Ownership is achievable in every company!
I have been party to thousands of discussions regarding B-BBEE over the years as to the merits around having a BEE Certification in companies and far too many animated discussions around the fire debating this. While I agree with many cons of BEE, as business owners you WILL lose business without certification. We can debate this forever, but one simple fact remains: companies can, and do, refuse to take you on as a supplier if you do not have a BEE Certification WHY because companies earn their procurement points based on your BEE Level and percentage black ownership. Companies cannot make up for these free points elsewhere.
Let’s inspect the experiences I have had around ownership which is nearly always emotional.
Ownership - I have worked for 30 years to build my company up, I took personal loans, signed suretyships', sat up at night worrying and pushed 15-hour days and now I must simply give a person a slice of my business for free - Forget it mate!! Would you give two of your four bedrooms away in your house and share your garden and garage after living in your home for 30 years, a place you brought up your kids?
And this is the emotion that many business owners face and its perfectly understandable. But here's the question - If you could increase your business so that your business grows is sustainable and your nett profit after tax increases so that you in fact earn more money even after selling a share % in your business would you be happy? I'm sure we all would. And then - this leads to - I do not want someone coming into my business scratching around telling me what to and how to run the business, would you? - Yes, I would if they were improving my business and freeing me up and making me more money!!
These people are scarce and not cheap - BUT you may have people of colour already in your business that have been with you for many years that do this every day. Could this not be an ideal opportunity of rewarding them. Have you considered a Key Person Trust or a staff employee share trust where they could become beneficiaries of the dividend that accrues to the trust?
No, I don't have these people in my company. How about an educational trust where the dividend will accrue to the trust and be paid to black South Africans as defined in the codes for further education?
What percentage will I need to give away? ZERO, NIKS, NOTHING! You can sell it to the trust over 10 years which the trust pays to you based on the time-based graduation factor. 10% prevents you from having a one level rating drop, if you are an EME or QSE 51% gets an automatic level 2, or 26% will earn you full points if you are rated via certification.
Ownership sorted either with a valued shareholder, a key person or happy employees or assisting with further educational needs to those that need it. No fancy buy back under the table structure, no monthly retainers for external directors that fill gaps just a meaningful structure that works. Drop the emotion and take your company to the next level! Let’s unpack your company's specifics and resolve your needs on ownership.
Article By:
Hilton Johnson: CEO - Compliance Hub