CHAPTER ONE 1.1 INTRODUCTION In a short period of three decades, computer has become a household item all around the world. With the introduction of Internet, in the 90s, computers became a significant medium to communicate with people around the world. It became a source of information and now there is an increasing number of businesses shifting toward eCommerce, which means doing business on the Internet. From a few hundred thousand pages on the Internet in 1994, there are now over a billion pages and these are being added at the rate of about a million new pages every day. Internet was introduced in early 90s in Nigeria, and since then, it has been on a tremendous growth because of incentives provided by Government of Nigeria to promote Computer related fields, such as computer education, Internet Service Providers, etc. Given the income level and low purchasing power of majority of Internet users in Nigeria, opening an Internet cafe to cater to this segment is a viable project. The project will be named GREEN ARROWS CAF. Green Arrows Caf will be located at No. 22 NYSC Road, Alakahia, Obio/Akpor L.G.A, Rivers State. The strategic location of this cyber cafe will enable customers have easy access to it. It will also help in advertising the fitness centre as it is a major street in the area. 1.2 PROJECT SUMMARY Green Arrows Caf will offer the following services: Access to the resources of internet and other online services;1

Printing; Photocopy; Scanning; Fax.

However or the sake of innovation and differentiation there would be a unique service of Video/Audio Chat. Just being a net caf will not serve the purpose as business need to be more than a value addition process rather than a traditional net caf, that is why after being operational for first two years there will be a facility added to the cart i.e. Web developing. It will not only be the value addition but also a business expansion tool. The project is estimated to cost N2185000 comprising N785000 as equity, N1000000 as long term loan payable over 5years with one year moratorium at an interest rate of ten percent, and N400000 as interest free loan from family members. For the scale of operation envisaged, the project is profitable as indicated in the financial statements. It is technically feasible, economically desirable, and commercially viable.

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CHAPTER TWO MARKET ANALYSIS 2.1OPPORTUNITIES The population of daily Internet users is growing daily. The importance of the Internet almost equals that of the telephone. As the population of daily Internet users increases, so will the need for the services of internet caf. 2.2 THREATS Rapidly falling cost of Internet access: The cost of access to the Internet for home users is dropping rapidly. Internet access may become so cheap and affordable that nobody will be willing to pay for access to it. Emerging local competitors: Additional competitors are on the horizon, and we need to be prepared for their entry into the market. A dependence on quickly changing technology: Internet Caf is a place for people to experience the technology of the Internet. The technology, that is the Internet, changes rapidly. Cost factor associated with keeping state-of-the-art hardware. Keeping up with the technology of the Internet is an expensive undertaking. Internet Caf needs to balance technology needs with the other needs of the business. One aspect of the business can't be sacrificed for the other. 2.3 Target Customers The proposed project intends to cater to students and middle income group people. Furthermore will be a magnet for local and traveling professionals who desire to work or check their e-mail messages. Students3

Business people Middle Income Groups Private Hostels

The large student population will become an important part of the Green Arrows Caf customer base. Evening entertainment, access to the Internet, and the up-scale ambiance will attract the students. Business community is growing rapidly with the addition of new companies day by day. Internet caf will provide an opportunity to local and traveling professionals to check their e-mail messages, this will be an attracting entity for the Middle income group and for the residents of private hostels who they do not have access to the internet at their living places. 2.4 Market Need As the popularity of internet continues to grow at an exponential rate, easy and affordable access is quickly becoming a necessity of life. The public wants access to the methods of communication and volumes of information now available on the internet, and access at a cost they can afford and in such a way that they are not socially, economically and politically isolated. 2.5 Market Trends More than 90 percent of visitors of these cafes and clubs are youngsters and their sole objective to get to these is to get enjoyment. 2.6 Knowledgeable and friendly staff Internet caf is a service business. The success of the business depends upon the quality of the service offer and delivering the service consistently. So a knowledgeable friendly and eager to please staff, state-of-art computer hardware and a clear vision of the market need will help it succeed.

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2.7 Marketing Strategy To develop an optimum marketing strategy, the 4ps of marketing shall be put together: A. The product: Green Arrows Cyber Caf will offer internet and business centre services which have been certified to be better than that of its competitors. This is as a result of the quality of the personnel, the price of its services, and the superior quality of the speed of its internet service. B. Place: The strategic location of Green Arrows Cyber Caf will improve its market share, reason being that it is easily accessible to customers. C. Price: an initial low pricing penetration strategy will be adopted so as to gain a fair share of the market. D. Promotion/Advertisement: For starters, this business will be advertised through handbills, posters, and newspapers. 2.8 1. MARKET FOCUS AND GOALS To develop marketing and sales strategy that can fully satisfy the first

15% of the target market. 2. the 3. To gain full control and satisfy the demands of a further 30% of target market within 3 years. Capital expansion that will subsequently make this service available in

other areas within 5years.

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CHAPTER THREE PERSONNEL AND MANAGEMENT REPORT 3.1 Management Team

This team will comprise knowledgeable and experienced individuals who have an experience in managing a Cyber Cafe. The team will include the following persons: 1. The Manager: The manager should have a minimum of OND or its equivalent in business management. A minimum of two years experience will be required. 2. Cyber Caf Attendant: must be a male and should have a minimum of OND or its equivalent in computer science or a diploma in a computer course from a reputable computer school. 3. Accounts Clerk: should have a minimum of WASC with credits in English language, mathematics, and financial accounting plus two years working experience. 4. Cleaners: should have a minimum of Standard Six Certificate. General Staff Requirements The business at the initial stage will employ 5 persons, a manager, 2 Cyber Caf Attendants, 1 accounts clerk, and 1 cleaner. Details of the staffs salary are shown below:

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Staff Requirement and Salary Structure Title No. Salary (N) Monthly(N) Annual(N) Manager 1 25000 25000 300000 Cyber Caf 2 20000 40000 480000 Attendants Accounts 1 15000 15000 180000 Clerk Cleaner 1 10000 10000 120000 Total(N) 90000 1080000

ORGANIZATIONAL STRUCTURE (ORGANOGRAM) OWNER/CEO

Manager

Cyber Caf attendant

Cyber Caf Attendant

Accounts Clerk

Cleaner

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CHAPTER FOUR MATERIAL REQUIREMENTS 4.1 CYBER CAFE EQUIPMENT Generator Set Computers Router HP LASERJET Printer (Black) Network Cables Cyber Klock Timer Web Camera Modem Scanner HP DESKJET (3 in 1) 4.2 FURNITURE AND FITTINGS Long Tables Shelf Office Chair Office Desk Ceiling Fans Air Conditioner Plastic Chairs The cyber cafe equipment, and the furniture and fittings will be sourced locally.

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CHAPTER FIVE FINANCIAL ANALYSIS 5.1 PROJECT COST The project is estimated to cost N2,185,000 consisting of the followings: Item Building Furniture and Fittings Cyber Caf Equipment Preliminary expenses Operating expenses Total project cost Cost (N) 50000 120500 665000 115000 1356000 (N)2185000

Cyber Caf Equipment ITEMS Generator Set Computers Router HP LASERJET Printer (Black) Network Cables Cyber Klock Timer Web Camera Modem Scanner HP DESKJET (3 in 1) TOTAL No. REQUIRED 1 10 1 1 1 10 1 1 1 UNIT COST (N) 25000 50000 15000 25000 2000 2000 36000 22000 15000 TOTAL AMOUNT (N) 25000 500000 15000 25000 5000 2000 20000 36000 22000 15000 665000

From the table, the Cyber Cafe equipment estimate is N665000. Furniture and Fittings F/F Long Tables Shelf Office Chair No. Required (N) 3 1 1 Unit Cost (N) 4000 2000 2000 Total (N) 12000 2000 20009

Office Desk Ceiling Fans Air Conditioner Plastic Chairs Total(N)

1 4 2 10

2500 3000 30000 1200 44700

2500 12000 60000 12000 102500

Preliminary Expenses: these include Item Feasibility Report Business Registration Miscellaneous Expenses Total Cost (N) 10000 100000 5000 115000

PROJECTED OPERATING EXPENSES Year Correspondence and stationery Transport Advertisement and promotion Insurance Maintenance Electricity bill Rent Fuel Salaries Bottles Miscellaneous Total(N) 1 5000 24000 15000 10000 31000 12000 50000 24000 800000 20000 10000 1096000 2 5100 26000 15200 10000 32000 12000 50000 24000 800000 20000 10000 1o99300 3 5200 28000 15400 10000 33000 12000 50000 24000 800000 20000 10000 1102600 4 5300 30000 15600 10000 34000 12000 50000 24000 800000 20000 10000 1105900 5 5400 32000 15800 10000 35000 12000 50000 24000 800000 20000 10000 1109200

N.B.: A N1000 increase in maintenance cost is estimated; A N100 increase in the cost of stationery is estimated. Transport is projected to increase by N2000.

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5.2 DEPRECIATION OF FIXED ASSETS Year 0 1 Cyber Caf Equipment(N) Cost b/f 665000 Cost b/f 665000 depreciation (66500) Net book 598500 Value Net book value 598500 b/f Depreciation (59850) Net book 538650 value Net book value 538650 b/f Depreciation (53865) Net book 484785 value Net book value 484785 b/f Depreciation 48479 Net book 436306 value Net book value 436306 b/f Depreciation 43631 Net book 392675 value Fixtures & Fittings(N) 102500 102500 (10250) 92250 92250 (9225) 83025 83025 (8303) 74722 74722 7472 67250 67250 6725 60525 Total(N) 767500 767500 (76750) 690750 690750 (69075) 621675 621675 (62168) 559507 559507 55951 503556 503556 50356 453200

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3

4

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N.B.: Depreciation is charged on a straight line basis @10%. 5.3 ESTIMATED CASH RECIEPTS Item 1 hr Total(N) ESTIMATED NO. OF CUSTOMERS 20 15 10 45 UNIT PRICE TOTAL 100 70 300 2500 1050 3000 6050

RECEIPTS FROM BUSINESS CENTRE

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Item

ESTIMATED NO. OF DOCUMENTS Scanning 10 Printing (Black) 300 Printing 10 (coloured) Photocopy 200 Total Daily Income: 18050

UNIT PRICE TOTAL (N) (N) 100 30 100 5 1000 9000 1000 1000 N12000

Monthly Income: 18000 x 23= N415150. Annual Income: 415150 x 12= N4981800. N.B. Green Arrows Cafe is opened from Monday to Saturday. One day in a month is used to service the equipments. Thus 23days was used in calculating the amount generated from customers who use our services daily. 5.4 PROJECTED PROFIT AND LOSS STATEMENT Year Cash Receipts Less operating expenses PBITD Less Depreciation PBIT Less Interest on loan PBT Less Tax (30%) Retained (net) profit(N) 1 4981800 (1356000) 3625800 (76750) 3549050 100000 3449050 1034715 2044958 2 5081436 (1359300) 3722136 (69075) 3653061 80000 3573061 1071918 2501143 3 5183065 (1362600) 3820465 (62168) 3758297 60000 3698297 1109489 2588799 4 5286726 (1365900) 3920826 (55951) 3864875 40000 3824875 1147463 2677412 5 5392461 (1369200) 4023261 50356 3972905 20000 3952905 1185872 2767033

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5.5 PROJECTED CASH FLOW STATEMENTYear Receipts (000) Equity Long term loan Short Term Loan Total cash receipts(N) Fixed assets Preliminary expenses Interest on loan Operating expenses Tax Payment Total cash payments(N) Cash surplus(N) Opening Cash Balance Bal b/f Closing cash balance(N) 0 785000 1000000 400000 2185000 767500 115000 100000 1356000 882500 1034715 2490715 2551085 2551085 80000 1359300 1071978 2511278 2630158 2630158 2551085 5260316 60000 1362600 1109489 2532089 2710976 2710976 5260316 7971292 40000 1365900 1147463 2553363 2793363 2793363 7971292 10764655 20000 1369200 1185872 2575072 2877389 2877389 10764655 13642044 1 4981800 60000 2 5081436 60000 3 5183065 60000 4 5286726 60000 5 5392461 60000

5041800

5141436

5243065

5346726

5452461

5.6 PROJECTED BALANCE SHEET Year Fixed Assets Cash Total Assets(N) Capital Add net profit Net Capital LIABILITIES Short Term Loan Long Term Loan Total capital & Liability(N) 1 6907502551085

2 6216752630158

3 5595072710976

4 5035562793363

5 4532002877389

3,241,835 3,251,833 3,270,483 3296919 845000 2414335 3259335 400000 1000000 3799060 905000 2501143 3406413 400000 800000 4606413 965000 2588799 3553799 400000 600000 4553799 1025000 2677412 3702412 400000 400000 4502412

3,330,589 1085000 2767033 3852033 400000 200000 4452033

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5.7 Financing Structure The project is to be funded as follows Equity (N) Personal 785000 Savings Interest Free Loan from family members Long Term Loan Total Short (N) 400000 Term Long (N) Term Total (N) 785000 400000

1000000

1000000 1388034

Green Arrows Cafe is expected to provide the equity capital of N785000. This sum is a form of credit to the project at a concessionary interest rate of 5% payable over a period of 5yrs with one year moratorium. Since this is a Green Arrows initiated project, the equity can be regarded as a free grant recoverable without interest charges over 5yrs. The sum of N400000 will be sourced from family members. Green Arrows Caf also secured a loan of N1000000 from the bank payable over 5years at a ten percent interest rate with one year moratorium. 5.8 Profitability analysis 1. Profitability Index, P.I. = CIFt= cash inflow at time t I= initial investment K=cost of capital (the cost of capital is 10%)14

= (

)

/I

PV=(

)

= (1501086.1+2132411.57+2660977.33+1873753.842+1755586.2) = 11679401.16/2185000 = 5.35. 2. Breakeven Analysis: breakeven point (BEP) is the point at which the cost or expenses and revenue are equal, i.e. there is no net loss or gain. It is given by the formula:

BEP (Naira Sales) =

Fixed Costs N Building 50,000 Furniture and Fittings 120,500 Cyber Caf Equipment 665,000 TOTAL FIXED COSTS 815,500

Variable cost N Operating Expenses 1356000

BEP(Naira Sales)

=

BEP(Naira Sales)

= =

BEP(Naira Sales)

= N 1,120,192

3. Return on Investment ROI =

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Average Profits = Average Profits = 2515869 ROI = CONCLUSION The foregoing analyses have shown that the project is commercially viable. If adequate attention is paid to product quality cash flow management and coupled with saturated promotions, the forecast on profitable performance will be exceeded.

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