The profitability of the cyber café

One of the most modern and popular business ideas in our time is the opening of the terrestrial Internet cafe in Peru. And for this project to be successful and profitable, an entrepreneur must evaluate its effectiveness and draw up a reliable business plan.
To do this, you must not only take into account the category of customers, geographic competition, services or pricing policies, but also estimate the profitability of Internet cafes.
Profitability is a relative measure, comparable to effectiveness: how many cents of profit on each monetary unit invested in business? Consequently, the factor depends on profits and income in various variations for each type of trade. Below are the main financial aspects that are worth considering in income and expenses for the owner of an Internet cafe.
Capital investments:
1. Purchase of goods.
2. Sign, decorations, repairs.
3. Connection to provider.
4. Furniture.
5. Machinery and equipment.
6. Training of personnel.
In the asset structure, investments in fixed capital occupy a significant part and can be close to 60%. Finding a good place with the large number of customers could force you to change several points, so it is better to start with the rented room with the right to buy later, and invest now in a reliable start. If you start a business in Peru with the purchase of a new room, in which you are already sure, it will be the most significant investment expense.
Current expenses
A) Operative expenses
1. Local rental.
2. Personnel salary.
3. Payment of public services.
4. Maintenance, cleaning of the territory.
5. Protection.
6. Property insurance.
7. Advertising, marketing, management.
8. Property tax.
Depending on the project, the share of this type of expense can be 20-40% of gross income and in the repair period reach 50%.
It is reasonable to spend up to 2% of gross income on protection and 8-15% on maintenance and utility costs. If your store is not autonomous and is located in a shopping center in Peru, this percentage may be two times less.
The share of advertising costs reaches 10% in the case of very active promotion in a given period.
B) Regular payments in a period
1. Maintenance of information systems, acquired for the business.
2. Amortization.
3. Public services.
4. Advertising.
5. Communication and Internet services.
6. Repair and maintenance of machines.
7. Bar products or other consumable materials.
The most important parts in this section are staff salaries and amortization, such as a regular repayment of capital misappropriation.
Profit = Income – Expenses
After deducting all expenses from the added income, we can calculate the profit of the Internet cafe in Peru. If you choose the effective method of work, income in this case will consist of:
1. Entry of money, as payment for services rendered to visitors.
2. Competitor sanctions, if any.
In expenses it is worth taking into account interest payments to financial institutions, if you have a loan for your business.
It is very important to predict and adjust the theoretical and practical income per day and per month, control the optimal number of computers and gaming terminals and their average workload.
According to experts, you can recover the main costs of the organization of sports betting establishments already within one or two years, if you prepare a reliable financial plan, invest sufficient efforts and secure at least 50% of the expected number of visitors.