How to Start an Internet Cafe

It’s hard to believe, but internet cafes are still a thing. They’re more common internationally, but they still exist in the U.S. They are usually in lower income neighborhoods where people are less likely to have computers and internet access.

In a nutshell, internet cafes provide computers with internet access, and in today’s world, they usually also offer snacks and beverages. That means that starting an internet café can bring in multiple streams of revenue. 

If you like the idea of providing internet access to people who don’t otherwise have it, starting an internet café might be for you.

But first, you need some business savvy. Luckily, this step-by-step guide is full of all the business insights you need to start a successful internet café.

Step 1: Decide if the Business Is Right for You

Pros and cons

How much does it cost to start an internet cafe business?

Startup costs for an internet café range from $13,000 to $28,000. Costs include the space rental and computers.

You’ll need a handful of items to successfully launch your internet cafe business, including: 

• Computers
• Desks
• High speed internet connection

How much can you earn from an internet cafe business?

You can typically charge about $10 per hour for access to a computer and internet connection, plus you can also bring in revenue from selling snacks and beverages. These calculations will assume that the average customer will spend about $20 per hour. Your profit margin should be about 20%. 

In your first year or two, you might have 30 customers a day six days a week, bringing in $187,200 in revenue. This would mean $37,440 in profit, assuming that 20% margin. 

As you gain traction, you might double your numbers and have 60 customers a day. With annual revenue of $374,400, you’d make a tidy profit of $74,880.

What barriers to entry are there?

The only barrier to entry for an internet café is funding the startup costs.

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Step 2: Hone Your Idea

Now that you know what’s involved in starting an internet cafe, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research internet cafes in your area to examine their products and services, price points, and customer reviews.

• Make a list of businesses that offer similar products or services. 
• Review your competitors’ products – their features, pricing, and quality – and marketing strategies.
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the local market is missing an internet café that offers fresh baked snacks. 

You might consider targeting a niche, such as an internet café that’s also a coffee shop.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products and services

In addition to computer and internet access, you should offer food and beverages. Get creative with what you offer to attract more customers.

How much should you charge for internet café access?

Your prices should be based on market prices in your area, but also on your operating costs.. 

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market is going to be lower income people who are unlikely to be on social media. You’ll need to rely on more traditional marketing methods to reach them.

Where? Choose an internet caffe location

You’ll need to rent out a space for your internet cafe. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space for your internet cafe, you may want to follow these suggestions:

• High Foot Traffic: Opt for locations with lots of pedestrian activity, as this increases visibility and potential patronage.
• Near Educational Institutions: Proximity to schools, colleges, or universities can ensure a steady flow of students needing internet services.
• Proximity to Complementary Businesses: Being near restaurants, bookstores, or other entertainment venues can lead to mutual customer referrals.
• Size and Layout: Ensure the space is large enough for all your equipment, seating, and other amenities while maintaining a comfortable environment.
• Infrastructure: Check for stable electricity, good internet connectivity, and adequate ventilation in the location.
• Ease of Delivery: If you’re considering offering food or drinks, ensure suppliers can easily access and deliver to your location.
• Cultural and Social Alignment: Ensure the café’s theme and offerings align with the values and preferences of the local community.

Step 3: Brainstorm an Internet Cafe Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “internet cafe” or “cybercafe”, boosts SEO
• Name should allow for expansion, for ex: “Connect Sphere Café” or “Net Nest” over “Code Brew Café” or “Gamer Grid Hub”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create an Internet Cafe Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Provide a brief summary of your internet cafe business plan, highlighting your business concept and key financial projections.
• Business Overview: Describe your internet cafe, including its location, size, and the range of services you’ll offer, such as internet access, computer rentals, and refreshments.
• Product and Services: Detail the specific services and amenities your internet cafe will provide, including types of computers, internet speed, and any additional services like printing or scanning.
• Market Analysis: Analyze the local market for internet cafes, considering factors like demand for internet services, customer demographics, and potential growth opportunities.
• Competitive Analysis: Identify competitors in the area and explain how your internet cafe will differentiate itself, whether through pricing, quality of service, or unique offerings.
• Sales and Marketing: Outline your marketing strategies, including online and offline advertising, promotions, and partnerships to attract customers.
• Management Team: Introduce yourself and any key team members involved in running the internet cafe, emphasizing relevant experience in the technology or hospitality industry.
• Operations Plan: Detail the day-to-day operations of your internet cafe, covering aspects like staff management, equipment maintenance, and customer support.
• Financial Plan: Present financial projections, including startup costs, revenue forecasts based on expected usage, and profitability estimates.
• Appendix: Include any supplementary materials, such as floor plans, equipment specifications, and marketing materials, to support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to internet cafes. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your internet cafe will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding an internet cafe business. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Business Licenses and Permits

Starting an internet cafe business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your internet café business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Book Now”. This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

1. Membership Programs: Implement loyalty programs or membership cards offering discounts, free hours, or other perks to encourage repeat business and build customer loyalty.
2. Social Media Engagement: Leverage social media platforms to engage with your local community, share promotions, and create a digital presence that resonates with your target audience.
3. Partnerships with Local Businesses: Establish partnerships with nearby businesses, such as schools, libraries, or offices, to offer exclusive discounts or joint promotions, expanding your reach through cross-promotion.
4. Theme Nights and Events: Host themed nights or events, like gaming tournaments or study sessions, to create a sense of community and attract diverse customer segments.
5. Student Discounts: Offer special discounts for students to attract the student demographic, a key market for Internet cafes, by partnering with educational institutions or advertising in student-centric areas.
6. Referral Programs: Create a referral program where existing customers receive incentives for bringing in new patrons, encouraging word-of-mouth marketing and expanding your customer base.
7. Flexible Pricing Packages: Introduce flexible pricing packages, such as hourly rates, day passes, or monthly subscriptions, to cater to different customer needs and budgets.
8. In-House Promotions: Display in-house promotions prominently within the cafe, showcasing discounts, bundle deals, or limited-time offers to stimulate impulse purchases.
9. Community Involvement: Engage in community events or sponsor local activities to foster a positive image and strengthen your ties with the neighborhood.
10. User Reviews and Testimonials: Encourage satisfied customers to leave positive reviews on online platforms, showcasing the positive experiences others have had at your Internet cafe.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your internet cafe meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your internet cafe business could be: 

• Experience high-speed browsing in a modern and comfortable atmosphere.
• Connect, collaborate, and create in our state-of-the-art internet cafe.
• Unleash your productivity with premium Wi-Fi and cutting-edge technology.

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an internet cafe business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in internet cafes for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in internet cafes. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for an internet café business include:

• Café attendants – Greet customers, take payments
• General manager – scheduling, accounting

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run an Internet Cafe – Start Making Money!

Internet cafés provide a valuable service in communities in need. You’re unlikely to become a millionaire by starting an internet café, but the rewards of helping people can be much more satisfying. Giving people access to the internet can help them gain access to information and to find jobs.

Now that you know what’s involved, you’re ready to be on your way to internet café success!