet cafe
In planning the various services your internet café will offer, you need to think about the services the surrounding businesses are offering. For instance, it would be bad business to spend significant capital on expensive color printing services when your cafe is surrounded by cheap printing services.
As a business owner in one of the few areas in the UK without Starbucks or Coffee Republic, it makes sense for you to serve coffee and other refreshments to your customers; however, if the neighborhood already has an established coffee shop, you might not want to expand into this area.
Founder of internet cafe chain Quarks, Jason Deane, said: “The bottom line is this: is this the best service, and you need to be sure to the last detail what the service is, that you can provide for the money you have?” “Will this work with your plan? If not, can you raise more money? If not, can you change it?” If no, don’t proceed.
Internet access is a commodity in this market, and this is a very competitive market.
“Therefore, you must provide a service that is different and priced accordingly. Even extremely successful entrepreneurs have discovered that the internet access game is challenging.” For more information visit our site best bizz.
