This is a proposal which is mainly framed for Java Net to open a new branch inside Al-yamamah College. It is a typical forum that provides an exceptional forum for entertainment and communication via the internet. The proposal deals about all the major concerns that are directly associated with the establishment of the new branch in the predetermined location. The proposal is designed to identify the various factors and that influences the decision to start a new branch. The needs and opportunities are identified and based on that additional requirements are designed. An important objective of the company is to create a demand in the college campus by providing an educational and entertaining atmosphere for worldwide communication. The total budget required for the company to lay its foundation on the college campus is SR 88,290. The other additional finance requirements are generated from the King Fahed Economic Development Fund, from personal savings from the owner Omar Al-Aqeel, from three investors, and from the short-term loans. In addition to the capital, the company has also secured finance from its shareholders and funds from the Oregon Economic Development. The goal of the project of starting the Java net Internet café is its objective to satisfy the increasing demand for internet for the people and also providing internet to people at a reasonable cost. A well-integrated action plan has been designed to carry out the project work in an efficient and effective way. A strong customer base will be generated within few months of operation and this will lead to the company’s success in the market. The chart shown below depicts the yearly growth of the concern.
Java Net offers the community easy and affordable access to the Internet and it is located in downtown Riyadh on Prince Sultan Street. It has a long time experience in this field of operation. The company endow with jam-packed access to email, WWW, FTP, Usenet and erstwhile Internet applications such as Telnet and Gopher. It also offer exclusive and pioneering environment for enjoying grand coffee, specialty beverages, and bakery stuff to the customers specifically the college students.
Identification of Needs and opportunity
The needs of the customers are identified by providing a novice-friendly environment. The needs of the students are identified by conducting small survey and the data are collected by the questionnaire stating the facilities that the students are expecting from the concern. This supply of questionnaire enabled to understand and identify the need of the customer.
Starting a new branch inside the Al-yamamah College campus is a very opportunity for the concern because the student category uses the internet facility more and thus can explore the demand that is currently prevailing in the market. The other opportunity is that the college students will not go outside for using internet when such facility is presented in the college itself.
(Receiving Company’s Name) Needs
The company will have its name in a good position if it able to meet the expectations of the customer and when it meet its corporate social responsibility. After the needs are identified appropriate measure are taken for further implementation process to make the operation to start a new branch a successful one.
The additional requirements for the firm that are required for starting a new branch are:
- Well established furniture
- Required number of staffs
- Modern machines and equipments
- Sources from where funds can be generated.
- Cafeteria and other snack facilities in the concern.
This project proposal is done for an existing company and as it is a proposal the figures ad the data derived are just estimations. The informations are collected from the published materials and the data derived from the questionnaires that are used for need identification.
The scope of the project is to establish a new branch of Java net in the Al-Yamamah College and how the decision created can be a success. This project work is not only confined to the students but also includes all the members in the college including the teaching staffs. The various ways that are used to attract both teaching and student category is taken into consideration.
Statement of Need
Today, all the businesses are in great competition; for existence, this company implemented some new policies for the safety in future. One of the proposed strategies is to add more communication system for the progress of its business. It included new services and policies in order to get new customers and to retain the existing permanent customers. It also implements latest technologies like fast processing computers for the quick availability of internet connection for the users.
The main objectives of this proposal are:
- To establish a new branch within the Al-Yamamah College.
- To understand the various issues that is faced by the concern in starting a new business in to organization.
- Accessing the information of online services at reasonable price.
The main strategies of java net are:
- Attention on attracting new customers.
- Providing a unique and sociable atmosphere to the customers.
- Pull strategy of power internet customers.
Java net internet café provides complete accessing of the internet functions at reasonable price to the users. The internet café also offers Xerox facility. The services are delivered at relatively lower price than that of the services offered by the outside service providers. It provides coffee and bakery items for their customers to create a pleasant and friendly atmosphere for the internet users
Needs vs. Opportunities
Javanet internet cafe offers entertainment and communication via internet. The main requirement of Javanet internet café is to get necessary equipments for communication so that internet facility is available to the customers. Other needs include the equipments for entertainment, capital etc. The opportunities in this field are increasing because the number of internet users is increasing day by day. Internet has strengthened the social bonds between people of different regions. This created more demand for the internet service providers.
The project team consists consist of the persons who are responsible for carrying out the project proposal. The proposal is to start a new branch with in the Al-Yamamah College. The project team consist of ten members and they were divided to five equal groups. Each group handled the various functions such as marketing, market research, preparing questionnaire, financial planning and budgeting.
The popularity of internet is increasing in the market at a fast rate. Most of the people use internet often for various purposes like communicating with others, browsing etc. Payment is collected on an hourly basis.
Market of your service/product
The service has good market because of the wide popularity and use of internet. Since Javanet provides an atmosphere of entertainment and comfort, all types of people are attracted towards it. The target customers was the teachers and the students in the campus.
Service/Product providers in your market
There are number of service providers in the market. Some of the most important service providers include America Online, CompuServe, and Prodigy. STC computers provide computer support and internet access to Java net.
The goal of the project of starting the Javanet Internet café in Al-Yamamah College is its objective to satisfy the increasing demand of internet for the people and also providing internet to people at reasonable cost. The project also focuses on how to create attention from the target customers.
The company name is JavaNet Internet Café. The owner of this company is Omar Al-aqeel and the three present outside investors are Mohammed Al-Ali, Saleh Al-sheikh, and Khalid Al-mula.
JavaNet’s aim is to offer to the society learning and interesting environment for universal contact available to all people at reasonable costs. The business concept of this company is to increase the interest towards learning via proper utilization of the internet services.
The Geographic Location of JavaNet is in downtown Riyadh on Prince Sultan Street and presently it is planning to locate one of its branches in Al-Yamamah College campus to meet the ever increasing demands of the students and faculties. The decision to start its new branch in the college campus reflects the responsibility of the concern towards the society.
Project Implementation Process/phases
The company has set up its objectives for the first three financial years during which it hopes to provide its customers with modern internet and develop a customer base. First the needs
of the target customers are identified, based on those needs strategies are designed, various facilities are arranged and finally the prices are fixed at a reasonable rate to meet the customers’ expectations.
Project Evaluation process
Feedbacks are collected from the customers and if any quality gap arise those gaps are filled by implementing appropriate strategies.
Javanet plans to invest in the latest, high speed computers along with fast and reliable internet connection. All the latest technologies which are not easily available in home or office like Pentium PC will be made easily available.
The Javanet internet café provides coffee as well as internet, both of which can be used simultaneously in a very enjoyable atmosphere. So, Javanet can face competition from both the groups i.e. from coffee sellers and also from internet service providers. The café can face competition in coffee but since there are less internet service providers, the competitiveness in the internet sector will be less.
The key point of difference that Javanet has with other service sector companies is that Javanet focuses both on business as well as refreshment.
The key point of difference that Javanet has with such other service sector companies is that Javanet focuses both on business as well as refreshment.
Javanet projected all its future expenses and also its revenue by making proper arrangements for rent, marketing, personnel pay etc. It is trying to find more investors from the market. For the start-up expenses, funds are being mobilized even though additional financing has already been secured from development funds and contributions by the owner along with the 3investors and from short term loans.
Investment to start the businesses
The investment that is needed for starting the business is related to the building’s renovation as a café cum internet service provider, the fixing of modernized coffee vending machines, high technology computer communication machines. The price of internet will be decided on an hourly basis. The total amount of investment that is required for the firm to start a new branch is SR 88,290.
The challenges faced by Javanet are that whether people will associate with Javanet as a social hub. There is also a risk factor, that the services that Javanet intends to offer should have demand. The low internet costs of accessing from home is also a challenge for the Javanet
Due to the increasing public demands and wants, the competition in this field is emerging. Competition is mainly between different producers and companies producing similar products; this benefits the end users and consumers, because in this situation all companies try to provide better products to satisfy the consumers.
- Emerging local competitors in this field will lead to competition among the producers.
- Emerging communities like open enterprises provide lot of information that can be easily accessible by all the internet users
- Most of the people use Personal computers now; hence, there is no need to go to café for getting knowledge.
SWOT analysis helps examine the internal strengths and weaknesses and external opportunities and threats of Java Net. Java Net has a significant range of strengths that will help achieve its goal.
- well-informed and pleasant employees
- Fashionable environment. It uses high tech technology. The various culture activities and all are adopted giving the social environment. To Good knowledge about the market need. They are unto date and follow according to the changes in the market environment.
- Activities and services are monitored in quarterly basis.
- Java Net needs to keep up with the technology.
- maintenance up with the know-how is an costly task
- Demand of the customers is increasing.
- It provides various opportunities all over the world.
- Quickly diminishing charge of Internet availability.
- Rising neighbouring competition. It will adversely affect the java net.
- Increasing opportunities to access the information in home itself.
The marketing and sales plan
In short, they can be termed as a blueprint for communication process and generating the value of the product and the business.
Sales and promotion strategies
They spend a huge amount advertisement for the start up year for its operations for building a good brand image and customer awareness. Promotion is concentrated in the local market and the marketing promotion includes the local TV, print media, radio events and the public relations conducted by the java net events.
Sales and promotion budget
The sales and the promotion budget play an important role in the promotion, when a product is to be introduced in the market. A clear estimation should be made on the budget. The total budget required for the sales and promotion activity is SR 2200.
As far as different kinds of services are concerned, present day has much access to the internet, the pricing of the materials are to be made on hourly price for the online use, because there is no direct competition in the cyber café. The java net considers the price in different way as they consider the three factors for the use – they are the cost to use the internet, secondly the pricing of the java Net in the market and how the competitor firm has made the pricing and thirdly a market survey is conducted in identifying the different downfall in the operations.
Management and Operations
The proprietor of JavaNet is Mr. Cale Brucker. As it is a small organization, the entire management of the business activities is carried out by the proprietor himself. All the decisions and planning of this organization are made by him. There are intelligent and sociable part time staffs for giving guidance and assistance to the customers; moreover; there is one technician.
There are three private investors in JavaNet internet café. Even though they are the investors of this company, they do have the power to take any managerial decisions.
Inorder to start a new branch sufficient number of staffs are required to perform all the activities. It is better to employ part time staffs. The part time staffs are required to work thirty hours in a week with a salary of $5.50 per hour. The full time technician needs to work for forty hours a week and will get a salary $10.00 per hour. The technician needs to be technically oriented, because he will have to deal with the terminal repairs.
The structure of the organization is a simple one due to its small size. This structure helps in easy communication and high flexibility. All the management decisions are taken by the proprietor. He controls the business activities of the organization. The staffs include part time employees, full time technicians and private investors.
Operation and Infrastructure Details
This company forms a distinctive, modern and attractive atmosphere for the purpose of communication through the internet. The total funds required to start up this internet café is $88,290.
The total budget required for this particular project proposal is SR 88,290.
The total start up expenses required for the concern to start one of its branch ion the college campus is SR 62,290. The bar chart shown below indicates the start-up expenses
- Staff Expenses: The total expenses that are required to meet the staff expenses for the three years is $129,254.
- Management Expenses: The total expenses that are required to meet the management expenses for the three years is $ 26,400
- Recurring Expenses: The recurring expense is calculated based on all the other expenses and the earnings generated.
- One Time Expenses: There are six part-time employees working for 30 hrs and technicians working forty hours a day. For the sift workers it is $ 5.50 per hour and for one full-time technician it is $10.00 per hour.
- Sales and Marketing: The promotional expenses allocated for the plan is $ 33,750. In the budget allocated for the market 20% is almost equal to sales.
A Few Specific Marketing Efforts:
- Local TV spots
- Print Materials
- Local Newspapers
- Local Radio Spots
- JavaNet Events
Investment required for 3 months: The total investment required for the concern for three month is $ 7,290.
Funds Available: The funds to be obtained in the initial period are SR 24,000 from Oregon Economic development fund. SR 19000 will be raised from the personal savings of the owner. SR 36000 from the investors and the rest of the SR 9,290 will be raised by loan.
The financial projections for the firm are shown in a chart as appendix.
The Standard Industrial Classification (SIC) Code for the Internet Service Provider industry is “Remote data base information retrieval” 7375.9903. We used the report for “Information retrieval services” 7375 to generate the industry profile. The combined nature of JavaNet Cafe makes our ratios a blend of the two industries – Shown in the appendices as appendix-1.
Income statement for the year ended December 31st, 2009: Complete profit and loss statement with appropriate graphs and charts are presented as appendix 4.
Projected income statement for next year: The income statement for the next three years are shown in appendix 5:
Yearly Cash Flow: Cash flow data is presented in the chart and table below. The calculation of the cash flow is SR 313,610.
Future plans and exit strategy
The future plans of javanet are to explore more branches in various parts of the countries and to retain a good position in the market. The plans are also to increase the additional units to be accounted for the shop floor.
The exit strategy of the business is the arising situation where the performance in the business tends to be weak and the organization is in the process of quitting of the operation, i.e. the escapism from the business.
Beyond the second phase
The java net has incurred the basic mile stones to keep the business plan priorities in place, each of the business responsibility is on the owner of the business and the forecast of the operation shows a good improvement in the operations. The forecast is done for three years; as far as the second year is concerned, they have a good growth compared to the previous year of the operations with the unit price the same. As the company has good operational methods and monitoring of the company operations, they are less prone to make losses in the operations. The detecting of the price also gives the idea on the hourly rate of access.
Exit strategy is the escapism from the business and the shutdown of the operation, the exit from the business is as important as the entry into the business and the aim of the company is to make revenue and the value for the company with the least time. The steps involved in the exit strategies are to reach the agreement and obtain the authorization, organizing the team, engage the professionals, prepare the list of the professionals and perform the valuation of the business. The schedule should be developed and the notice has to be announced followed by the closing operations.
This proposal depicts a clear cut picture about how to set up a new branch inside the Al-Yamamah College campus. The cash flow, financial projections for three years are calculated and from all the financial projections it is very clear that the firm will be able to meet its customers’ demand and will have the capacity to succeed in future.
Appendix – 1
|Year 1||Year 2||Year 3||Industry Profile|
|Percent of Total Assets|
|Other Current Assets||0.00%||0.00%||0.00%||84.78%|
|Total Current Assets||100.00%||100.00%||100.00%||86.95%|
|Percent of Sales|
|Selling, General & Administrative Expenses||69.89%||69.18%||69.93%||79.00%|
|Profit Before Interest and Taxes||8.23%||8.80%||7.60%||1.62%|
|Total Debt to Total Assets||84.84%||54.81%||37.56%||0.00%|
|Pre-tax Return on Net Worth||334.80%||109.30%||58.28%||0.00%|
|Pre-tax Return on Assets||50.74%||49.40%||36.39%||0.00%|
|Additional Ratios||Year 1||Year 2||Year 3|
|Net Profit Margin||5.11%||5.82%||5.07%||n.a|
|Return on Equity||234.36%||76.51%||40.79%||n.a|
|Accounts Payable Turnover||10.58||12.17||12.17||n.a|
|Total Asset Turnover||6.95||5.94||5.02||n.a|
|Debt to Net Worth||5.60||1.21||0.60||n.a|
|Current Liab. to Liab.||0.53||0.66||0.80||n.a|
|Net Working Capital||SR 19,826||SR 32,496||SR 43,610||n.a|
|Assets to Sales||0.14||0.17||0.20||n.a|
|Current Debt/Total Assets||45%||36%||30%||n.a|
Appendix – 2
|Pro Forma Profit and Loss|
|Year 1||Year 2||Year 3|
|Sales||SR 248,868||SR 303,544||SR 313,610|
|Direct Cost of Sales||SR 62,217||SR 75,886||SR 78,403|
|Other Costs of Sales||SR 0||SR 0||SR 0|
|Total Cost of Sales||SR 62,217||SR 75,886||SR 78,403|
|Gross Margin||SR 186,651||SR 227,658||SR 235,208|
|Gross Margin %||75.00%||75.00%||75.00%|
|Payroll||SR 93,291||SR 121,824||SR 129,254|
|Marketing/Promotion||SR 33,750||SR 40,000||SR 43,000|
|Depreciation||SR 0||SR 0||SR 0|
|Rent||SR 24,000||SR 24,000||SR 24,000|
|Utilities||SR 9,120||SR 9,120||SR 9,120|
|Insurance||SR 6,000||SR 6,000||SR 6,000|
|Payroll Taxes||SR 0||SR 0||SR 0|
|Other||SR 0||SR 0||SR 0|
|Total Operating Expenses||SR 166,161||SR 200,944||SR 211,374|
|Profit Before Interest and Taxes||SR 20,490||SR 26,714||SR 23,834|
|EBITDA||SR 20,490||SR 26,714||SR 23,834|
|Interest Expense||SR 2,325||SR 1,470||SR 1,100|
|Taxes Incurred||SR 5,450||SR 7,573||SR 6,820|
|Net Profit||SR 12,716||SR 17,671||SR 15,913|
Appendix – 3
|Pro Forma Balance Sheet|
|Year 1||Year 2||Year 3|
|Cash||SR 28,817||SR 42,592||SR 53,681|
|Inventory||SR 6,980||SR 8,514||SR 8,796|
|Other Current Assets||SR 0||SR 0||SR 0|
|Total Current Assets||SR 35,797||SR 51,106||SR 62,478|
|Long-term Assets||SR 0||SR 0||SR 0|
|Accumulated Depreciation||SR 0||SR 0||SR 0|
|Total Long-term Assets||SR 0||SR 0||SR 0|
|Total Assets||SR 35,797||SR 51,106||SR 62,478|
|Liabilities and Capital||Year 1||Year 2||Year 3|
|Accounts Payable||SR 13,972||SR 13,610||SR 13,868|
|Current Borrowing||SR 2,000||SR 5,000||SR 5,000|
|Other Current Liabilities||SR 0||SR 0||SR 0|
|Subtotal Current Liabilities||SR 15,972||SR 18,610||SR 18,868|
|Long-term Liabilities||SR 14,400||SR 9,400||SR 4,600|
|Total Liabilities||SR 30,372||SR 28,010||SR 23,468|
|Paid-in Capital||SR 55,000||SR 55,000||SR 55,000|
Appendix – 4
|Pro Forma Cash Flow|
|Year 1||Year 2||Year 3|
|Cash from Operations|
|Cash Sales||SR 248,868||SR 303,544||SR 313,610|
|Subtotal Cash from Operations||SR 248,868||SR 303,544||SR 313,610|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||SR 0||SR 0||SR 0|
|New Current Borrowing||SR 2,000||SR 5,000||SR 0|
|New Other Liabilities (interest-free)||SR 0||SR 0||SR 0|
|New Long-term Liabilities||SR 0||SR 0||SR 0|
|Sales of Other Current Assets||SR 0||SR 0||SR 0|
|Sales of Long-term Assets||SR 0||SR 0||SR 0|
|New Investment Received||SR 0||SR 0||SR 0|
|Subtotal Cash Received||SR 250,868||SR 308,544||SR 313,610|
|Expenditures||Year 1||Year 2||Year 3|
|Expenditures from Operations|
|Cash Spending||SR 93,291||SR 121,824||SR 129,254|
|Bill Payments||SR 133,870||SR 165,945||SR 168,467|
|Subtotal Spent on Operations||SR 227,161||SR 287,769||SR 297,721|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||SR 0||SR 0||SR 0|
|Principal Repayment of Current Borrowing||SR 9,290||SR 2,000||SR 0|
|Other Liabilities Principal Repayment||SR 0||SR 0||SR 0|
|Long-term Liabilities Principal Repayment||SR 9,600||SR 5,000||SR 4,800|
|Purchase Other Current Assets||SR 0||SR 0||SR 0|
|Purchase Long-term Assets||SR 0||SR 0||SR 0|
|Dividends||SR 0||SR 0||SR 0|
|Subtotal Cash Spent||SR 246,051||SR 294,769||SR 302,521|
|Net Cash Flow||SR 4,817||SR 13,775||SR 11,089|
|Cash Balance||SR 28,817||SR 42,592||SR 53,681|
Internet Cafe Business Plan. Bplans.co.uk. 2010. Web.