Business Plan for Opening an Internet Café in Jumia Residential Area

Questions: 1. Identify the steps you would take to start the business. List down the physical and financial resource requirements. Identify the sources of finance available for meeting such financial needs. 2. Assess the implication of these finance resources, i.e. the advantages and disadvantages of choosing the different sources of finance. 3.Which source of finance would you use for your business plan? 4. Explain the importance of financial planning for a small and medium enterprise in Singapore. Answers: (1). Our company plans to start an internet caf business in Jumia residential area. The total budget for starting the business is $ 300,000. There are several sources of finance from which we can seek financial help from. Our company has some saved money of its own in the bank. The money amounts close to $ 280,000. Our company may also consider getting a grant from the government. Our company may also seek the money from venture capitalist. The last option that our company can consider is to seek for a bank loan. Our company prefers the last option of seeking a bank loan so that the borrowed money would be repaid later on. Our company intends to seek for a loan of $ 300,000 from the Central Bank of Singapore. However, there are some physical and financial resource requirements that we must meet before the bank grants us the loan. The requirements include: The bank must check and a prove the creditworthiness of our company There is a credit limit for new customers. Our loan must therefore fall within the set limit. The bank would only increase our credit limit based on the payment record of the first loan and subsequent loans. Our company must provide two good references before we are granted a loan. One of the references must be from a bank. (Pinson, 2014), confirms that the file containing the loan agreement details must be kept by both the involved parties. Our company and the bank too will therefore have a copy of the loan agreement details. According to (Pam, 2014), any available customers financial information should be maintained by the bank. The bank would therefore seek all available financial information about our company before we are granted the loan. General Company Description Our company would put up a large building within the area. We would then purchase computers and place in the building. Our company would thereafter, seek internet connection for the computers from the local mobile service providers. Our company has set up several number of internet cafs in different regions across the country. Our internet services have been appreciated by the members of the community in all the areas where we offer our services. We intend to improve our services even further so as to keep off our competitors. The loaned money would also be used to employs workers and run the operations at the internet caf at the beginning. The business would then be able to sustain its operations once it starts making profits. We would also be able to start repaying the loan using the money from the profits that would be made by the internet caf business. According to (Jennings, 2016), bank loan finance is advantageous when it comes to funding of business because the business a company and the bank is to agree on the terms of loan repayment plan which is acceptable by all the involved parties. Finance resources have many implications. One therefore has to compare the advantages and the disadvantages of the financial resources before making a choice. The implications of financial resources are as follows: (2). Assets and personal savings (Thomas, 2008) states that a companys assets and savings can be a major of stating capital Advantages There is minimal cost of acquisition because they are already owned by the company or the individual person who would wish to start a business There is no interest which would be repaid to banks as in the case of loans. The company or business would not share its business proceeds with investor. All the returns are for the business entity and its owners. Disadvantages Savings can be lost if they are all invested in the business. If the business collapses due to making of loses then all the invested savings would be lost. Retirement account assets are secured from bankruptcy and creditors. It is not appropriate to place such assets under risk especially when one is about to retire and would not have enough time to rebuild the accounts once they are depleted. Government grants These is money that can be given by the government to individuals or companies to enable them start business Advantages Government grants are given for free. They are hence not repaid Disadvantages They are not given to all types of businesses According to (Jennings, 2016), allocation of grants can be affected from one year to another because they are given based on the available funds. When funds are unavailable or inadequate then the government may as well fail to allocate grants. Investors These are people who can assist individuals or companies to raise starting capital needed for business investment Advantages The investors may help in provision of advice to the business owners. Such advice may be of great benefit to the success of the business. Some investors may participate actively in the running of the business Disadvantages According to (Henderson, 2016), control of the company must be shared between the investors and the owners of the business. The investors must be kept happy at all times or else they may pull out if they are unsatisfied. The business owners have to share profits with the investors in case the business risks are also shared between the investors and the business owners. Bank loans (Jennings, 2016), states that commercial banks can provide funding loans to companies and individuals for starting business activities Advantages One is able to keep his/ her money at hand for other purposes such as running the business operations One has the opportunity his/ her important assets in the event that the business ends up making heavy losses. The business owner would facilitate the protection by declaring himself/ herself bankrupt. Disadvantages The borrower has to pay interest alongside the loan Loan repayments must be made as had been agreed even if the business incurs losses. Our company would first carry out financial planning for our internet caf business before the business is finally rolled out in the Jumia residential area Products and Services Our company would offer internet services to customers at affordable prices. We also intend to employ qualified and friendly staff who would interact and attend to our customers. The staff would be able to assist the customers wherever necessary in their attempt to access various sites in the internet. Our company would offer very fast internet which would be appropriate for all categories of people. Students would be able to undertake their online studies at our internet caf without any problem. Social media users would also enjoy our services. We therefore intend to bring a complete solution to the people in regard to the poor internet services that they have along been exposed to for a long period of time. Marketing Plan Our company would come up with a vigorous marketing plan that would ensure that our business becomes successful in the residential area. We would carry out advertisement and road show campaigns in the area so sensitize the people about the impending opening of the internet caf in the region. Our company is well aware of the challenge from the competitors that is awaiting it. We would provide free internet to the local residents for the first two weeks. The move would enable the residents to compare the internet services that we intend to offer against the services that is offered by our competitors. The residents would therefore be able to make informed decisions. Our company would also offer other internet related services such as scanning of documents and photos, printing of documents as well as photocopying of documents. We intend to offer all these services under one roof unlike our competitors who are already in the market within the area. Our competitors are only offering internet services. Our internet caf would be operational even over the weekend. All the internet cafes in the area are closed over the weekend. The people are therefore unable to access internet services over the two day period every week. Our business would fulfill the internet needs of the people in the area over the weekend. We would therefore have an edge over our competitors. Most of the local people would prefer our services because they are accessible during all days of the week. We also intend to provide free internet services one every week to the people who frequently use our internet caf. Most of the area residents would therefore prefer our services. Majority of the local people would prefer our internet services so that they can benefit from the free internet services that we would offer to our esteemed customers. Lastly, we intend to introduce internet Wi-Fi services to the residents after our one year of operation. The local people would be able to subscribe to the internet Wi-Fi services and then enjoy internet from the comfort of their homes. This move would reduce congestion in the internet caf. Operational Plan Our business would be operational every day as from 8:00 am to 8:00 pm. There would be a manager at business premises. The manager would be charged with the duty of ensuring that customers needs are well attended to by our staff. The manager would also ensure that the quality of services is guaranteed at all times. Management and Organization The internet caf would be headed by a chief manager who would report directly to our company. There would also be a human resource manager and a marketing manager. The two managers would assist the chief manager in the daily running of the business of the business. Our company would also employ20 qualified workers. The workers would assist customers in case of any need. The workers would also carry out other internet related duties such as photocopying of documents, printing etc. (3). Financial Plan Source of finance for our business plan We would seek for a loan of $ 300,000 from the Central Bank of Singapore in order to finance the business. A written agreement would be made between our company and the bank. The loan would be repaid starting two years from this moment. Our company would repay the loan for a period of 4 years. There are no internet cyber cafes in Jumia residential area. Many people have to constantly visit other areas in search of internet cafes where they can access the internet. We intend to explore advantage of the existing opportunity. (4). Importance of financial planning for small and medium enterprises in Singapore (Hilla, 2016), explains that financial planning enables small and medium enterprises to successful in their business activities. A business is likely to fail if it has no financial plan It helps determine the amount of money that the business enterprises can spend on daily basis. For example, it can be used to determine the amount of money that should be allocated to employees on daily basis. The business could hence be able to carry on with their activities smoothly According to (Batie, 2016), it is necessary for a business organization or company to be granted financial support. Lenders in Singapore dont approve financial support to businesses which dont have financial plan. Business plan provide marketing decisions to business owners. Business owners are able to tell whether the laid down business strategies are effective or not Business plan can be used to measure the progress of the small and medium enterprises. An individual would be able to see clearly the profit growth that is achieved by the business. It can immediately show the business owner if there is a financial downturn. The business owner would then be able to make informed decisions. According to (Rama, 2007) business planning can show the sales trends of the small and medium enterprises. Their owners would then be able to monitor the trends and find out the nature of delivery of the returns. (Pinson, 2016), explains that business plan provides an opportunity for the small and medium enterprises owners to understand the bottom line of their businesses. They would be able to document their profits. They would also be able to establish ways in which the profits can be increased. References list Art DeThomas, S. A. (2008). Writing a Convincing Business Plan. Barron's Educational Series. Cecile Nieuwenhuizen, H. B.-W. (2008). Business Management: A Contemporary Approach. Juta and Company Ltd,. Chambers, K. D. (2008). The Entrepreneur's Guide to Writing Business Plans and Proposals. Greenwood Publishing Group. Drucker, P. (2012). The Practice of Management. Routledge. Edward D. Hess, C. D. (2008). 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