Industry sector:

Internet cafe: Cash sales


'Cash sales' means all income from your main business activity that is received at the time of sale. Although many customers may pay you in actual cash, remember that Cash sales can also include debit and credit card payments, and even PayPal. (The software you use may include a secure online payment module allowing you to reassure customers that their card details and PayPal log-in and password are safe.)

To prepare your cash flow, you will need to work out how much income you will receive over the next 12 months, including VAT. To do this you will have to estimate how many people will use your services and what you'll charge for them.

There are a number of things to consider when you make your estimates, depending on the type of business you are planning:

Type of business

  • will you offer food and drink and if so, on what scale. (In the early days, internet cafes generally didn't offer much in the way of food and drink but as demand for their traditional services has fallen, many now do)
  • how many computer terminals will you install
  • will you offer WiFi access for customers with their own laptops, tablets, smartphones and other devices alongside your computer workstations
  • will you offer online and networked gaming
  • who will your customers be. Will you target a particular category of customer such as gamers or a particular ethnic community, or will you aim to appeal to a broad cross-section
  • will the eating area be separate from the computer area and if so, how many seats will it have
  • what will your opening hours be
  • where will your premises be
  • how many days of the week will you open
  • will you apply for a licence to sell alcohol
  • what payment and food ordering system will you use

Your services and products

  • what level of computing service will you offer - for example, you might have the necessary skills to offer computing courses at various levels or a repair and upgrade service
  • will you offer other services like photocopying, faxing, printing, lamination, scanning, phone repair and unlocking
  • if you offer food and drink, will you make everything from scratch or will you buy-in ready made dishes from specialist catering suppliers
  • will you have daily food and drink 'specials'
  • how will you monitor which are popular/unpopular meals
  • how will you control and monitor wastage
  • what range of alcoholic drinks will you stock (if you decide to do so)

Pricing

  • what will your pricing policy for internet connection be. For example, will you charge in increments of 15 minutes, half-hours and so on or will customers be billed for the exact amount of time they use
  • what system of charging will you use - will you allow customers to purchase blocks of 'time' that can be activated at a later date or will they be able to pay only for the time used at each visit
  • how will you charge for other services such as printing or non-internet computer usage
  • will you offer any discounts, for example free drinks for computer users at quiet times to try to attract more customers or volume discounts for customers that pay for large blocks of internet 'time'
  • will you operate a membership scheme that entitles regular users to qualify for lower rates if they pay an annual fee
  • how often will you review your prices
  • if you have waiting or counter staff serving food and drinks what will your policy on staff tips be - for example, will tips be put into a central pool, or 'tronc', and distributed to staff by a 'troncmaster'

Competition

You will face direct competition from:

  • other specialist internet cafés
  • cafes, coffee shops, hotels and so on that offer WiFi hotspots for customers with laptops and other devices, often free of charge
  • universities and colleges that allow members of the public to use their computer terminals
  • libraries that offer internet services
  • all other catering and leisure outlets, including fast food take-aways and home delivery firms. Depending on the nature of the business, your internet café may appeal to customers who just want food and drink

Indirectly you also face competition from:

  • growing domestic connection to the internet. Around 90% of households in the UK now have access to the internet, the vast majority of which is broadband. Some domestic broadband packages also include free UK-wide WiFi access
  • an increasing amount of people having free access to the internet through work
  • widespread internet connectivity through smartphones with a data connection which means that more people can go online when they are away from their home or office. The ongoing roll-out of '4G' mobile broadband in the next couple of years will give smartphone users even faster internet access. (As screen sizes have increased and more and more website owners have redesigned their websites to make them easier to read on small screens, the barriers to using smartphones to go online have been largely removed. Most smartphones can also be 'tethered' to another device like a laptop using WiFi, Bluetooth or a cable connection to act as an internet modem)

This makes it essential that your proposed café has something special that will attract customers to your establishment rather than to your competitors.

To help with your decisions, click on the checkpoints for guidance. Once you have worked out a Cash sales figure add it to the relevant field in your cash flow forecast.