What You Need To Know About Certification Opportunities For Diverse-Owned Companies

Is your company a minority, woman or other diverse-owned business enterprise? If so, you might be missing out on valuable opportunities to grow your business. Diverse supplier certification can open doors to forge new networks and partnerships, build capacity and create additional revenue streams. However, many eligible businesses are unaware of the benefits of certification or how to obtain it. In this article, we’ll explain what diverse business certification is, why it matters, and how you can get certified. We’ll also share some tips on how to leverage your certification to grow your business and create more opportunities.

Federal, state and local governments reserve a portion of their contracts exclusively for certified businesses. For example, the federal government aims to allocate up to 23% of its prime contract dollars to certified small businesses, often exceeding this target. In 2023, small businesses received $178.6 billion in federal contract dollars, accounting for 28.35% of prime contract dollars. Additionally, in the private sector, more than 80% of corporations in the United States have dedicated supplier diversity and inclusion programs to include diverse and small businesses in their procurement activities.

In the United States, businesses that are majority-owned, operated and controlled by individuals from traditionally underrepresented or underserved groups, such as women, minorities, veterans, LGBTQ+ individuals and people with disabilities, can be classified as diverse-owned. To access the power of supplier diversity networks, diverse businesses typically need to be certified.

Certification requires validation by a recognized independent third-party agency, such as the National Minority Supplier Development Council (NMSDC), Women’s Business Enterprise National Council (WBENC), National Veteran-Owned Business Association (NaVOBA), National Veteran Business Development Council (NVBDC), National Gay & Lesbian Chamber of Commerce (NGLCC), Disability and the Small Business Administration (SBA).

To be eligible for certification, you must meet the following qualifications:

• The business must be at least 51% owned, operated and controlled by a diverse group member(s) or, in the case of a publicly owned business, at least 51% of its stock is owned by one or more of such diverse group members.
• The business owners must be U.S. citizens.
• The business must be for-profit and physically located in the U.S. or its territories.
• The minority owners must also participate in the daily management and operations of the business.

Supplier diversity is good for business. It widens the pool of vendors, encouraging competition and innovation. Companies can access unique perspectives and solutions by including a broader range of suppliers, leading to better products and services.

Supplier diversity also fuels economic growth in communities. According to the U.S. Census Bureau’s 2022 Annual Business Survey, there are approximately 5.9 million businesses with employees. Approximately 1.2 million (21%) were minority-owned, 1.3 million (22%) were women-owned and 305 thousand (5.2%) were owned by veterans. These and other diverse-owned businesses play a crucial role in creating jobs, supporting wages, generating tax revenue and developing communities.

Many small businesses rush into the certification process without thoroughly researching who might buy what they sell. This can lead to frustration and disappointment when they discover limited opportunities in their target markets after navigating the complex paperwork and procedures. Before you begin the certification journey, it’s essential to ask yourself some key questions:

Who buys what you sell? Are your products or services in demand by corporations, government agencies or both? Understanding your target customers is vital in determining whether certification will open the right doors for your business.

At what level do they buy? Consider whether potential clients are looking for prime contractors or if they are more likely to work with subcontractors. This distinction can significantly impact your strategy and the potential success of your certification.

What are the industry trends? Research whether there’s a demand for your offerings within the industries that prioritize diverse suppliers. For example, some sectors, like construction or IT, might have more opportunities for certified businesses than others.

By doing your homework and understanding your market, you’ll be better positioned to leverage your certification effectively.

The certification process can involve several steps. First, you need to apply through a recognized certifying agency. A certification fee may apply. Your application will be audited for accuracy and completeness. The process includes customer reference checks and either a virtual interview or a site visit. Once your application is approved, your certificate will be issued, and your business profile will be added to the certifying agency’s database.

For the most seamless process:

• Gather all your documents prior to starting the application. You will need detailed documentation to support your application. Most delays are due to incomplete paperwork. So, be sure to collect all of your documents before starting your application. This includes proof of ownership, U.S. citizenship and minority status, if applicable.
  You may also need to provide personal identification for business owners, financial statements, business licenses and at least two years of business tax returns, even if it’s just a Schedule C.
• Explore fast-track options. If applicable, consider multiple certifications. Businesses owned by individuals who belong to multiple underrepresented groups and/or are interested in public and private certification may benefit from fast-track applications between certifying agencies.
  
• Mark your calendar to track the renewal date. Certifications are generally valid for one year, after which you must apply for recertification.

Becoming a certified diverse supplier offers numerous advantages, including enhanced credibility and visibility, increased business opportunities, and the potential for long-term success. However, it’s important to understand that certification is not a guarantee of winning business; rather, it adds value and aids in the growth of your business.

Certified suppliers also gain access to networking events and conferences, where they can build valuable connections with larger companies. These interactions can lead to partnerships that might not have been possible otherwise. Additionally, diverse suppliers benefit from mentorship and training programs, which help them compete more effectively in the market.

Networking and Professional Development

Building connections through conferences and events, engaging in ongoing education, and forming strong partnerships are key to becoming a successful supplier. Invest your time in these areas to maximize growth and opportunities.

Attending conferences and networking events is crucial for suppliers. These gatherings allow you to meet industry leaders, potential clients, and other diverse-owned businesses.

Prepare digital business cards and practice a quick pitch about your business. Participate in panels or roundtables where you can share your experiences and insights. This can boost your visibility and authenticity within the community. It’s also helpful to follow up with new contacts after the event. A simple email or LinkedIn message can keep the conversation going and create future opportunities for collaboration.

Keeping your skills current is vital. Through educational programs, you can access workshops that cover key topics such as market trends, new technologies, and business strategies. Enroll in courses about managing supply chains, implementing STEM innovations, or improving operational efficiency. The knowledge you gain will improve your business and make you a more attractive partner to large corporations. Consider also attending seminars on finance or marketing to round out your business expertise.

Workshops offer hands-on learning experiences and direct interaction with experts. This personalized learning can provide solutions specific to your business’s challenges and open new doors for growth.

Strong professional relationships are the backbone of your success. Building partnerships with other businesses can lead to subcontracting, joint ventures, increased resources, and shared knowledge.

Invest time in getting to know potential partners deeply. Understand their business needs and see where your strengths can support them. Regular communication, such as monthly check-ins or collaborative projects, can strengthen these relationships.

Don’t overlook the value of mentorship; experienced peers, such as SCORE mentors, can provide guidance and support as you grow your business.

Certification allows your business to participate in and benefit from numerous networking and educational programs provided by certifying organizations, often at a discounted rate. Check with your regional or local office about business opportunity fairs, leadership training, and networking events. Also, visit corporate supplier diversity pages to research information about their programs, requirements, and registration portals.

Visit the Small Business Administration’s (SBA) contracting website for federal and state contracting opportunities. There, you’ll find a wealth of links to procurement opportunities at both the national and local levels, along with guides on how to bid for them. The official website for federal contracts is called the System for Award Management (SAM). Register your business there to bid on contracts and receive contracting notices.

Don’t limit yourself to government and corporate contracts. Once certified, make sure to highlight your diverse ownership status on all your marketing materials, including your website, brochures, and email newsletters. You never know who might be looking to support a diverse-owned business like yours.

Obtaining diverse supplier certification can be a sensible business strategy for diverse-owned business enterprises with innovative solutions. It not only validates your business’s diversity status, but it also connects you with a network of supportive peers and partners and positions you to seize opportunities in the public and private sectors. The process is rigorous, but the rewards can be invaluable. By pursuing certification, diverse businesses can unlock their full potential, drive sustainable growth, and contribute to a more inclusive economy.

The National Minority Supplier Development Council (NMSDC) is the leading organization that provides minority business certification, recognized nationwide by over 1,750 national and local corporate members and 17,000 certified MBEs. The NMSDC also has 23 regional councils that offer local support and resources to MBEs and has spent over 50 years increasing minority participation in corporate procurement.

NMSDC offers multiple minority business certifications based on the structure, complexity of the ownership structure, and type of business. The most common is Minority Business Enterprise (MBE), which is a for-profit business that is at least 51% owned, managed, and controlled by a U.S. citizen(s) who is Asian Indian, Asian Pacific, Black, Hispanic, or Native American.

The 2023 NMSDC Minority Businesses Economic Impact report indicated that NMSDC-certified MBEs earned $363.6 billion in that year. This spending resulted in a total impact of $482.1B on the U.S. economy, 1.8 million jobs supported, and $136.4 billion in wages earned.

Engaging within the NMSDC network enables access to various regional councils and corporate members looking for qualified suppliers. Additionally, capacity-building resources are available through programs addressing marketing and sales, operational excellence, executive leadership education, and accessing capital and contracts. The annual NMSDC boasts the largest minority business conference in the world.

This article originally appeared on Score.