Business Proposal

Kyangombe Cyber Cafe

January 2011

Contact: Genesis Ngari, genesionjeru@yahoo.com

Contents
Executive summary Kyangombe opportunity Business proposal Capital requirements Contact information

Business Proposal Kyangombe Cyber Cafe

Executive Summary
Unique Opportunity to be First-to-Market Cyber Services Provider in a New Nairobi Slum

Market

Demand for pay-per-usage access to the Internet is very high in developing countries where mobile and high capacity bandwidth networks are still being built Cyber cafes that offer other business services are a thriving business in the Nairobi area Kyangombe is a newly developing slum settlement a few miles east of Nairobi Recent voting results revealed approximately 50,000 people live in the slum Relative to other slums in Nairobi, Kyangombe is more secure and contains a higher mix of temporary and permanent structures There is one main road into Kyangombe that connects to various side roads There is a great opportunity to launch the first cyber caf in Kyangombe Numerous other businesses exist on the main arterial roads but no internet providers Nearest cyber caf is at the Mombasa Road junction near a supermarket (~2km from Kyangombe) and charges 2-4x the average market rate Services to be offered: Terminal access to Internet or Office suite at 1 ksh per minute (market average) Scanning and Photocopying services Lamination services Binding services Numerous permanent structures are available for reasonable rental rates on the main road into Kyangombe Month 1: acquire computers, tables/chairs, scanners / printers, and other equipment and set up 3-5 stations Month 2: finalize location and sign contract Month 3: negotiate Internet service providers, etc. Month 4: set up location and open business

Business

Business Proposal Kyangombe Cyber Cafe

Plan

Kyangombe Opportunity (I)

A Captive Audience in a Newly Developed Slum
Nairobi is a city well-known for its proliferation of slum settlements Estimated that ~2M of the citys 4M population lives in a slum Slums are typically dense housing areas with high population density, few if any public services, and numerous informal businesses Kyangombe is a newly developing slum located on Mombasa Road outside Nairobi Major highway to major airport (JKIA) Significant matatu and foot traffic in the broader area Land owned either by the city or Kenya Airways (unclear) Kyangombe is relatively more secure than other Nairobi slums Higher standard of living Structures are more durable (built from tin sheets rather than mud) Numerous permanent structures frame the area Kyangombe has one major road leading from Mombasa Road to the slum, which in turn connects to other side roads at various junctions Numerous small businesses have already been started in the slum However, to date no cyber caf or computer center has been developed

Business Proposal Kyangombe Cyber Cafe

Kyangombe Opportunity (II)

Excellent Location in a Dense Area
Target location

Main road leading into Kyangombe

Side road in Kyangombe

Business Proposal Kyangombe Cyber Cafe

Side road in Kyangombe

Business Plan: Kyangombe Cyber Cafe (I)

Overview of Business
Services: full-service cyber caf and business center Internet access and computer usage (e.g., Microsoft Word) priced per minute with a minimum Target: 1 ksh per minute with minimum of 10 ksh per usage (current market average) Business services such as printing, binding, lamination, photocopying, and scanning Personal services such as printing, CD burning, etc. Location: main road into Kyangombe, where majority of foot and motorbike traffic occurs Rent a permanent (cinder block, metal roof, owned by a landlord) structure that will provide security for equipment and patrons Located near an intersection with a residential side-path Prominent signage Evaluating multiple options: second floor concrete building near a school, first floor concrete building near other businesses, etc. Rent estimated to be 4,000-5,000 ksh per month including utilities Financial model Startup costs ranging from 40,000 ksh to 150,000 ksh ($500-2,000 USD) based on approach Monthly revenue potential of 35,000 ksh Monthly operating expenses of 8,000 ksh Net monthly profit of 27,000 ksh

Business Proposal Kyangombe Cyber Cafe

Business Plan: Kyangombe Cyber Cafe (II)

Example Locations

Option 1 Second floor room with toilet access on a balcony overlooking main road. Secure door, tile floors, solid walls, ample space.

Option 2 First floor shop with solid door and window near other shops. Numerous options available for rent.

Business Proposal Kyangombe Cyber Cafe

Business Plan: Kyangombe Cyber Cafe (III)

Revenue and Expense Model
Assumptions Operating hours per day Days per month Internet usage Internet patrons per hour Average usage (minutes) Cost per minute (Ksh) Business services Copies per day Cost per copy (Ksh) Scans per day Cost per scan (Ksh) Laminations per day Cost per lamination (Ksh) Bindings per day Cost per binding Expenses Monthly rent / utilities Monthly internet access Ink / toner per month Other supplies Salaries
Business Proposal Kyangombe Cyber Cafe

Pro forma Profit & Loss 8 22 Revenue Internet usage Copying Scanning Laminations Bindings Total revenue Expenses Rent Internet Supplies Wages Other miscellaneous Total expenses Pre-tax profit 5,000 3,000 600 1,200 None Monthly 26,400 880 1,100 2,200 660 31,240

6 25 1

20 2 5 10 5 20 1 30

5,000 3,000 1,800 1,000 10,800 20,440

Capital Requirements: Three Scenarios

Initial Estimates
All dollar figures in Ksh Description Quantity Computers 3 Printers 2 Seats 5 Shelving 2 Power extension 3 Lamination machine 1 Binding machine 1 Bulbs 2 Card reader 2 Webcam 2 Head phone 2 UPS 3 Network modem 1 Receiver 1 Network pins 10 Network cables 50 Counter books 2 Miscellaneous Shipping of donations Grand total Scenario A: Higherend equipment Unit cost Total 15,000 45,000 10,000 20,000 5,000 25,000 5,000 10,000 1,500 4,500 6,000 6,000 5,000 5,000 500 1,000 500 1,000 1,000 2,000 500 1,000 3,000 9,000 5,500 5,500 6,000 6,000 25 250 20 1,000 100 200 10,000 Scenario B: Cheaper equip. Unit cost Total 15,000 45,000 5,000 10,000 1,500 7,500 3,000 6,000 667 2,000 6,000 6,000 5,000 5,000 150 300 250 500 500 1,000 500 1,000 2,000 6,000 5,500 5,500 6,000 6,000 25 250 20 1,000 100 200 5,000 Scenario C: Some donated equipment Unit cost Total 5,000 25,000 5,000 10,000 1,500 4,500 6,000 6,000 5,000 5,000 500 1,000 500 1,000 6,000 6,000 25 250 20 1,000 100 200 5,000 5,000 69,950

152,450

108,250

Business Proposal Kyangombe Cyber Cafe

Contact Information
Genesis Njeru Ngari genesionjeru@yahoo.com Cell: 254 0720 993509 Background Author, Slum: The People of Kibera (2009) Non-fiction book documenting the lives of people living in Kibera, the largest slum in sub-Saharan Africa www.peopleofkibera.com Co-founder, Blessed Hands Beauty Salon Salon and business center located in Laini Saba, Kibera, founded using funds from book sales of Slum Translator, Katekisimo (2010) Developed a Swahili version of the Childrens Catechism from English to use in churches in East Africa

Business Proposal Kyangombe Cyber Cafe