cybercafes.htm

On the surface, operating a cybercafé—sometimes called an Internet café—seems like an entrepreneur’s dream. What could be easier than setting up a cluster of pay-by-the-hour public computer stations in some business setting where a sufficient number of people without computers or Internet connections gather and would make providing such equipment profitable? The going rate for using a computer in a cybercafé worldwide seems to be $2 to $5 USD per hour. Users simply pay to use your computers and the money pours in, right? Actually, the answer is more like “maybe.” This can be an unpredictable business; still, it’s well worth exploring.

You can get a business plan (http://www6.clearlight.com/cybercaptive/bpssl.shtml) for operating a cybercafé from Cafe Cybercaptive in San Mateo, California, for $44.95 USD—$20 off when using Paypal. One testimonial writer suggested that the plan helped him get $80,000 in start-up financing. Tourist areas seem to be good locations. The plan provides some market statistics, discusses the often short lifespan, low success rate, and how to avoid all of those. There may be potential, but there are pitfalls to avoid.

Consider the competition

Competing organizations often offer the same services found at cybercafés. Though most are fee-based, many finer hotel chains offer the Internet right in your room, so why go to a cybercafé? Also, in their efforts to hook everyone into cyberspace, many government and NGO groups offer free computer and Internet access services. True, you have to get to them, but they are free. This includes most public libraries in the U.S.

However, one promising technology on the horizon right now is Wi-Fi, a wireless networking technology. A lot of this is free but also very slow when connections get overloaded. Though McDonald’s and Starbucks are leading the way with fee-based Wi-Fi service, it remains to be seen how many “hot spots” show up outside big cities with dense populations. The range is miniscule at present.

The new versatility of cell phones threatens both cybercafés and Wi-Fi. You can not only play games on them but also send e-mail and enjoy other computer-like abilities.

These are just a few obstacles to cybercafé success. Who knows how many others exist? As with every business, the entrepreneur must do his market research and stay ahead of technology.

Who uses cybercafés?

One of the biggest attractions for the typical cybercafé user is the offering of game packages. This is particularly the rage in parts of East Asia, including Japan. Often young people (others, too) will go to these outlets to play against their friends, as well as people all over the world. The cybercafé operator who can figure a way to serve this market and create excitement for their customers will do very well indeed.

Some cybercafé packages are available to entrepreneurs at http://www.molecenters.com/. These include everything from games to domain names to ring tones.

According to a May 23, 2002, press release from Telewest Communications, South Korea tops the world in broadband usage at 60% compared with 11% in the US. There are 15,000 cybercafés (some say as many as 25,000), called PC bangs (or baangs), in South Korea. The bangs are heavily used by the 70% of Internet users in their late teens or early twenties. Rather than visit nightclubs, this group often prefers spending the evening multi-player gaming, streaming live music, or downloading videos at one of these cafes.

An article by Caroline Gluck stated that some spend so much time on the Internet their health suffers. Last October, a 24 year-old man spent 86 hours non-stop at a computer, then collapsed and died. It’s estimated that 3 million South Koreans may be at risk of “Net Addiction.” The government has begun steps to provide counseling to those with potential problems.

In his article on the cybercafé industry in Seoul, J.C. Herz explained that part of the bang popularity is that they provide a social meeting place. Because there are so many scattered everywhere, especially in Seoul, cybercafes offer a non-threatening way for boy to meet girl. In every cybercafé, there are people talking with others in chartrooms. A lot of the booths are set up as double seats in a sort of love-seat arrangement. A guy may talk to an interesting girl and invite her to his booth, which may be several blocks away, or just down the hall. If a girl is interested, she will drop by the guy’s booth and see what he’s like; if she remains interested she will join him. The love-seat arrangement is ostensibly so boys can play their games and girls can chat with other girlfriends.

A significant reason for the popularity of these rooms in South Korea is the long-standing cultural animosity against the Japanese. They were an occupying force for many years, and there are restrictions prohibiting most Japanese electronics. Consequently, there are few game platforms like Sega or Nintendo in South Korea, so cybercafés provide the means to play games.

How much can you make as a cybercafé owner?

In 2000 the South Korean industry grossed $6 billion USD. This works out to over $200,000 USD per business entity—not bad for a small business. But not everyone will make that. Just go to some of the cybercafé databases (See Resources below) to see how many are no longer available.

What do you need to start?

First you must find some kind of physical location. Often this is a kiosk or similar space within another business. Of course you will need a connection to the Internet, computers, printers, scanners, and software to keep up with time used and network management.

Kiosks are popular Internet connection centers (http://www.kiosks.org/). Some free how-to guides are available to help choose an enclosure and a printer as well as how to set up a kiosk project. The site may require registration to access certain areas.

A good plan would always be to begin very small with the ability to expand rapidly if necessary. You need to have your money available and to know reliable suppliers who can deliver quickly.

You might consider installing a Braille keyboard for $279 USD (http://www.electronickeyboards.com/). Having one of these available would be a good community relations gesture. Sighted people can also use it.

To get an idea about where some cybercafé locations are and how they are set up, take a look at some of these databases:

Cybercafes.com (http://www.cybercafe.com/) lists over 4,000 locations worldwide. There is a wide range of equipment, service, and prices available here, too.

CyberCaptive.com (http://cybercaptive.com/zz/smx.shtml) is another international database of cybercafés. This appears to be a volatile business. If not actually going out of business, they tend to continually move to more profitable locations with more attractive partnerships.
What does it cost to start?

The Cyber Cafe Checklist (http://www.cybercafechecklist.com/) gives several useful pointers to help you obtain the necessary permits, see what equipment you will need, and estimate your startup costs. The most important sections on the left sidebar are “Construction” and “Computers.” Many suppliers listed on some of these sites are outdated. Much newer equipment is available, and most prices are lower. The basic equipment needed is listed, however, and you can get a good idea of what you will need.

Talk to some local computer experts or your Small Business Center. In the U.S., these centers are often located on the campus of community colleges. Your state university system should also be able to give you technical assistance.

A good information source about possible locations would be any tourism agency in the area you desire for your cybercafé.

Do your research and check everything before spending money. This can be a very profitable and entertaining business. Just be careful, anticipate the challenges before they arise, and factor them into your business plan. Remember, it's never a sure thing in any business venture.

SOURCES

Gluck, Caroline. “3 million in Seoul at risk of Net addiction.” Straits Times, December 9, 2002. http://it.asia1.com.sg/newsdaily/news001_20021209.html.

Herz, J.C. “The Bandwidth Capital of the World”. Wired, August, 2002. http://www.wired.com/wired/archive/10.08/korea.html

Telewest Communications. “It’s speedier in Seoul.” Press Releases, 05-23-2002.
http://www.telewest.co.uk/ourcompany/
pressreleases/speedierinseoul.html

RESOURCES

Cybercafé business plan already prepared ($44.95 USD with $20 off when using Paypal for payment): http://www6.clearlight.com/cybercaptive/bpssl.shtml

Many business packages to help you make money in a cybercafé or any other retail operation: http://www.molecenters.com/

Kiosk Guides, http://www.kioskmarketplace.com/
marketplace_storefronts_client.htm?i=441

Source of Braille keyboard and others, http://www.electronickeyboards.com/

Database of worldwide cybercafés, http://www.cybercafe.com/

Another worldwide cybercafé database, http://cybercaptive.com/zz/smx.shtml

A checklist of equipment, permits, and other useful start-up information, http://www.cybercafechecklist.com/

Article by Yank Elliott, a home-based entrepreneur and freelance business writer in Belhaven, North Carolina, USA. His Website is http://www.furriwhalesworld.com/. He is currently a staff writer for IAHBE. Contact Yank at globalbiz@furriwhalesworld.com.