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Certifications for Minority-Owned and Disadvantaged Businesses Enterprises

Certifications for Minority-Owned and Disadvantaged Businesses Enterprises

Have you been thinking about becoming certified by the Small Business Administration as a minority-owned business? Do you know the steps involved or whether you’d even qualify? For that matter, how would the certification really affect your bottom line?

Becoming certified as a minority-owned business, a HUBZone company or an economically disadvantaged enterprise is a lengthy process and isn’t to be undertaken without research and planning. To understand the process and how certification can benefit your organization, we reached out to Jennifer Fowler, principal at Strategies by Design, a Baton Rouge based management consultancy for growing businesses. Here’s what she shared.

The Benefits of Certification

There are several reasons for a small business to seek certifications, including that they make it easier to get contracts from the state and federal governments or from private companies, Fowler says. There are specific certifications tailored for the public sector and for the private sector, she says. “If you’re trying to land significant government or nongovernment contracts, these certifications can help you get a foot in the door,” Fowler says.

Even if you have no desire to become a government contractor, many large companies have diversity initiatives in which they actively seek out business partners that are owned by women, minorities or veterans, she says. And being classified as a small or economically disadvantaged business can bring you preferential treatment such as being prioritized to receive contracts or to have eased payment terms like net-30 when the payor’s usual practice is net-60. This can aid a small business’ cash flow, Fowler says.

In Louisiana, to be a certified small business, you should apply for the Hudson Initiative.

The Types of Certifications

Some of the certifications available for small businesses include:

  • Women Owned Small Business: At least 51 percent of the company must be owned by a woman or group of women.
  • Veteran-Owned Small Business: The Department of Veterans Affairs has certification information for Veteran-Owned Small Businesses and Service-Disabled Veteran-Owned Small Businesses.
  • Minority Business Enterprise: The National Minority Supplier Development Council can certify your business as a minority business enterprise if it meets criteria about ownership among racial minority groups.
  • 8(a) Certification: The SBA awards 8(a) certification to socially or economically disadvantaged businesses.
  • HUBZone: The SBA awards Historically Underutilized Business Zone certification to businesses located within certain urban or rural areas.

The Process of Getting Certified

Different certifications have different requirements, but one thing is common to all of them — they aren’t issued overnight. It can take many months to become certified, Fowler says.

Before you begin, it’s a good idea to familiarize yourself with your Dun & Bradstreet information and make sure it’s accurate. Also, you probably already know your NAICS code, but investigate other possible codes that apply to your business. The more you use, the more opportunities you’ll be matched with, Fowler says.

Next you’ll need to register with the System for Award Management through the SBA. This system is what lets you see and accept government work, but it’s required of many certifications first, even if you don’t intend to work for the government, Fowler says.

Then you’ll determine the process for your desired certification. Many certifications use third-party verification. For example, to become a Women Owned Small Business, you can be verified through groups including the U.S. Women’s Chamber of Commerce and the Women’s Business Enterprise National Council. Get a list of the documentation a particular group requires and work your way through it. Fowler recommends gathering all the information in a single place and submitting it together. “If you do it a little at a time and papers are here and papers are there, it can become very cumbersome,” she says.

Most third-party verifiers will do a site visit or interview. They want to be sure the applying woman, minority or veteran owns the company and manages operations on a day-to-day basis.

If you’re trying to be certified for multiple classifications, Fowler recommends doing them one at a time, but one right after the other. Most of the paperwork for one will also be required for another. Once you’ve gathered everything needed for veteran certification, submit it. While you’re waiting for an answer, begin applying for your women-owned certification, etc.

Putting Your Certification to Work

It’s up to you to use the certifications after you’ve been approved, Fowler says. You still have to do sales and respond to RFPs. A resource she recommends is the Louisiana Procurement Technical Assistance Center, which is free to business owners. Its experts know about certification procedures and benefits, and it has a database that pulls RFPs from state and federal agencies and can match you with opportunities, Fowler says.

“These certifications can bring your business to a whole different level,” she says. “The companies that topped the LSU 100 for the last three years all had 8(a) certification.”