BBBEE is simpler and less onerous for SMEs to implement than most business owners assume, provided compliance forms part of the business strategy from the early stages rather than being treated as a costing exercise.
1. Ownership
This element measures the percentage of equity held by black people within the business. Some business owners resist this element specifically, which is why government incentivises several additional elements alongside it. Consult a BEE expert to understand the structure options relevant to your business.
2. Management control
This measures black participation at senior management level. A single appointment at this level can meaningfully move a scorecard, but any such appointment needs to be entirely legitimate, since a fabricated appointment breaks the law.
3. Employment equity
This measures the percentage of black staff employed across the business. Implementing a genuine employment equity strategy is a long-term transformation commitment, and employing black people, especially black women, at any level counts meaningfully toward this element.
4. Preferential procurement
This measures the BEE status of your suppliers. It is one of the more admin-intensive elements, since it requires collecting BEE certificates from every supplier, but it remains a relatively straightforward way to earn points: the more empowered your supplier base, the more points available.
5. Enterprise development
Compliance here requires no internal restructuring. Qualifying small enterprises are required to contribute 2% of net profit after tax toward developing sustainable, black-owned beneficiary businesses.
6. Socio-economic development
Qualifying small enterprises must contribute 1% of net profit after tax toward grassroots development that brings black people into the economy as active participants. Black people must make up at least 75% of the beneficiaries of any supported organisation for the contribution to count, so confirm the organisation holds a proper Beneficiary Analysis Certificate before donating.
7. Skills development
Qualifying small enterprises need to spend a minimum of 2% of annual wages on training, in strict compliance with the Skills Development Act and SETA registration. Upskilling employed, unemployed and disabled people remains one of the most cost-effective ways to earn maximum points while genuinely benefiting the business and the wider economy.
Frequently asked questions
Is BBBEE compliance really as complicated as most SME owners assume?
No. Once broken down into its seven elements, it is considerably simpler to implement than the reputation it has among many small business owners.
Which BBBEE element is generally the easiest for a small business to comply with?
Enterprise development, since it requires no internal restructuring, only a fixed contribution of net profit after tax toward qualifying beneficiary businesses.
Do donations to any charity count toward socio-economic development points?
Only if black people make up at least 75% of the organisation’s beneficiaries, confirmed through a proper Beneficiary Analysis Certificate, not just any donation to a good cause.
Seven elements, one strategic decision
Understanding each of the seven scorecard elements individually makes it far easier to decide where a small business can realistically and cost-effectively earn points.
Further reading: A Guide to B-BBEE for Businesses in South Africa | Department of Trade, Industry and Competition for the official B-BBEE codes of good practice
Originally published in April 2019. Updated September 2026 to tighten this breakdown of the seven BBBEE scorecard elements from LFP Group’s Louis Pulzone. The underlying scorecard structure remains current.
