Women-owned businesses: How certifications can help land more business
Learn more about how getting certified as a woman-owned business can increase sales, networking and educational opportunities.
Women-owned businesses are a force to be reckoned with in the American economy. According to a 2017 survey by American Express OPEN, women start an average of 849 new businesses per day, up 3 percent from the previous year. Over the last 20 years, the number of businesses owned by women has more than doubled, as has their revenue. For example, the National Association of Women Business Owners (NAWBO) reports that as of 2017, more than 11.6 million firms are owned by women, employing nearly 9 million people, and generating $1.7 trillion in sales.
Family-owned businesses are among the front runners in advancing women, often passing the company down to the next generation of daughters. A 2018 Quartz at Work survey found that the world’s largest, longest-lasting family businesses are advancing women, including non-family members, further and faster than their non-family-owned business counterparts. The survey of the 589 largest family businesses from top global markets found that top management is 22 percent women and board membership is 16 percent women. Overall, the survey showed a 20 percent increase in the number of women in the C-suite since the organization’s 2014 survey.
Today’s focus on women-owned businesses began more than 20 years ago when the federal government set a goal of awarding 5 percent of the value of its contracts to women-owned companies as a way of helping to level the playing field. Similar goals are also in place for state and local governments as well as the private sector. Certifications such as the Woman-Owned Small Business (WOSB) or the Women Business Enterprise (WBE) can help women entrepreneurs grab the brass ring of public or private contracting dollars. In general, the WOSB certification is required to participate in federal programs, while the WBE certification is accepted by most private companies. Both provide the seal of approval that a business is truly owned and controlled by women.
Who offers certification?
The Small Business Administration (SBA) certifies WOSB. Those interested in pursuing the WOSB certification can self-certify on the SBA website for the time being. The National Defense Authorization Act for Fiscal Year 2016 eliminated the self-certification process, but the SBA hasn’t yet decided how to implement the change. Another option is to receive WSOB certification through one of four SBA-approved organizations: the National Women Business Owners Corporation (NWBOC), the Women’s Business Enterprise National Council (WBENC), the U.S. Women’s Chamber of Commerce or the El Paso Hispanic Chamber of Commerce.
While all four of the above organizations also offer the Women Business Enterprise (WBE) certification used by state and local governments and in the private sector, the main players are NWBOC, the first private national certifier of women-owned businesses when it formed in 1995, and WBENC, the largest certifier of women-owned businesses or women’s business enterprises in the U.S.
The benefits of certification
Achieving certification can be a time-consuming process, but there are several advantages:
- Sales opportunities – Certification can be a stepping stone to obtain government and private contracts that are a reliable source of income for women-owned companies.
- Access to information – Certifying organizations make it easier for women to find business leads by providing access to databases of information with lists of suppliers and procurement executives at hundreds of major U.S. corporations and federal, state, and local government entities. In addition, a newly certified women-owned business also increases its visibility through its own listing in the database.
- Networking and educational opportunities – Conferences, training programs and educational workshops provided by the certifying organizations can enhance the chances for connecting with decision-makers and creating future business partnerships.
- Additional tool to increase visibility – Listing a certification as a WOSB or WBE on marketing or packing materials can help women business owners promote their companies and enhance marketability.
What’s involved in the certification process?
Both the WOSB and the WBE use specific criteria to determine certification, but in general, the process requires the business owner to pull together a list of required documents to prove that:
- The business is at least 51 percent owned and controlled by a woman/women who are U.S. citizens or Legal Resident Aliens
- Daily business operations are overseen by a woman/women
- A woman holds the highest office at the company
A quick recap of the different requirements for the WOSB and the WBE is available at Townsquared, an SBA business partner, while the WBENC provides a list of the required documentation for certifications.
Certifying agencies also conduct in-person interviews in an onsite visit to verify information. In general, the certification process may take three months or more.
Some things to consider…
While certifications certainly can be a boon to new business, there are things to consider:
- Certifications aren't universally recognized. Some women-owned businesses may only need to get a national certification (such as the WOSB for federal contracts) while others might want to pursue a local one. State government agencies may have different processes for certification, as do different corporations. Therefore, it’s best to check in advance about which certifications are required by a particular government agency or corporation that a woman entrepreneur is targeting for new business.
- Certification costs — Certifications generally require an application fee. For example, NWBOC charges $400 as an initial application fee, while WBENC’s application fees are determined by its 14 Regional Partner Organizations and the amount of the woman business owner’s previous year’s gross earnings. In addition, there are annual certification renewal fees.
- Certification isn’t a guarantee of new business. Getting certified can help open doors for a woman-owned business. But, just as with any other prospective customer, it’s up to the business owner to promote her business and close the sale.
Other certifications abound
In addition to the WOSB and WBE, women business owners have several other options when it comes to choosing certifications. For example, the SBA also provides certifications for an Economically Disadvantaged Women-Owned Small Business (EDWOSB) as a way to increase sales opportunities. To qualify, a woman’s personal net worth must be less than $750,000, her adjusted gross yearly income averaged over the three years preceding the certification must not exceed $350,000, and her fair market asset value (including her primary residence and the value of the business) should not exceed $6 million.
Women who own their own small business may also want to look at becoming a B Corp as a way of attracting new business, new investors or employees. B Corps are for-profit companies that are certified by B Lab, a nonprofit organization, after meeting rigorous standards of social and environmental performance, accountability and transparency.
Which certification is best?
The choice of which certification to pursue is a personal one. Woman business owners should first ask targeted potential customers which type of certification they require. While federal contracts require women business owners to hold the WOSB, local governments or businesses may require a city certification. Next, review the websites of the certifying organization to see which benefits (such as databases and educational or networking opportunities) might provide the best advantages. WBENC has a handy quiz about WBE certification that might help in deciding whether that particular certification is a good fit in fulfilling a long-term business plan. Finally, compare costs of the application process at different certifying organizations and then be sure to block out the time required to submit the necessary documents for certification.
Is certification worth it?
There’s no simple path to business success. While there’s no denying that compiling the required application documents requires dedication, certification can provide a woman-owned business with an edge by raising its visibility, increasing networking opportunities and opening the door to more business.