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Small companies will be hit hardest by next month's B-BBEE code changes

by , 14 April 2015
Businesses around the country are scrambling to make sure they're not too seriously affected by the new Broad-Based Black Economic Empowerment codes that come into effect in May.

But business analysts are worried...

Especially for small businesses.

They say that the amended BEE Codes of Good Practice have moved the goalposts for business. By placing more emphasis on direct black ownership and control of companies than anything else, the code is putting small businesses at a disadvantage.

Here's why...

********** B-BBEE is changing – will you be prepared? **********
Will your company be able to do business after 1 May 2015?
B-BBEE codes are changing, and come 1 May 2015 your company could find itself unable to do business with ANY BEE-compliant company because its BEE level has dropped significantly.
Do you know how to avoid this?
There's a simple way to ensure a smooth transition.

BEE and small business: What are the dangers

As business writer, Lisa Steyn explains: These changes will be most 'felt in smaller companies, which will need direct black ownership, and where transformation is not easily measured.'
You see, in the past, an entirely white-owned company could achieve a good BEE score by excelling in areas such as employment equity, skills development, preferential procurement, socioeconomic development or enterprise development. 
Thanks to the new B-BBEE codes, this is no longer possible. 
It's condensed compliance categories from seven to five. Three of which are priority elements that companies MUST comply with to be able to do business for BEE projects. 
And guess which one has the highest weighting: Shareholding and ownership. 
In fact, with a weighting of 40% of your BEE score, you need to have a 10%, fully paid black shareholder programme to earn maximum BEE points. 
If your company doesn't comply with the ownership element – and 80% of small companies don't – you lose one FULL broad-based black economic empowerment level, adds Gavin Levenstein, director of consultancy group, EconoBEE.
So while government has made it harder to find loopholes like BEE fronting to improve your company's BEE score, it's also affectively made it harder for you to achieve the score you need to do business. 
Thankfully, if you understand how these changes affect you, you can make changes to ensure your business isn't disadvantaged. And we'll reveal all the details on how you can do that at our urgent BEE Workshop later this month. 

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