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Make business boon last

Plan well, be streetwise and focus on sustainable business that could benefit from the massive influx of international visitors, but that would not fade upon the conclusion of the Soccer World Cup. That is the advice offered by Danny Jordaan, chief executive officer of the Local Organising Committee of the 2010 Soccer World Cup, and by André Diederichs, Old Mutual’s specialist on small, medium and micro enterprises (SMMEs).

While 86% of SMME owners believed that the 2010 Fifa Soccer World Cup would be positive for the country, only 45% believed that they would benefit from the event, the SME Survey 2009 has found.

“Fifa is known for its zealous protection of the rights of its sponsors to do business in zones surrounding match locations and therefore, to a large extent, works to exclude the participation of ‘outside’ organisations,” survey researcher Arthur Goldstuck said.

He added that as sponsorships were far beyond the means of any SMMEs, it rendered direct benefit to these business owners “practically impossible”, a fact these business owners were well aware of.

However, creative entrepreneurs could still benefit, the researcher stated.

“Visitors to the event are very likely to do more than just attend matches. That allows for some spillover of benefits,” said Goldstuck.

“Young entrepreneurs can attract tourists to their communities and offer services such as accommodation, food and beverages and even sell cultural artefacts,” added National Youth Development Agency (NYDA) chairperson Andile Lungisa. (Additional source: “Mail & Guardian Online”, 19 December 2009).

The researchers also found that companies that applied for funding from the NYDA, which cofounded the survey, were more confident about benefiting from the sporting event than others, with 73% saying they expected to benefit, compared with 45% for the overall sample.

Jordaan, speaking at the Centre for Small Business Development at the University of Johannesburg's Soweto Campus, said: "We want to have an impact on small and medium enterprises."

He warned, however, that businessmen should not create an operation entirely dependent on the World Cup, but must look at sustainable ventures beyond the tournament.
"Focus, study the market, look at the opportunities."

And for informal traders, Jordaan had pointed advice, reminding South Africans that this was not a "Chiefs versus Pirates match, but a tournament lasting 30 days".
"Don't just look at trading at the stadiums. We have to look more broadly than the 90 minutes of the match,” he said.

Broadening the impact of street traders

Global Brands, the master licensee for Fifa merchandise, is working on a deal that would help local street traders cash in on the 2010 Soccer World Cup.
The company said that the plan would enable the informal sector to retail exclusive World Cup goods.

Nicholas Bloom, licensing director at Global Brands, said it was developing a programme where hawkers could buy the licensed products and sell them around the country. The idea was yet to be pitched to the soccer governing body, he said.

Asked if the goods would be sold to the hawkers at a cheaper rate, Bloom said: "We will always adhere to the highest quality standards, but it will be products which are appropriate for that market."

According to last year's labour force survey, 2.4 million people work in the local informal sector. There are estimated to be between 60 000 and 70 000 street traders in Durban and Johannesburg and at least 30 000 in Cape Town.

Focus on fan parks

Jordaan said the average tourist would spend about 25% of their budget on accommodation, 18% on transport, 15% on food and trinkets, and 12% on leisure.   

He added that there were vast business opportunities to be had at public viewing areas, which, unlike fan parks, would not be regulated by Fifa.

With tickets for the final already oversubscribed, many fans would make their way to these areas.

According to the “South African Food & Beverage Reporter”, about 11 000 tons of food and 14 million litres of beverages will be needed to feed visitors coming to the event, something SMMEs in this industry could benefit from.

The importance of accurate projections

Diederichs said SMMEs must plan well if they are to benefit from the 2010 Fifa Soccer World Cup.

"The capacity to balance supply with demand when some 500 000 foreign soccer fans converge on our country's shores for next year's Soccer World Cup spectacle will largely determine the level at which South African businesses will be able to capitalise on the event," said Diederichs.

With a potential injection of an estimated R55-billion into the economy and 415 000 new jobs created, business owners would have to make fairly accurate projections if they wanted to claim their piece of the action from the once-in-a-lifetime business opportunity.

"With no blueprint outlining the needs and budgets of visiting soccer fans, business owners will have little idea of what to expect from the single largest sporting event on the globe."

Enthusiastic business owners might over-expose themselves financially by investing in too much stock or supplies and find themselves with dead stock at the end of the tournament.

On the other hand, those who were overly cautious might under-cater for the event and miss out.

Diederichs advised business owners against investing in huge supplies of stocks by optimistically assuming their entire offering would be snatched up by foreign shoppers. (Additional source: Sapa)

"One way to manage stock levels is through prior arrangement with suppliers to be on stand-by, even after-hours, for sudden shortfalls in your business – whether it be a restaurant, gift shop, small retailer, or other business," he said.

He said it was better to pay a premium for stocks delivered after-hours than have stocks that were not selling.

Business owners wishing to capitalise on the World Cup should familiarise themselves in good time with the fixtures to be played in their city and plan around them.
They should also draft an action plan on how to maximise opportunities for their businesses.

"Ensure your marketing efforts reach the soccer audiences, and be fair – don't over-charge your foreign patrons just because of favourable exchange rates," he said.
Diederichs advised SMMEs to train their staff in good time, improve their professionalism, and explain the business's expectations to them.

He said SMMEs should not infringe on Fifa trademarks, as they might then be liable for prosecution.

There will be a campaign to educate South African businesses on the tournament as a protected event.

Restrictions

Legislation strictly protects Fifa's trademarks and reserves certain areas of commercial activity for Fifa and its sponsors alone. Large events like the World Cup are made possible because of the large amounts of money paid by sponsors, and these sponsor-rights are protected.

Government gives this protection to large events on the basis that they are in the public interest.

While opportunities for businesses will be available, businesses seeking to benefit from the World Cup need to understand and comply with the law.

The source of these restrictions is the Merchandise Marks Act 17 of 1941, which outlaws the application of false trade descriptions to goods, provides for the protection of prohibited marks and prohibits ambush marketing.

Ambush marketing is when a business, which is not an official sponsor, associates itself with an event, but without using any of the official trademarks.

Section 15(A), an amendment to the legislation, prohibits the use of a trademark in relation to a protected event (in this case, the World Cup) without prior authority from the event's organiser. (Source: “Info South Africa”).

So, for example, a local clothing manufacturer may not – unless it is endorsed as an official commercial affiliate – print the Fifa logo on T-shirts to be sold during the event.
The Act makes the unlawful use of trade descriptions and emblems a criminal offence. If a trader conducts business in contravention of the Act, any person may institute criminal proceedings or approach the High Court for relief.

The Merchandise Marks Act makes provisions for certain areas such as stadiums and fan parks to be designated as exclusion zones – in which prescribed commercial activities may only be performed by persons identified by the Local Organising Committee (LOC).

Fifa's commercial rights will be protected by the National Rights Protection Committee – which includes representatives from the Department of Trade and Industry, Fifa and the Organising Committee.

Words and phrases to be ignored

Fifa has registered the words “World Cup Soccer 2010” and only certified sponsors can use the phrase.

“Fifa also owns several other copyrights to the event, and the tourism industry needs to be well aware of them before they embark on costly marketing campaigns this year,” says Ectour Chairperson, Anleen Louw.

Ectour is a private-sector group marketing organisation for the Eastern Cape.

The issue of copyright was raised when Fifa took Cape Town businessman Grant Abrahamse to court because a key ring he designed for the 2010 World Cup infringed on Fifa’s intellectual property interests.

His key ring had pictures of a vuvuzela and a soccer ball on it. According to reports, Abrahamse had approached Fifa to settle the case without litigation, but Fifa refused.
The following words and slogans have been registered by Fifa and may not be used without authorisation:

2010 FIFA World Cup South Africa
2010 FIFA World Cup
FIFA World Cup
World Cup
2010 World Cup
World Cup 2010
South Africa 2010 or SA 2010 or ZA 2010
2010 South Africa
Football World Cup
Soccer World Cup
And any similar derivations or combination thereof.

Importance of SMMEs for SA economy

As large enterprises have restructured and downsized, SMMEs have come to play an increasingly important role in South Africa's economy and development.

The sector has grown significantly. In 1996, around 19% of those employed were in the informal sector of the economy. By 1999 this had risen to 26%. The government has therefore targeted the SMME sector as an economic empowerment vehicle for previously disadvantaged people.

Data on small and medium enterprises suggests that these enterprises contribute about half of total employment, more than 30% of total gross domestic product (GDP), a GDP which will be boosted by R33 billion in direct spending on stadiums and infrastructure in 2010.

Also, one out of five units exported is produced in the small and medium sector in South Africa.

SMMEs in Limpopo upbeat about World Cup benefits

Meanwhile, SMMEs in Limpopo province were confident of the benefits of World Cup event, according to the latest SME-survey.

“The Peter Mokaba Stadium in Polokwane serves as a beacon of hope for many; it is relatively a lot more significant for Limpopo than, for example, the facility in Green Point is to the Western Cape, since it is just one of many tourist attractions in Cape Town,” said Goldstuck.

In Limpopo Province and in the Eastern Cape, 88% of respondents were positive about the impact of the World Cup on the country, while in the Western Cape it is 86% and Gauteng 84%.

However, in Gauteng, Mpumalanga and KwaZulu-Natal provinces people were as aware of the disruption as they were of the games, Goldstruck noted.

“Again, there is a lot of activity in these provinces; the World Cup is a major development for them, but amid ongoing development that is happening regardless,” he added.
The Free State and North West provinces came in far lower, at 81% positive.

“That is still overwhelmingly enthusiastic, but it would appear that SMMEs in these regions are less likely to believe there will be any direct or other benefit from the event,” Goldstuck said. (Additional source: “Mail & Guardian Online”, 19 December 2009)

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