The Clock Strikes – It’s Time to Certify Your Diverse Business

By Emily Griesing & Jessica Mazzeo | July 01, 2023

Amid what continues to feel like a constantly shifting reality, one thing remains clear: diversity and inclusion matter. We know that organizations with diverse teams are more innovative and profitable; – they offer a variety of perspectives enabling them to think outside of the box and stay competitive. In addition, it behooves companies to champion diversity and inclusion as consumers and employees alike are increasingly demanding transparency around team composition and pay structure as well as efforts to implement equitable practices internally. However, despite the proven value proposition, diversity in leadership, especially among large corporations, has progressed slowly, with many minority groups facing a glass ceiling. This stagnation in progress has resulted in a rise in entrepreneurship among underrepresented groups who seek upward mobility on their own terms.

Today, there are approximately 13 million women-owned businesses in the United States that employ about 9 million people (about half the population of New York) and generate $1.9 trillion in revenue. There are also more than 4 million minority-owned businesses in the United States, with annual sales totaling close to $700 billion and creating almost 5 million jobs. The number of businesses owned by veterans, members of the LGBTQ+ community, and people with disabilities are also growing at record pace. This increase in diverse-owned businesses offers a wider net of capable vendors for government agencies, nonprofits, and public and privately-owned companies to hire from as part of their diversity and inclusion efforts. However, there is a caveat; only those diverse businesses who have been certified as such will be considered for these opportunities.

What is Diverse Business Certification?

One of the ways that large entities show their commitment to diversity is through supplier diversity initiatives that allocate a certain amount of spending to diverse suppliers (women, minority, LGBTQ+, veteran, and disability-owned businesses). National certifying bodies for these various underrepresented groups assess businesses to assure they are in fact owned and operated by members of said underrepresented group. To be considered a diverse business of any kind, it must be at least 51% owned, controlled, and operated by a member of said underrepresented group. Currently, there are five nationally recognized certifications and certifying bodies:

  • Women Business Enterprise (WBE), certified by the Women’s Business Enterprise National Council (WBENC)
  • Minority Business Enterprise (MBE), certified by the National Minority Supplier Development Council (NMSDC)
  • LGBT Business Enterprise (LGBTBE), certified by the National LGBT Chamber of Commerce (NGLCC)
  • Veteran-Owned Business (VOB), certified by National Veteran Business Development Council (NVBDC)
  • Disability-Owned Business Enterprise (DOBE), certified by Disability:IN

Diverse businesses that also qualify as “small” (as determined by annual revenue limits per industry set by the Small Business Administration (SBA) can add a second layer of certification. Options include being certified as a Women- Owned Small Business (WOSB) or Veteran- Owned Small Business (VOSB). Local and state municipalities may also have their own certifications to boost business opportunities for certain groups, but many are dependent on receiving certification from the national certifying bodies first.

Why Certification Helps

The benefits diverse business certifications provide are mutual: certified small and/or diverse businesses have the unique opportunity to pursue new business through avenues that prioritize or are exclusively available to them, while organizations have a verified pool of diverse suppliers to pick from to work with. For eligible businesses, the business development opportunities that arise with certification can be instrumental for growth as an increasing number of corporations and federal, state, and local governments recognize these diverse certifications.

Once a diverse business becomes certified, it joins the database of diverse businesses maintained by their certifying body, which organizations use when looking for a certain product or service. But a more common way to get your foot in the door with larger organizations is by registering your certified business in their supplier diversity portal. These portals allow the organizations to search by industry, experience, and types of diversity certification. Registering on these portals is usually the first required step to receive requests for proposals (RFPs) for services or products that match your business.

Christa Cotton, CEO of El Guapo Bitters, discovered just how far her WBENC certification could take her very quickly. She tells The Tori Burch Foundation, “Supplier diversity programs have changed the trajectory of our growth and gotten our foot in the doors with retailers it would have taken years to even pitch otherwise! The very first supplier diversity deal I pitched was for Costco in July of 2019. We pitched Costco within 30 days of receiving our certification and won the deal on the spot. It was so unexpected but the best feeling ever!” Improving margins, better shelf positioning, and reaching larger corporations are just a few of the benefits Cotton has seen since getting WBENC certified. Read more of her story here.

Some organizations set aside specific contract opportunities for certified diverse businesses, however, to expose more diverse businesses to these contracts, RFPs are commonly including requirements for majority businesses to partner and subcontract certified diverse businesses. For example, a majority business may wish to respond to an RFP, but the RFP contains a requirement that they subcontract a portion of the work to an accreditedcertified diverse business. These partnerships allow certified diverse businesses to expand and have access to large contracts that they may not have otherwise qualified for. It also increases the large-scale experience for diverse businesses that many corporations expect from their vendors. The goals of these initiatives are to make it so that certified diverse businesses can eventually qualify on their own for large scale contracts and projects.

Furthermore, getting certified gives your business access to numerous events and conferences where you can network with other diverse businesses as well as get a chance to introduce your business to larger organizations who attend these events. Networking with other diverse businesses should be as much of a priority as getting in front of large organization as relationships with fellow diverse businesses are what ultimately help you grow. Beyond providing new revenue sources, these opportunities also allow businesses to gain visibility and establish their brands. Depending on your industry and business goals, it may be worth considering pursuing a combination of certifications to open the door to these networks.

The Process

Despite the seemingly straightforward requirements for getting certified as a diverse business, it is not as easy as it sounds. Each certifying body has their own process, but all of them require submitting extensive personal and business-related documentation to demonstrate that your business needs their criteria. It is not an incredibly cost-prohibitive process, certification applications typically start around $350, depending on your business’s annual revenue, but the submission process takes time and energy, and the review and approval process can last several months. So don’t delay, get the ball rolling now by considering diverse business certification to take your business to the next level.

Learn more about how we can help you navigate the diverse business certification process.

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