An entrepreneur is loosely described as an individual who organises, operates and assumes the risk for a business venture.
Individuals with entrepreneurial flair are the powerhouse of any economy, creating jobs and introducing innovative ways of doing business.
While most entrepreneurs go on to establish and lead the small, medium and micro enterprises (SMMEs) that form the cornerstone of the local economy, some go on to establish national and international companies with billions in annual turnover. SMMEs typically employ fewer than 200 employees: small (between 21 and 50); medium (between 51 and 200), and micro (fewer than 20).
From roadside vendors and spaza shop owners to the start-up information technology company, South Africa boasts an abundance of entrepreneurial spirit. But the country is behind the curve in global entrepreneurship stakes.
The 2008 Global Entrepreneurship Monitor, conducted by the UCT Centre for Innovation and Entrepreneurship, ranked South Africa 23rd out of 43 countries.
The survey included snippets of good news. It revealed that 79% of new business activity was driven out of opportunity rather than of necessity.
Government hopes the World Cup will create more opportunities for existing SMMEs and encourage new entrants to the business world. But it hasn’t been plain sailing.
Too ‘rich’
The press is full of stories about greed and profiteering in the run-up to the event. Perhaps the strangest release is an appeal by Fifa for local businesses to remain price competitive.
That’s rich coming from an organisation that runs the most profitable tournament in the world.
Says Arthur Goldstuck of World Wide Worx: ‘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.”
Small businesses in the hospitality and tourism industry were totally unprepared for the seemingly exorbitant licence fees demanded to join the Fifa Match tour operator programme, for example.
The $35 000 is out of reach of many local entrepreneurs. Realism has set in and, instead of being disheartened, business owners have turned their attention to the long-term benefits of the tournament.
Barbara Plato-Chrisstoffels of Somoho Tours in Cape Town notes: ‘With the infrastructure upgrades, our natural, beautiful Mother City and its humble, giving people, all the world will experience, see and know South Africa and Cape Town as a luxurious, affordable destination. These tourists will return to experience more of it with their family, friends and businesses.”
A positive big picture
Most small business owners remain unconvinced of the benefits of the tournament.
Philip Ardé, owner of QPS Productions, a Centurion-based company specialising in signage, design and print, is disappointed with the pre-tournament hype.
‘I thought the World Cup would bring in a lot of new work, but we’ve seen nothing so far,” said Ardé. He doubts whether large tenders in the print industry will trickle down to SMMEs and, barring any lastminute marketing attempts, expects business as usual through 2010.
Andrew Honey, publisher of the popular Entrepreneur magazine, writes that ‘the Fifa 2010 World Cup will come and go”. Business success during the tournament hinges on the sector in which the SMME operates. If you’re not in a position to benefit from the 476 000 expected tourists, then expect business as usual.
The SME Survey 2009, compiled from 2 500 telephonic interviews with business and financial decision-makers at SMMEs, draws similar conclusions. The survey shows that 86% of these organisations’ owners believe the event will be positive for South Africa, while only 45% think they will benefit from it.
The tournament has given birth to thousands of pseudo-entrepreneurs.
Ordinary homeowners have been lured by promises of huge returns to market their primary residences as ‘guest houses” for the event. They will meet with varying levels of success.
Those lucky enough to secure guests through companies such as Seeff and Just Letting will turn quick profits with limited effort, while those who spruce up and market their properties independently may even catch the small business bug and remain in the industry for the future tourism bonanza.
‘To the newly formed ‘connected’ and ‘fly-by-night’ businesses, it is going to be difficult for you to sustain your turnovers,” notes Plato-Chrisstoffels, adding that ‘the corporate workplace will have plenty of potential applicants knocking on doors next year.”
Existing customers
Love or hate it, the World Cup event is the centre of many informal business talks. At a recent lunch, the conversation quickly turned to the exploitative practices of big and small businesses alike.
The story is all too familiar. Eyes glaze over at the thought of squeezing a few extra rands out of the well-to-do football tourist.
Suddenly, return domestic airfares between Johannesburg and Cape Town shoot up from R1 500 to R4 000 a person. A single night’s accommodation in a three-star hotel could cost R2 000 a night and a budget rental car almost doubles from R270 to R500 a day.
This kind of pricing is going to have different impacts on large and small businesses. Post-2010 the big airlines will simply drop their prices back to ‘normal” ranges and resume ‘business as usual” as their clients flock back.
The country’s car rental agencies and hotels can expect a similar outcome. But small business — the bed and breakfasts that stuck their regular clients with 40%-plus accommodation hikes — could be in for a nasty shock.
When the tourist surge expected in the weeks before and after the event dries up, they could struggle to secure occupancy.
Don’t sacrifice your loyal local customers for a one-month turnover surprise. The long-term consequences could be unpleasant.