Two Reasons for Implementing BEE
There are two reasons for implementing Broad-Based Black Economic Empowerment (BEE) in your company:
1) Ethical/moral: This relates to uplifting and assisting the rest of our population. The arguments for this are social and political, which I will not get into now.
2) Business – it will assist you in doing business and making a profit: Business is abut providing the right product /service at the right price. Part of doing business, and getting more business is giving your customers what they want. Many entrepreneurs get so excited about their own products they forget to ask if that is really what their customers want.
One of the aspects that many of our customers are asking is your BEE score. If your business does not provide that information, it is guilty of not providing good service. When your customer asks for service, you either give the service, or stand the chance of not getting that business.
By ignoring your customer’s request, you run the risk of losing his business.
Do remember your customer has a genuine reason for asking for your BEE score. A BEE scorecard is made up of seven elements – ownership, management, employment equity, skills development, preferential procurement, enterprise development and socio-development. Your customer is asking for your score as a result of the preferential procurement element. Your BEE score impacts on his BEE score. Preferential procurement is worth 20 points to any large company’s BEE scorecard. Since most companies have a low score, on average no more than 30 points, procurement is an important element with which to score points. The calculation is quite complicated, but the higher your BEE score, the greater the impact on your customer’s BEE score. The value of goods your customer purchases from you also impacts on the scorecard. Therefore if you are a large supplier to a particular customer, then your own BEE score would make up to 10 points difference to his scorecard. This is hugely valuable to your customer! Imagine how satisfied with you your customer will be if you provide him with both a good product or service and a good scorecard that earns him an extra 10 points!
Many entrepreneurs believe, wrongly, that it is difficult to become BEE compliant. It should be noted that there are levels of compliancy. It is quite easy to take the first step to becoming compliant, even if you do not earn 100% on the scorecard – in fact very few companies do achieve 100% compliancy. Entrepreneurs, whose businesses have an annual turnover of less than R5 million, have been given a dispensation in terms of the BEE codes. The codes state that they are automatically defined as being BEE compliant to level 4, and they do not need to produce a BEE scorecard! Even if your turnover is more than R5 million, but less than R35 million, it is still quite easy to earn points on the scorecard – up to 75 points is quite feasible – which is quite possibly far better than your customer’s own score.
Follow these simple rules whenever you are asked for a BEE scorecard
- Respond and acknowledge the request– even if you are not BEE compliant. Many companies want to see you are making an effort.
- Become familiar with the BEE requirements – they are less onerous than most people realize.
- If your turnover is less than R5 million per annum, tell you customer that you ARE compliant to level 4 – and be prepared to prove your turnover.
- If your turnover is more than R5 million and less than R35 million, you will need to calculate a scorecard. It is worthwhile doing so, recognizing how your score will assist your customer!