'World Cup may disrupt business'

Johannesburg - To coin a South African phrase, the 2010 World Cup may be "vrot" with opportunities for small- and medium-sized enterprise (SME) owners, but it's also fraught with dangers for those who are ill prepared.

That's the warning from Michael Lombard, the general manager of small business financing group GroFin South Africa, which has over R52m invested in SMEs in the country.

Business owners will need to do extra planning around access to premises and there will be pressure on suppliers to ensure that stock can be delivered and dispatched on time.

"SMEs operating close to the stadiums need to be prepared for the effects brought on by an influx of extra people," he said.

Industries which could be affected include retail fuel franchises as well as those operating in the fast-moving consumable goods (FMCG) sectors.

"For example, filling stations could run dry. If they are not prepared for this, they face three days of being unable to trade, as fuel needs to be ordered from suppliers three days in advance."

He said: "Business owners trading in fast-moving consumer goods must take precautions for the delayed delivery of stock as a result of increased traffic in host cities."

This means that now may be a good time for small business owners operating in these sectors to do some "stress testing" of their operations.

Small business experts who chatted to Fin24.com identified some of the following as areas where owners should consider engaging suppliers:

Stock levels and pricing: Are your suppliers expecting a meaningful decline in stock on hand or an increase in delivery time over the World Cup? Do they anticipate price increases and what impact will that have on the products you sell?

Advanced ordering: Would your business score with better payment terms by pre-ordering from suppliers?

Access to premises: What will the impact of changed traffic patterns be on your premises? Is your landlord planning to rent out parking space to spectators which will reduce accessibility for your clients? Will traffic authorities be closing off routes around you and will this affect your business?

Ambush marketing: Whether intentional or not, your proximity to major Fifa flashpoints - including stadiums and fan zones - means your marketing could be considered as "ambushing" World Cup brands, which could put you on a collision course for legal issues. Know your legal rights.

Insurance: Increased volumes of people lead to opportunities for damages to property, theft or even loss of revenue should you run foul of legal authorities who will be watching Fifa-designated areas closely for chancers. Consult with an insurance expert to identify how your business can be best protected.

Despite some of the negativity about the state of the South African economy, Lombard is upbeat.

He said: "Although the impact of the global financial crisis on consumer appetite has resulted in a lower demand for SME goods and services, the approaching Fifa 2010 World Cup, lower interest rates and stabilising employment conditions will assist in increasing the credit extended to households."

- Fin24.com