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VIEWPOINT: AUTOMATIC LEVEL 2 Ready to start cooking?

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The Amended Codes require that you address all five of the scorecard elements to achieve one of the eight B-BBEE status levels. Unless significant qualifying contributions were made prior to your 28 February 2016 financial year-end, it is possible that you will be found non-compliant when your 2016 financial year is measured under the Amended Generic Codes or any of the Amended Sector Codes that are effective – unless you are an exempted micro enterprise (EME) or a 51% black-owned qualifying small enterprise (QSE).

Some SOCs and government departments have already stated that they strongly prefer transacting with businesses that are either 51% black-owned or hold a Level 2 status. Private sector corporates will be following suite shortly. Majority black-owned entities with an annual turnover below R50 million automatically qualify for a Level 2 status.

Experts will tell you that three essential ingredients are needed to start a viable new business, namely startup capital, relevant skills and a willing market. The B-BBEE Codes of Good Practice contain specific provisions that transfer all three these vital ingredients to a newly established business.

  • Enterprise and supplier development = startup capital
  • Management control and skills development = relevant skills
  • A R50 million threshold = access to a more than willing market

Yes, B-BBEE is actually a recipe for economic as well as individual business growth! However, to make this dish come alive, the chef must have all the ingredients at hand. Not all chefs are this well prepared. Are you?

So ask yourself the following: Do I have some cash to spare? Do I have skilled employees to spare? Do I know a credible black institutional investor? Congratulations! You have all the ingredients to start cooking!

If the complete B-BBEE scorecard seems too daunting for your SME business, a pre-empowered new venture may just be the answer. Just one word of caution: a good chef is proud of his work and prepares all his dishes at the same standard. So make 100% sure that you start and run any new business in exactly the same fashion that made your current one such a great success.

Author: Anton de Wet CA(SA) is Managing Director of Net Value Holdings