The Certification Process Poses Challenges, but There Are Rewards
The Women’s Business Enterprise
By KRISTINA DRZAL-HOUGHTON, CPA
So, you’re a woman, and you run a business. In the pool of privately held small businesses in this country, being a woman business owner actually has many advantages.
Most public corporations, as well as local, state, and federal government purchasing agencies, have programs for allotting a certain percentage of business to women-owned companies. Getting certified as a women’s business enterprise (WBE) can make the difference between landing that business or not. However, the certification process is not without its challenges, and owners often get discouraged during the process because they lack the proper guidance or misunderstand how the process works.
Certification validates that the business is 51% owned, controlled, operated, and managed by a woman or women. Ownership is just a small part of the equation. The term ‘ownership’ goes beyond numbers in this case. A woman must also hold the highest position at the company and be active in daily management and the strategic direction of the company.
So, before moving forward, make sure that you have several ways of proving that you are leading the company, from doing the hiring and firing to any planning documents. In addition to being a majority owner, the woman must also be a U.S. citizen.
If you are puzzled about the many types of certification, you are not alone. Much confusion exists, and to fully explain each is beyond the scope of this article. However, with just a short explanation, most people can determine which certification is probably right for them to pursue.
• Women’s Business Enterprise (WBE) certification is gender-based for woman-owned businesses;
• Women-owned Small Business (WOSB) certification is required for a specific federal purchasing program that has a set-aside for women-owned businesses. There is also a disadvantaged component to this program, which is called EDWOSB;
• The 8(a) designation is actually a business development/mentoring program administered by the Small Business Administration (SBA) for a company that has been disadvantaged, and 8(a) certification is part of that program;
• Small Disadvantaged Business (SDB) certification is for businesses that are disadvantaged but are not participating in the 8(a) development program;
• Disabled Veteran (DV) certification is for the business owner who is a veteran of the U.S. Armed Forces and who has been disabled in action; and
• Minority Business Enterprise (MBE) certification is race-based for minority-owned businesses.
The U.S. Small Business Administration can be contacted regarding participation in the 8(a) program, or to obtain the SDB certification as well as the DV certification.
MBE certification is done through the National Minority Supplier Development Council (formerly known as the Minority Supplier Council, or MSC). WBE certification, as well as WOSB and EDWOSB certifications, can be obtained through the government or third-party certifiers.
Third-party certification is geared to the private sector. If you are interested only in being a vendor/supplier to any government entity, it is recommended that you contact each specific agency to obtain their requirements. If you are more interested in doing work in the private sector, particularly with large, publicly traded companies, WBE certification by a third-party certifier is recommended.
There is a long list of documents that you will need to get together for your application. This is probably the most arduous part of the certification process, and if you’re not organized or haven’t kept track of important business documents, getting everything together can be even more time-consuming and challenging.
You don’t have to be going through the application process before you get organized. If you think that getting certified is something that you will eventually want to do, it is wise to start putting aside the necessary documents and paperwork as early as possible.
The Women’s Business Enterprise National Council (WBENC), a national, Washington, D.C.-based nonprofit that also provides an avenue for women-owned enterprises to get certified, has a list of required documentation on their website.
Here is typically what to expect in the certification process:
• The applicant sends the completed application to the certifying agency;
• The certifier checks to ensure that the application is complete with supporting documentation;
• The application is forwarded to one of the national review committees;
• If the committee has questions arising from the documentation in your application, they will contact you for clarification;
• A visit to your place of business will be arranged and conducted by one of the certifier’s trained site visitors. Results of the site visit are sent to the review committee;
• The review committee meets again to make final decision;
• The applicant is notified of the decision, and, if certified, a certification packet is sent. If the application has been denied certification, a letter is sent stating the reasons and stating the appeal process; and
• You must renew your company’s certification annually, whether you have WBE, WOSB, or EDWOSB certification. However, the process is a relatively simple one after the initial certification, especially if there have been no ownership changes.
Once you make it through the certification process, it’s time to use the distinction to your advantage. According to business owners who have their certification, there is a lot of potential to grow your business through this avenue, but you can’t just sit back and expect the business to come to you. The best way to get word out that you are certified is to contact local, state, and national certification agencies and ask to get put on their mailing list.
Additionally, mention that you are a certified women-owned enterprise on your marketing and promotional materials, which is an easy way to let potential customers know about this important distinction.
Kristina Drzal-Houghton, CPA, MST is the partner in charge of Taxation at Holyoke-based Meyers Brothers Kalicka, P.C.; (413) 536-8510.