BEE - No Problem

I was chatting to a friend a few days ago who mentioned that one of the factors stopping her from taking the plunge and going into business for herself was BEE. It struck me once again that so many people don’t realise that BEE really doesn’t affect small businesses until you get to a reasonable size. Here’s why….

If your business grosses less than R5 million per annum, its exempt from BEE and deemed a Level 4 contributor- this means that other businesses that buy goods and services from you can count 100% of their spend with you on their BEE Scorecard.

If your business grosses between R5-R35 million, it would fall into the Qualifying Small Enterprises category- here you can choose to use your best 4 out of the 7 pillars of BEE when calculating your Scorecard (each of the 4 pillars comprising of 25 points).

Its pretty easy to get a good BEE Scorecard even if you have no black ownership at all. (Please note that by ‘black’ the Act refers all South African citizens of colour.) The BEE Scorecard is made up of 7 pillars: Ownership, Management, Employment Equity, Skills Development, Enterprise Development, Residual Element (charity) and Preferential Procurement (the driver of BEE).

Many QSE’s have a problem when it comes to Ownership and Management- so how do you get a good rating when you don’t have enough black owners or managers? Well here are some ways that you can get an awesome rating:

Employment Equity: obviously employ as many people of colour (particularly women) as possible and upskill them towards promotion.

Skills Development: spend time and money training black employees. In house training counts towards this- you just have to keep the appropriate records and work it out as a percentage of the trainer’s salary.

Enterprise Development: find one of your suppliers or a business that you know that is black owned and either spend a bit of time training them how to give you great service or give them your old computers, telephone systems etc.

Residual Element- give money or old equipment to charities where the beneficiaries are black.

Preferential Procurement- choose suppliers that give you both good service and have a good BEE rating.

Organisations only need to get a score of between 65-75% to be recognised as Level 4 Contributors which is really achievable if you do some work on your pillars.

Business that gross more than R35 million per annum use the Generic Scorecard to calculate the organisation’s BEE Scorecard (all 7 pillars). This is more onerous and complicated but at this stage, the organisation is not a struggling small business so should have the resources to address the challenge.

In summary- BEE really isn’t as bad as it looks for SMME’s, do a bit of work, get a good Scorecard and you can really use it as a competitive advantage…


Clive Stewart

Tel: +27 31 266 8194
Fax: +27 86 617 1660
Cell: +27 82 857 9396