Thursday, August 28, 2014

Small Business Certifications: Where Do I Start?

For many small, privately held businesses, navigating the world of small business certifications can be a daunting task.  Certification options abound for women, minority, veteran-owned, and small disadvantaged businesses.  What does it all mean, and where does one start?

The website of the U.S. Sm
all Business Administration (SBA) explains it well: “Small business certifications are like professional certifications; they document a special capability or status that will help you compete in the marketplace.”  Here, I address women-owned business certifications, a topic on which our office receives frequent inquiries.

Women-owned businesses may seek certification through both governmental and private entities, and while certification requirements vary, both generally require that one or more women own at least 51 percent of the business and manage the business.  In other words, a woman holding a 51 percent or greater ownership interest in a company in which her husband is CEO isn’t going to cut it.  She must be responsible for both the long-term decision making and day-to-day management of the company.  

Typically, a business primarily focused on serving as a supplier to governmental entities will want to become certified by a governmental agency, whereas a business that primarily works in the private sector and with large, publicly traded companies should seek certification from a third-party certifier.  For Minnesota businesses, governmental certifiers include (i) the SBA, (ii) the State of Minnesota, and (iii) the City of St. Paul.  Third-party certifiers include the Women’s Business Enterprise National Council (WBENC) and the National Women Business Owners Corporation (NWBOC).  

The SBA administers the Women-Owned Small Business Federal Contract Program, which authorizes federal contracting officers to set aside certain federal contracts for eligible women-owned small businesses.  

The State of Minnesota and its agencies administer the Targeted Group/Economically Disadvantaged Small Business Program (the TG Program) and the United States Department of Transportation Disadvantaged Business Enterprise Program (the DBE Program).  Upon certification under the TG Program, the business is added to the state’s vendor list, and the TG may be eligible for up to a 6 percent preference in selling its products or services or bidding on construction projects to the State.  The DBE Program is a federally-funded certification program intended to help disadvantaged people, including women, participate in the planning, construction and management of the country’s transportation system.  The Minnesota Unified Certification Program (MnUCP) makes certification decisions with respect to participation in the DBE Program.
The Central Certification Program (CERT) is a small business certification program administered by the City of St. Paul and recognized by Hennepin County, Ramsey County, and the City of St. Paul.  Certification makes you eligible to participate in activities specifically designed for certified vendors.    

Two of the most prominent third-party certifiers are the WBENC and NWBOC.  Each certification provides women-owned businesses with access to supplier diversity and procurement executives at major corporations and federal, state and local government entities.  The application fees for these certifications start at $350, and certifications are usually valid for just one year.  

This is merely a high-level overview of the reasons companies may seek certification and the types of certifications available to Minnesota companies.  As you consider whether certification may be right for you, keep in mind that the process is lengthy and rigorous.  Numerous document requests must be fulfilled and on-site visits may be required.  Recertification may also be required on an annual basis, but the numerous benefits that accompany certification may make it all worthwhile.

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