Common Pitfalls I-Café Start-Ups Run Into
This is my second in a series of articles about why do most i-café start-ups fail. I am writing on the subject based on my experience and personal observation of an industry where attrition is very high especially among the new entrants to the business. The series is also my way of winding up my advocacy work for the industry that sees a dim future due to oversupply, ever-decreasing prices of computer hardware and lower costs of Internet access.
I have already said that most new i-café owners have no idea about how to price the services and products that should give them a reasonable compensation for their long hours of work and a competitive return on their substantial investment in the business. It is not enough that they offer lower rates to bring the customers in and hope to keep them for good. Doing so would just trigger a price war that could bring down everybody in the business.
Apart from the general industry issue with price sustainability, the common pitfalls that i-café start-ups run into are listed below. Having engaged myself in the industry at its infancy as an owner/operator and later as an observer with keen eyes on the travails of the business, I know these are pitfalls and start-ups have a higher tendency to fall into them.
- Lack of technical skills by the owner – The computer units in a new i-café will not go on and on like well-oiled machines. They can stop functioning anytime especially that most customers do not care how they use them. They are not theirs after all. Calling for a technician’s help everytime something goes wrong costs money till it drains enough to influence the closure of the business. It should do well for an i-café start-up to have an owner that knows at least the basic of computer troubleshooting and repair.
- Computer specifications rules too much – Same goes for over investing in computers with the top-of-the-line specifications. Why would you do that when you are not even sure of how long you will stay in the business? Isn’t it prudent that you buy only computer units that could serve the current needs of your prospective customers.
- Poor ergonomics in shop’s design – In any business, it pays to be different from your competitors. It is not enough that you copied your neighbor’s layout, tables and chairs or sometime even cut down on their design to save money. As a new entrant, your shop should look better, not a cheap copycat.
- Gaming only – Understandably, i-café start-ups fall for gaming as their business model. As I already said, the business seems so simple as in set-up the games and wait for the gamers to come in and play. But it is not that simple, they may come to try your new machines but will soon go when new shops open in the neighborhood.
- Too much focus on power consumption – Power bill constitutes a big share in the operational expense of an i-café and the natural tendency of a newcomer to the business is to immediately cut down on it. You bought an air-conditioner that you used in the first few weeks of operation. Just when you have enticed some clients because of cool weather inside your shop, you will shutdown your air-conditioner when the first electric bill comes. If you are a customer of such i-café, would you continue to be one when a cool shop nearby?
- Poor staffing – I-cafés don’t just sell games/Internet access … they sell stress relief, belonging, recognition, feel good, connection and many other intangible value-add benefits that only come from how you and your staff engage with the customers. The i-café with the staff that make a feature out of remembering customer names, their standard fares and yesterday’s discussion succeeds, while those that don’t fail.
The above shows that i-café is not an easy business after all. It should do well for would-be i-café owners to make a business plan and plan it well. It maybe even better if you follow a simple saying, ‘if you do not know what you are going into, don’t go in’.
Adding some observations garnered from one year and a half operation of our own I-cafe business, I would say that lack of a project study was an important factor in our losing venture. We dared to start the business just to satisfy the desire of our second sons who had some five years experience as a i-cafe attendant. The location was good being along a major thoroughfare as my son’s old customers flocked around daily as well as new ones.
As all ten computer units were all brand new, gamers and surfers were naturally attracted. A one-hp air-conditioner plus an electric fan cooled the place well as it was a 4 x 6 square meter area only.
Since printing was the sole added service, we soon realized that the daily earnings were not enough to pay the bills as the monthly remittances of our eldest son abroad had to be diverted to the shop’s upkeep. Learning from other i-cafe operators’ experience, we realized the need to add five more computers which could not be done considering the rented space’s limited space.
Thus, after one and a half years existence, we had no choice but to close shop. Of course, it was still a blessing in disguise as ONDOY could have devastated our shop if we continued our unprofitable operation.
This is really a good read for those who are planning to venture into I-cafe business.
I once planned to venture into this business but I did not push it through when I-cafe’s started popping like mushrooms in every street corner in our place.
Very good article, i agree in most of your point, and i laugh about the aircon thing we also bought one and eventually put it in the back burner…you know what i mean…hehehe…….We have been engage in netCAfe buss for 4 yrs…have 10 unit, we print docs picture scan and the like we have solid gamers and local loyal clientele,
Over all its good, but now in our place new net cafe just started popping out, there are now six com shop in our area,some old ones folded, n some of them price an hr of P10 especially the new ones, but i still maintained may old price of p15/hr….among the reason that we are still in buss is may be my love of the game….were still doing well, at times break even, plus i educated our selves, me and my wife and one attendant, by enrolling in IT school, i guess i will be adding additional 5 or ten units,
Thanks for your articles on why i-cafe start-ups tend to fail.. 🙂 actually, me and my brothers have always dreamed of opening our own i-cafe. i always read the comments and hear the success and fail stories (somehow i’m reading more fail ones tho :/). that’s why i really really put into consideration your thoughts in the topic in my business plan. hehe im a bs entrep and i’m actually making a bp for an internet cafe – not entirely sure if i’ll be implementing this, but if it is received well by my professors that would really be cool.
naiintindihan ko na quite often, factors of failing is dahil binababa ng mga owners ang presyo to the point na non-profitable na siya. and there’s also the case na owners don’t know the technical aspect of an internet cafe (kaya di maganda ang pc at kung anu-ano pa)… mabuti n lang hindi ganun ang kaso sa amin, kaya medyo positive ako sa internet cafe na plano naming itayo (pero nakakatakot pa rin mabasa ang mga stories ng mga other cafe owners na nag-fail XD)