Enterprise and Supplier Development (“ESD”) is not a South African concept. It is a global initiative that has stimulated economies, diversified supplier chains and created jobs. (Supplier Development is a global term, but according to B-BBEE Codes, Supplier Development in SA is defined as Enterprise Development that happens specifically in the supply chain of the Measured Entity.) Its main aim is to grow small and medium sized businesses by providing finance and support which can help these SMEs to be more competitive.
Remember that enterprise development contributions may be monetary or non-monetary and recoverable or non-recoverable. For example, an established engineering company may provide professional services to an emerging black contractor. These services can be rendered at a discounted rate or at no cost. The most value contribution would be helping develop suppliers so that they are able to supply to your business as well as grow and supply others. It is about helping a business become sustainable and getting a head start with your support.
As a contributor to ESD, the company can assist the emerging black contractor in human resources, administration and finance as well as their core business. The employee’s time has a rand value; the hourly rate is calculated as follows: Employee Cost to Company divided by 160 hours.
Any enterprise development claim for BEE verification has supporting documentation requirements. An Enterprise Development Agreement provides an understanding between the company providing the contributions and the business which is receiving them.
Companies are now required to spend 2% of their net profit after tax annually on supplier development and another 1% on enterprise development and sector specific programmes. Together, these two categories comprise the 15 points that were previously attainable under Enterprise Development.
According to the Department of Trade and Industry, “The key task is to increase the number of businesses that survive the first few years of establishment and progress to growth and expansion, thus contributing to higher levels of job creation and economic growth.”
Another option could be taking staff from your own stable who have the potential to grow into leaders and setting them up as a supplier or customer to your own business. This way you create a customer and/or supplier for your own business who:
- is passionate about your brand,
- understands your way of work, and
- will remain loyal to you.
Don’t do it for the BBBEE points, or because you are having to spend the legislated funds do it to help grow your business and, in turn, the economy. Be the change you want to see in the business marketplace!
For more information about business coaching and business consulting services, contact me:
083 256-0378 | This email address is being protected from spambots. You need JavaScript enabled to view it.
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