Investigating the impact of broad-based black economic empowerment on SMEs in selected areas
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The impact Broad-Based Black Economic Empowerment (B-BBEE) has on family businesses in the Boksburg, Ekurhuleni area was studied. The research report begins with the nature and the scope of the research, followed by a literature review on Black Economic Empowerment (BEE) and Family Business that sets the tone of the study and from where the questionnaire was constructed. The results from the empirical research with a conclusion are at the end of this report. The BEE programme was introduced in 2003. It was actually condemned by most businesses and organisations, which led to the introduction of an altered programme in 2007 called Broad-Based Black Economic Empowerment (B-BBEE). B-BBEE received further criticism and amendments were made to the codes, which came into effect on 1 May 2015. This brought a huge change to the manner in how an organisation’s B-BBEE status will be calculated and thus affected. These new calculations might have far reaching effects as some organisations may fall from a level 4 to a level 7 B-BBEE rating. Organisations will have to evaluate their existing B-BBEE approach to measure the effect of these modifications and take steps to try and preserve their present BBBEE ratings. Owners of family businesses are passionate about their business and are very emotional with regard to decision making or changes that have a direct effect and impact on their business, because it impacts their livelihood. Legislation like B-BBEE is one of those changes that have a huge impact on the way family businesses are managed, their ownership and succession plans. In the empirical study the results and information were acquired through an online questionnaire that was e-mailed to the correspondents. Follow-up phone calls were made, meeting requests sent and one-on-one discussions took place. A total of 41 respondents completed the online questionnaire. The results from the questionnaires were processed with SPSS and Microsoft Excel for various statistical data. This data was analysed to provide conclusions and recommendations. It seems that numerous family businesses still continue to be unsure about the real consequences of B-BBEE and the significance it can bring to their businesses. Most family business owners appear to recognise the principles of B-BBEE, but still feel that the policy is not the best for business and do not see it as a growth opportunity. To make recommendations to family businesses in such an environment can be challenging, especially if the questionnaire output is so overwhelmingly negative towards the B-BBEE policy. The fact is that B-BBEE is a legislative framework and needs to be conformed to, especially if a business wants to grow. The best advice is to plan ahead with B-BBEE in mind and put processes and procedures in place to address any possible tension and issues that can escalate between business owners, partners, employees and / or siblings.