As of 2016, there are 8 million minority-owned businesses and 11.6 million women-owned businesses in the US, according to the Minority Business Development Agency and the State of Woman-Owned Businesses Report. These businesses are bringing a combined $35.2 trillion into the US economy, a number that will only grow as the number of certified business increases.
What is a certified minority or woman-owned business? A Woman Business Enterprise (WBE) or a Minority Business Enterprise (MBE) is a business that has been certified through either a national, state, third-party or local agency. Different options and agencies offer these certifications, depending on the goals and reach of your company. These certifications aim to level the playing field for businesses that would otherwise face hurdles that other, majority-owned businesses do not.
Having a WBE or an MBE certification can open up opportunities for small businesses they might otherwise struggle to establish. The National Minority Supplier Diversity Council (NMSDC) works toward connecting smaller, minority-owned businesses to larger private corporations for exclusive contracts, marketing, and networking events. The NMSDC boasts matching more than 12,000 minority-owned businesses to their corporate partners, such as AARP, Target, Starbucks, and Microsoft.
Since 1998, the Department of Transportation (DOT) has required that at least 10% of money spent on certain contracts go to minority-owned businesses. This requirement also applies to other departments that receive DOT funding, opening up more opportunities for WBE or MBE businesses to get footholds into government contracts. The US Small Business Association’s 8(a) Business Development program doesn’t offer certification, but it gives participants access to sole source or reduced competition contracts, specialized training, and the opportunity to form joint ventures with other established companies through the SBA’s mentor-protege program.
Some certifications are free, such as the 8(a) program through the SBA, while others vary in cost depending on your region. Some organizations offer multiple types of certifications, and some may offer a discount if applying for multiple certifications. For example, the National Women Business Owners Corporation (NWBOC) offers separate certifications for women-owned, minority-owned, and veteran-owned businesses. The initial application fee for 1 certification is $400, but it’s discounted to $700 when applying for 2. Before you begin your application, take the time to research your options and find the certifications that will grant your business the advantages you’re looking for.
Details vary between agencies, but most require proof that at least 51% of the business is owned and controlled by a minority or woman. If it is a publicly owned company, at least 51% of the shareholders must be minorities or women. The NMSDC defines a minority as someone who is at least 25% Asian, Black, Hispanic, or Native American. At this time, the NWBOC does not appear to provide a working definition of who qualifies as a woman other than a birth certificate, but some other agencies address the minority status of trans-women and gender non-conforming business owners. You must be a for-profit business and able to show proof of US citizenship. Almost every available WBE or MBE certification must be renewed annually.
Owners who apply must be able to prove they are managing day-to-day business operations or hold the highest level position in the company. The key here is that someone who qualifies as a minority or woman is running the business. Some certifications have income limits in place for the applicant, particularly those associated with the SBA. Make sure to read each application guideline thoroughly to make sure your business qualifies before beginning the application process.
Below you will find an example of the certification process for the National Minority Supplier Development Council:
Below is a list of certifying agencies to get you started:
Don’t forget to inform your local agencies, city councils, or state government of your new status as a WBE or MBE and find out if they have any email updates or information on upcoming projects you now qualify for.