BEE (KykNET’s Winslyn)

In my previous insert, I spoke about how you can start your own business. I was so surprised with the reaction the viewers had regarding BEE. I received a few messages from people that felt that they can’t start their own business in South Africa because of BEE requirements. Therefore, I decided to speak about BEE and why it doesn’t have such a big influence on small businesses.

BEE is an initiative by the South African government which was created to help previously disadvantaged people because of the old apartheid laws. How BEE works is that every business gets points for how actively they are involved with black empowerment. These points are then counted together and the business is assigned a certain level. Level 1 being the best and level 7 being the worst. When other businesses are looking for new suppliers, they look at this BEE status because if they spend more with businesses that comply with BEE standards, they gain points. The government and other institutions regard these high-level BEE companies as preferred providers.

There are two things that most people don’t know about BEE:

 BEE isn’t just about ownership.

People tend to think that they must give up a part of their business to get a BEE status, this however is not true. BEE points are gained by ownership but there’s a lot of other components too like; who manages the company, the employees, the training, who the company’s suppliers are and how the business helps other black institutions. Therefore, the company can be owned by white owners and still have a good BEE status.

  • Small businesses qualify automatically for BEE.

In this insert the focus is on small businesses and what very few people realise is that small businesses don’t have to comply with BEE. If your turnover is less than R10mil per year, your business is an exempted micro enterprise and your business automatically gets a BEE grading.

The grading is as follows:

  • 100% Black ownership – Level 1
  • >51% Black ownership – Level 2
  • <50% Black ownership – Level 4

You can simply get an affidavit that your business turnover is under R10mil per year and this statement will be your BEE certificate. Even a Level 4 certificate isn’t bad and is acceptable for most institutions. New enterprises are also seen as exempted micro enterprises in the first year after the establishment of the entity. This provision applies regardless of the total income of the new enterprise.

As entrepreneurs, we must always look at the positive in every situation and BEE is no exception. It’s the reality and we should work with it. For small business, there’s more than enough relief.

For an example of the affidavit visit @WinslynTv, and to talk to me more about small businesses and the exciting world of entrepreneurship, visit www.marnusbroodryk.com

 

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