Thursday, January 17, 2013

Franchise VS Self Managed Cybercafe which one can give you more income? Part 2: Self Managed

Self Managed Cybercafe - How they operate?

A sustainable cybercafe managed solely by the owner. They handle everything in the cybercafe.
  • Pre Opening 
    • Location scouting
    • Business license application
    • Outlet rental negotiating
    • Game publisher negotiation
    • Furniture ordering
    • Computer hardware ordering
    • Software license
    • Internet Service Provider application
    • Insurance for business against theft, fire, etc
    • Electrical wiring, cabling and fixings of furniture and computers
    • Recruit supervisor, cashier and technician.
    • Decoration
    • Pricing
    • Promotion
  • Operation
    • Standard of procedures for handling customer complaints for games, computer hardware, payments.
    • Cashiering procedures and reports.
    • Standard practice of monitoring the outlet, CCTV, closing the outlet with alarm system
    • Hardware and software management, especially, upgrades, updates and maintenance.
    • In house promotion and event making.
    • Additional service managing such as selling snacks and stationary.
    • Staff scheduling
    • Handling legal documentation on staff (Socso, KWSP)

What should a cybercafe owner do well in managing the outlet?

In order to manage a cybercafe outlet well, the cost center and revenue center must be managed.

Revenue center:
Computers, Internet and Games. These hardware and software are the one that will directly bring in revenue. Without them, the revenue generated will be lesser or none.


Cost center:
Customer service and marketing.  If the customer service is bad, then the customer will not come back. Without marketing, student promotion or other promotion will not attract customers in, generating lesser revenue indirectly.

The customer service must be perfect. They paid a fee to play in the outlet, therefore there are a few factors that the owner must be aware of.
  • Players needs:
    • Good ambiance, air conditioned, good chairs, nice lighting, decorations, background music, clean toilet, smoke free, no rude and annoying players.
    • Large games variety, lots of latest and updated games.
    • Computer's speed to play a perfect game, good PC hardware specification.
    • Good internet connection and bandwidth management, ensuring no LAG occurrence.
    • Good customer service, polite and help when players have problem. Especially handling refunds.
    • Reasonable pricing for gaming.
    • Convenience for game reload and mobile reload, etc
Therefore, to keep revenue coming in, the player needs above must be addressed.

Hardware management

Problems happens with all sorts of reason, it can be due to the game incompatible with hardware drivers. 

Keeping inventory of the computers, modem, switch, router, load balancer, cache servers, game server, movie server, billing and cashiering computer.


Map network device chances are useful for troubleshooting for the network devices.

These inventory information will be easy for the technician to troubleshoot problems encounter.

Software management


Software includes games, especially online games updates. With the recent hit of Ragnarok Online 2, a popular online game with constant game updates, if the game updates were not done, players will have to spend their time (money) wasted on updating the game themselves where the cybercafe themselves could have done it.

There are few ways how owners can manage the game folders. But the most effective and efficient way is to use a Game Server.

If they don't there will be a lot of work.

To get things done faster, get a Auto Game Update service where game updates are done by third party while you work on other things.

Licensing


One of the cost drivers, depending on the games that is demanded by players, the game publishers will collect a fee from the owner and pays it back to the original game creator.

Possible risk of self managed cybercafe [Important]

Revenue generation- Without proper management system in place, owners tend to resort cheaper pricing to keep attracting customer to come back. This is an action that cybercafe will eventually take, and the outcome of cheaper pricing without fixing the root cause of problem will lead to business closure.

The picture below will illustrate the common root cause of problems. 

Fig.1 Root Cause of Cybercafe Net Profit Decreasing 1

Fig.2 Root Cause of Cybercafe Net Profit Decreasing 2



If the owners know how to solve the root cause of problems, then the business is sustainable. The next post is about the comparison in cash flow between the 2, franchise VS self managed cybercafe.

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