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Cape Town - The negative perceptions in the small business arena around Broad Based Black Economic Empowerment (BBBEE), and the impact it has on the ability of smaller enterprises to compete for business, was reduced by legislative changes that gave businesses more space to grow before compliance becomes an issue.
The negative perceptions, according to Standard Bank, that it was essential to use “frontmen” and give away shares in a business to win business, especially government tenders, are two of the myths that have been largely dispelled.
Ravi Govender, head of small enterprises at Standard Bank, said recent changes to BBBEE legislation have given way to a programme that can be of value to those who have an insight to BBBEE and its implementation. The purpose of the legislation, however, remains to assist with fast-tracking previously-disadvantaged people into the economy, so that they can contribute to national economic growth.
“The fact is that small companies have been given more opportunity to box above their weight category and compete on an equal footing with larger companies that may have more employees or resources,” said Govender. “This is because of the threshold changes applied to small business and introduced through the new legislation.”
The changes include:
-The annual financial turnover threshold for BBBEE compliance has been raised from R5m to R10m for small companies;
-Proving that turnover is within these limits has been simplified;
-Complying with BBBEE requirements now applies to companies that have turnovers over R10m;
-Those with turnovers between R10m and R50m have to comply with BBBEE, but the threshold of these requirements has been reduced.
Small businesses have been given an opportunity to grow their businesses significantly by automatically being granted certificates of compliance with BBBEE.
“If a business is now operating near the R5m threshold, it can continue to do so knowing that BBBEE will only become a factor when the R10m annual turnover mark is reached,” he said. “All that is needed when a BBBEE certificate is required is that the annual turnover is certified by an accountant, or that a statement to this effect is made before a Commissioner of Oaths.”
“It is unlikely that a business will grow from R5m to R10m in turnover within the short space of a year,” he said. “This means small businesses that are growing will have two or three years in which to strategise and introduce a BBBEE compliance plan.”
“The company will be growing, so the introduction of a planned BBBEE initiative will enable the business to grow to the next level,” said Govender. “Higher up the growth ladder the requirements have been simplified and eased, so the same will apply to these businesses.”
For companies exceeding the R10m turnover threshold planning will have to be devoted to five key operational areas.
These are:
- Ownership of the business;
- Management control and employment equity;
- Enterprise and supply development;
- Socio-economic development; and
- Training.
At first glance, these may seem onerous. There are, however, specialists who can advise on what is required and how changes can be introduced to the business.
“The emphasis should be on using the time allowed for growth to develop a BBBEE road map so that any transition undertaken is beneficial to the growth of the company,” said Govender. “Planning for BBBEE should never be underestimated and should be seen as a tool that can increase employment opportunities and boost business growth.”
The negative perceptions, according to Standard Bank, that it was essential to use “frontmen” and give away shares in a business to win business, especially government tenders, are two of the myths that have been largely dispelled.
Ravi Govender, head of small enterprises at Standard Bank, said recent changes to BBBEE legislation have given way to a programme that can be of value to those who have an insight to BBBEE and its implementation. The purpose of the legislation, however, remains to assist with fast-tracking previously-disadvantaged people into the economy, so that they can contribute to national economic growth.
“The fact is that small companies have been given more opportunity to box above their weight category and compete on an equal footing with larger companies that may have more employees or resources,” said Govender. “This is because of the threshold changes applied to small business and introduced through the new legislation.”
The changes include:
-The annual financial turnover threshold for BBBEE compliance has been raised from R5m to R10m for small companies;
-Proving that turnover is within these limits has been simplified;
-Complying with BBBEE requirements now applies to companies that have turnovers over R10m;
-Those with turnovers between R10m and R50m have to comply with BBBEE, but the threshold of these requirements has been reduced.
Small businesses have been given an opportunity to grow their businesses significantly by automatically being granted certificates of compliance with BBBEE.
“If a business is now operating near the R5m threshold, it can continue to do so knowing that BBBEE will only become a factor when the R10m annual turnover mark is reached,” he said. “All that is needed when a BBBEE certificate is required is that the annual turnover is certified by an accountant, or that a statement to this effect is made before a Commissioner of Oaths.”
“It is unlikely that a business will grow from R5m to R10m in turnover within the short space of a year,” he said. “This means small businesses that are growing will have two or three years in which to strategise and introduce a BBBEE compliance plan.”
“The company will be growing, so the introduction of a planned BBBEE initiative will enable the business to grow to the next level,” said Govender. “Higher up the growth ladder the requirements have been simplified and eased, so the same will apply to these businesses.”
For companies exceeding the R10m turnover threshold planning will have to be devoted to five key operational areas.
These are:
- Ownership of the business;
- Management control and employment equity;
- Enterprise and supply development;
- Socio-economic development; and
- Training.
At first glance, these may seem onerous. There are, however, specialists who can advise on what is required and how changes can be introduced to the business.
“The emphasis should be on using the time allowed for growth to develop a BBBEE road map so that any transition undertaken is beneficial to the growth of the company,” said Govender. “Planning for BBBEE should never be underestimated and should be seen as a tool that can increase employment opportunities and boost business growth.”
