8. LEGAL
8.1 Mortgage/Rent Requirements
Premises in CBD leased at rental of R6 000 a month. Two year lease with an option to renew for a further one year. Escalation: none in year two; 7% in year three.
8.2 Regulations & Permits
The following are required:
- Registration as a business
- Business trading licence from Kouga Municipality
- Restaurant trading licence from Kouga Municipality
- Health inspection certificate from Kouga Municipality
- Fire safety certificate from Kouga Municipality
8.3 Agreements
Agreements are to be entered into with the following to ensure continuity of maintenance and support in the medium term:
- Internet Konnect, Port Elizabeth
- EC Computing, Port Elizabeth
- Go Rentals, Port Elizabeth
8.4 Trademarks & Copyrights
The Big Surf Internet & Lifestyle Café! name, logo and trademark will be registered in South Africa.
9. FINANCIAL PLAN
9.1 Start-up Capital
Analysis of Start-up Costs
| Legal & Accounting fees: | R 5 000 |
| Furniture & fittings: | R 25 000 |
| Equipment: | R 60 000 |
| Stationery: | R 1 000 |
| Advertising & marketing: | R 9 800 |
| Other: | R 10 000 |
| Total start-up cost: | R109 800 |
9.2 Fixed business costs
Analysis of Monthly Expenses
| Rent: | R 6 000 |
| Utilities: | R 5 000 |
| Wages & salaries: | R 34 600 |
| Insurance: | R 800 |
| Bank charges: | R 350 |
| Bank loans: | — |
| Repairs & Maintenance: | R 1 000 |
| Vehicle Expenses: | R 3 000 |
| Travel: | R 1 000 |
| Telephone: | R 600 |
| General Supplies: | R 800 |
| Website & IT backup: | R 2 500 |
| Marketing & Advertising: | R 1 000 |
| Miscellaneous: | R 2 000 |
| Total average fixed business costs: | R 58 650 |
9.3 Break-even Analysis
In year one, a break-even scenario would be adequate. To break even, the business requires a turnover of approximately R60 000 per month, which equates to R2 400 per day (assuming a six-day week and 25 working days per month). This could comprise the following mix of average daily sales:
| Internet / Wi-fi: | R1 500.00 |
| Coffee shop/snack bar: | R 600.00 |
| Gaming (non-internet): | R 200.00 |
| Photocopier | R 25.00 |
| Other: | R 100.00 |
| Total: | R2 425.00 |
9.4 Important Assumptions
| Year 1 | Year 2 | Year 3 | |
| Current interest rate | 8.5% | 9.0% | 9.5% |
| Tax rate | 28% | 28% | 28% |
| Electricity tariffs | — | +8% | +5% |
| Av. internet / Wi-Fi spend | R50 per customer per visit | Unchanged | +5% |
| Av coffee shop spend | R30 per customerper visit | +10% | +10% |
| Av. spend on non-internet gaming | R5 000 per month | +10% | +10% |
| Av. spend on repair & upgrade services | R2 500 per month | +8% | +12% |
9.5 Projected Profit & Loss (first 12 months of operation)
| Annual Gross Revenue: | R821 200.00 |
| Less Start-Up Costs & Overheads: | R813 600.00 (R109 800 + R703 800) |
| Net profit | R 7 600.00 |
9.6 Projected cash flow
* See Section 13 (Appendices) for full Projected Cash Flow statement
9.7 Projected balance sheet
* See Section 13 (Appendices) for full Projected Balance Sheet statement
9.8 Business Loan / Start-up Capital
No bank loan is being sought. The owner will fund this from his own savings and via private loans from family.
10.0 Personal financial statement of owner
* See Section 13 (Appendices) for full Personal Financial Statement of owner
