Is there hope in the Net Cafe Business?

About a year ago, I wrote about the state of the internet cafe business in the Philippines and why it’s a seemingly losing battle. A couple of days ago, I mentioned that I started venturing into the Internet Cafe with a friend. I got emails asking why I thought the net cafe is still a viable business and here’s my take.

Again, I’ll refer you to the points I highlighted in my previous entry — location. If you believe that you have the right location then you’ll have a higher probability to succeed or even just getting back your investment in a short time.

Your goal here is to be able to recover enough of the initial capital in order to re-invest in upgrading your workstations in 2 or 3 years. Otherwise, you get left behind with older and slower PCs that you’ll lose customers (esp. gamers) to nearby competitors that offer better ones for the same rates.

The major driving force with my decision to going into the internet cafe business is different though. What I am looking into are parallel businesses that I can put on top of the net cafe business without incurring additional or too much overhead.

That way, all I need is for the revenues of the net cafe to at least cover rent, bills and wages. Whatever profits I am expecting will come from other side businesses.

What are possible side businesses that one can add on top of an internet cafe? Well, some of them are already being offered in most shops:

• Gaming cards for pay-for-play games (Level-Up, e-Games).
• Cellphone reloading for Smart, Globe and Sun Cellular.
• Photocopying, printing, scanning and CD/DVD burning services.
• Food and drinks.
• Photo-ID and photo printing.
• Custom cellphone uploads (ringtones, wallpapers, games, apps).

You can also offer outsourced services:

• Computer sales and repair services.
• Encoding/typing services.
• Digital Photo services (better than webcam quality Friendster photos).
• Card Design/Printing (calling cards, invites, certificates, custom greeting cards, etc.)
• Video conversion/authoring.
• Cellphone and electronics repair services.

If you add revenues from all these sources, they could be a significant amount on the returns. Of course, you only select the ones that your manpower can handle and your location. The rest can be outsourced. The ideas here are more applicable if you’re located in subdivisions or villages. You can look into totally unrelated combinations too — like a laundry shop and a net cafe, a video rental, a used book store, a car wash service or a 24-hour grocery.

The idea is to share the burden on the rent and bills which usually takes up majority of the operational costs.