Woman-Owned Small Businesses are BIG Business
If you are a woman-owned enterprise, take heart that you are not alone! There are nearly 6.5 million women-owned businesses generating a reported $940 billion in revenue, according to the 2009 U.S. Census report. For many women entering the small business ownership ranks, the reasons are as varied as the women themselves. Small business ventures like Mary Kay Cosmetics which recently posted a $2.5 billion in lipstick, eyeshadow and other beauty sales in 2010 even in this two-and-a-half year long recession. Large corporate businesses like Jill Blashack’s Tastefully Simple are also making a significant mark on the business world. One way to further highlight your small business enterprise is to undergo a woman-owned certification process. There are pros and cons to certification and depending on your business type and commitment level, you may want to weigh your options before you decide to certify.
What is certification?
Certifying a business as woman- or minority-owned can provide additional opportunities for growth that may not otherwise be available through more traditional business channels. If your business would benefit from access to large national suppliers or government contracts certification may be in your future.
With the signing of Executive Order 13360, an increase in federal contracting and subcontracting opportunities were made available for both veteran service-disabled and woman-owned businesses. Many government contracts have a portion of their work earmarked for this population of business owners and even give preference to this smaller subset when contracted dollars are allocated. That means that there are many government contract dollars just waiting for your small business to fill a need. In order to qualify for these contracts, a woman-owned enterprise must complete several steps including an application and government contract training course. These steps help to ensure that you and your business are ready to manage the work required including the substantial paperwork that comes with a government contract.
Mounds of Paperwork
With any government contract also comes the ‘bureaucratic red tape’ associated with government work. The process can be intimidating at first, so collect your resources, attend the government sponsored courses and then evaluate if government contract work is a good fit for your small business.
Steps to Certification
Like any reward, the process to achieving success is often a difficult one. Obtaining woman-owned certification is also a lengthy process, but can be highly rewarding in the end. Here’s a brief list of what is required:
- · Business must be woman-owned and led. The owner must be female and hold at least 51 percent interest in the company.
- · The woman-owner must be active in the daily operation of the business. This ensures that a man doesn’t put his wife on the masthead only to be left to running the company himself. You can demonstrate involvement by providing documentation with regard to the daily operation, hiring, firing and community duties of the business.
- · The woman-owner must be a U.S. citizen and in business for a minimum of six months. The longer the business is in operation the better for consideration (usually several years with a solid track record).
It’s a marathon, not a sprint.
If your business can clear the first three bullet points, you’re in a good position to start the certification process. The entire application from start to approval can take several months to up to a year to complete and receive approval. Stay organized and keep a duplicate set of all records so that you know where you are in the process and can readily work on open issues and documentation. As a safety precaution, store your second set of documents off-site, so you’re covered in the event of a workplace catastrophe.
What are the types of certification?
Women Business Enterprise Certification (WBE) – A national certification awarded by the Woman’s Business Enterprise National Council (WBENC). This is a lengthy application process requiring the woman business owner to not only demonstrate 51 percent or greater ownership in the business, but also a full set of business financial statements (prepared by a third party accountant), copies of rental agreements, equipment rental or purchases, real estate holdings and even records like bank signature cards. There is a $300 application fee.
HUB Zone – The SBA’s Historically Underutilized Business 8(a) program called the HUB Zone program, is based on the geographic location of the business’ primary site. The mission of the program is to serve economically disadvantaged and challenged communities. Each state has a hand in running the program, so check with your state’s Minority Business Development center through the SBA to find details.
State and Local Programs
Again, each state runs their own version of the national woman-owned program. Details for application and levels of certification can be found on the individual states’ web sites. Using the state-level application can be cost-effective and far less time consuming if you’re only looking to expand your business opportunities within your state. For businesses in large states like New York, Texas and California, this is often a great option and way for a small business to explore contracting on a more limited scale.
WomenBiz.gov – The hub for learning the ins and outs of navigating government contracting. Start here to learn the basics and see if certification is right for you.
NAICS – Obtain the North American Industry Classification System (NAICS) for your small business’ industry or service type. Once you have these numbers, you can then apply to Dun & Bradstreet for a DUNS number.
Central Contractor Registration – Primary database for becoming a registered U.S. Federal Contractor and for government contractors to search for qualified subcontractors like you. Note: You can also obtain your DUNS number here.
Defense Contractor – If your small business is seeking work with U.S. Department of Defense contracts, you’ll need to register ith the On-line Representations and Certifications Agency (ORCA). This new online registry will gain your business access to contracts and awards from the DOD. Data can be entered here once for eligibility to all government contracts.
Federal Business Opportunities (FBO) – This site gives you access to the Procurement Technical Assistance Program, which is a resource at no or low cost that provides assistance to businesses in marketing products and services to federal, state and local governments.
There are many ways a woman or minority-owned small business can expand their markets and explore government contracts. First and foremost on the list is to have well organized, accurate and timely small business finances so you can prove your business is a good risk that is ready and capable of the work. Talk with a us to see if your small business is ready for the challenge.
Copyright Information 2011 Professional Association of Small Business Accountants
Presented By: David Bradsher, CPA , a PASBA member accountant, located in Falls Church, VA