Obtaining & Leveraging Business Certifications

Sustainable Business Series

By Adrienne B. Haynes, Esq.

Lead Consultant, SEED Collective

A business certification can provide reputational legitimacy and open the door to additional contracting opportunities. Projects that involve local, state, or federal government funds implement “set-asides” to reserve a portion of their annual contracting dollars budget to certified firms. Socially responsible corporations also set procurement and supplier diversity goals.

The different types of certifications include:

· Women owned business- gender-based certification for woman-owned businesses.

· Minority owned business- raced-based certification for minority-owned businesses

· Veteran owned business- certification is for the business owner who is a veteran of the U.S. Armed Forces

· Service Disabled Veteran Owned- certification is for the business owner who is a veteran of the U.S. Armed Forces and who has been disabled in action.

· Disadvantaged business enterprise- certification is for business owners that qualify as socially and economically disadvantaged based on personal net worth

· SBA 8(a)- 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.

· Historically Underutilized Business Zone (HUBZone)- location based designation for small business concerns located in economically distressed communities in order to increase employment opportunities, stimulate capital investments in those areas, and empower communities through economic leveraging.

At SEED Collective, we’ve been working with certified companies since 2013. We worked with individuals, resource partners, corporate partners and a national certifying agency when we were engaged to manage and expand the Midwest Women’s Business Enterprise Council, a certification agent and affiliate of a national certification leader based in Chicago, Illinois. In addition, we’ve worked closely with construction contractors through our incubator programs and have been fortunate to assist many clients with the certification and recertification process.

These contract assistance programs can increase opportunity and serve as a competitive advantage for individuals from historically underestimated communities. To be eligible for these certifications:

• At least 51% of the business must be owned by the certification’s intended audience
• The eligible business owner must be a U.S. citizen or lawfully admitted permanent resident of the U.S.;
• The owner must hold the highest position in the company and be capable of day to day leadership, as well as long-term decisions regarding the management, policies and operations of the firm; and
• The business must be organized as a for-profit business.

The certification is based on a firm’s specific scope of work and the process can be arduous and is not automatic. Each government agency can set their own requirements on eligibility requirements, including size standards, conditions based on how long the company has to have been in business and personal net worth limits for owners.

The cost to be certified by a public agency is usually free but may include a processing fee. For private certifying agencies like the Women’s Business Enterprise National Council, the cost to be certified is based on gross annual revenues. This can range anywhere between $300 to $1,000.

Business owners should give themselves three to six months to prepare for the certification process, from the application preparation to determination letter. One received, certifications can last between one to three years and may require annual updates between recertification.

The documentation required for a complete and successful application package may take some time to compile. Requested supporting documentation can include:

· Governing documentation

· Business Plan

· Proof of Citizenship

· Marketing Materials

· Client References

· Ownership Affidavit

· Professional and Business Licenses

· Resumes of owners, board, key staff

· Financial statements- tax returns, debt instruments, proof of capital/equity investment

· Personnel listing and verification

· Current contracts

In addition, most certifying agencies also require an on-site visit as a part of the application process.

When expanding outside of your original certifying region, the certification is usually not immediately transferable. Some regions do provide an automatic or rapid certification process for those who have been recognized in other jurisdictions.

Lastly, if your certification application was successful, near the end of the period of certification, you’ll be invited to recertify. If the application was denied, many agencies have an appeals process.

Before the application process is started, owners should consider their existing and desired clients and make sure that a certification will serve as a competitive advantage. If you are a nonprofit organization or if your business only focuses on residential construction (projects not involving government funds), the certification may not help you get more clients (the point!).

This article is an overview of certification considerations and does not cover every step in the process, requirement, exception, or restriction. Every business decision should be well researched and discussed with a professional before being made.

SEED Collective, LLC is a consultancy that exists to inspire and support the sustainability of entrepreneurs and businesses through education, research and policy, and advocacy. For individual clients, we have provided in-depth business coaching services since 2013 to early and second stage businesses. We work with owners and leadership teams throughout the country (see our client list on the website here) to help streamline business models through systems and refined operational processes, engage strategic partners and stakeholders, and reach milestones in our executive accountability program.

To work with SEED Collective, we start with a consultation to learn more about your business and consulting needs. If we’re able to help, we’ll outline a consulting plan and prepare a formal proposal. To schedule a consultation to learn more, find a time that works best for you here.

Citations and Additional Resources:

DIVISION 2. — MINORITY AND WOMEN’S BUSINESS ENTERPRISES (M/WBE), Code of Ordinances, https://library.municode.com/mo/kansas_city/codes/code_of_ordinances?nodeId=PTIICOOR_CH3COLE_ARTIVCOPRRE_DIV2MIWOBUENMWB_S3-421DE (last visited Apr 15, 2020).

Customer Service Bill of Rights, Disparity Study Report and Performance Measurement Reports, https://www.kcmo.gov/city-hall/departments/human-relations/performance-measurement-reports (last visited Apr 20, 2020).

KANSAS STATEWIDE CERTIFICATION PROGRAM, https://www.kansascommerce.gov/programs-services/minority-women-business-development/kansas-statewide-certification-program/ (last visited Apr 10, 2020).

Minority, Women and Disadvantaged Business Enterprise (MWDBE) and Airport Concession Disadvantage Business Enterprise (ACDBE), https://www.kcmo.gov/city-hall/departments/human-relations/certification-and-compliance/minority-women-and-disadvantaged-business-enterprise-mwdbe (last visited Apr 21, 2020).

OFFICE OF CIVIL RIGHTS COMPLIANCE, http://www.ksdot.org/divadmin/civilrights/ (last visited Apr 15, 2020).

Regional Partner Organizations, https://www.wbenc.org/regional-partner-organizations (last visited Apr 20, 2020).

Supplier Diversity, Purchasing, https://purchasing.wycokck.org/eProcurement/C/WYCOKCK2/SupplierDiversity.aspx (last visited Apr 18, 2020).

Types of Contracts, Federal Contracting Contracting Guide, https://www.sba.gov/federal-contracting/contracting-guide/types-contracts (last visited Apr 18, 2020).