What is the cost of Enterprise Development

The Cost of Enterprise Development


In terms if the codes of good practice, as well as the sector codes that go with it, the cost related to enterprise development is based on a factor of net profit after taxation for the year.

The percentage used per sector is as follows:

Sector Percentage of NPAT
Generic Codes 1% of NPAT
ICT 3% of NPAT
Agriculture 1.5% of NPAT
Forestry 1% of NPAT
Property 1% of NPAT
Transport 3% of NPAT

From the above you need to understand which sector you belong to. Further, the company must be able to accurately determine what the NPAT will be for the period. If you miscalculated NPAT, you will miss the target, or you might overspend considerably.

NPAT will change due to accounting entries and adjustments after the yearend. Understand your business to accurately calculate NPAT firstly, and the target secondly. The spend must be paid for before the last day of the financial yearend.

But this is only the direct cost, the fees paid to the beneficiary company. What about the “below the line” costs of enterprise development?

There are two ways that you can implement an enterprise development program:

  1. Do it yourself, for your own company
  2. Use an implementing partner to assist

Costs that cannot always be claimed as ED spend, but should be considered, include:

  • Advertising cost to recruit beneficiary companies
  • Travel costs
  • Staff time and salaries
  • Programme monitoring
  • Many others

The consideration of in-house versus outsourced depends on your appetite for the work to be done, but also on the underlying costs you have to take into account.

Contact us if you want to discuss options relating to the outsourced approach of Guqula.

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