Dog Days

It is the hot, humid and last lazy dog days of summer, as our mother used to refer to them.  Then we were excited about new home room teachers, cool clothes and maybe even a new school building.  These days, its the return to a more normal business landscape.  Our customers will be back from final vacations in a week or two and we’re planning how to make the most of this year’s final quarter.  For many SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) business owners, this has become a good time to think about the benefits of diversity certification — most of our company’s certifications renew in September and October — and we’ve been getting calls from many people who are just starting their certification research.  So it seems like a good time to talk about certifers and what’s out there.

Who are the certifying organizations? 

It is a lengthy list that can be simplified by type.  There are diversity certifications offered by virtually every level of government: federal, state, county and municipality. These certifications often rely on the US Department of Transportation’s rules to define which businesses may be certified. Each certifier may have slightly different expectations and processes, but underlying programs expect:

  • Company is an independent, for-profit business.
  • The business is at least 51% owned and controlled by a socially and economically disadvantaged individual(s).
  • The company’s disadvantaged owners are US citizens or lawfully admitted permanent residents.
  • The business meets the Small Business Administration’s size standards for its primary NAICS code.

There are several third party certifiers: Women’s Business Enterprise National Council (www.wbenc.org); National Minority Supplier Diversity Council (www.nmsdc.org); LGBT business owners – National Gay and Lesbian Chamber of Commerce (www.nglcc.org); or people with disabilities business owners – US Business Leadership Network (www.usbln.org).  Third party supplier rules can be different.  For example, social or economic disadvantage is not part of the criteria — and personal net worth statements are generally not required.  In general, the businesses are not restricted to being considered small — large DMWVLGBTBEs can apply and be certified.  But, NMSDC only certifies US citizens.

Don’t know what to choose because there are so many choices? Taking time to poll your customers may be the best way to choose.  We often recommend reviewing these certification strategies.

What will certification do for me?

Hate to say, but it depends.  Diversity certification isn’t a golden ticket, it’s a marketing tool. You still have to be good at what you do, and continue to offer valuable goods or services to your customers.  What it does offer is instant recognition.  Many SDMWVLGBTBEs aren’t aware of the value certification adds in supporting their clients’ diversity  and inclusion goals — and it is NOT just the government clients. Corporate cultures are becoming more interested in commitments to supporting their own diverse customer base.  Take, for example, the Billion Dollar Roundtable (BDR) comprised of 24 corporations with a minimum $1 billion annual 1st Tier MWBE Supplier Diversity  spend, that in 2011 spent another $6.5 Billion with “Other Diverse Suppliers” including veterans, service disabled veterans and LGBT suppliers. BDR members encourage  prime suppliers to engage with SDMWVLGBTBEs by setting participation goals.

In our world, we use our certifications in three ways.  We often serve as prime on moderate-sized government contracts. In many cases those contracts also require us to meet supplier diversity goals — we can self-fulfill the WBE portion of the contract but not the MBE portion, so we have MBE certified suppliers.  We’re approached frequently to subcontract to other government primes, some who may be certified themselves but most often with large companies that aren’t certified — remember, government agencies have size limits. And finally, in every piece of marketing material, web site, business card, etc. we declare our certification status so potential clients know we’re certified.

The key to successful SDMWVLGBTBE certification is choosing the program that best suits your business and using it to enhance your marketing efforts.

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Perspectives

We often talk about the history of supplier diversity, how its roots are buried in the affirmative action/equal employment opportunities that came out of the Kennedy, Johnson and Nixon administrations.  Some of our staff actually marched (and sat) in solidarity with Martin Luther King, Jr’s mission at various locations and campuses in the Midwest and New England.  The many federal, state, local and third party diversity certification  processes began as an idea in Nixon’s 1971 Executive Order 11625, that directed federal agencies to develop comprehensive plans and specific program goals for a national Minority Business Enterprise (MBE) contracting program.  Today, there are many robust  programs offering SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) certifications.  Theses certifications open doors for us and are a value add when pursuing commercial and government contract opportunities with customers who are committed to diversity and inclusion in their own organizations.

What we haven’t talked about much, is how and why the certification processes have changed.  Granted, at GetDiversityCertified.com we only have direct experience since the late 1980s, but that’s still almost three decades.  Our business owners first heard about MWBE (minority and women business enterprise) issues around 1988.  There was a local news story about an MBE firm that was charged with fronting  for a non-minority owned company in a computer related contract.  Today, that would be called a pass-through. This type of arrangement has always been illegal.  The SDMWVLGBTBE must provide a legitimate and commercially useful function (CUF). A few months later, after winning a state contract, we were asked to complete a one page survey about our business, its ownership and our sales volume. A return letter certified us as a large – size standards were different then – WBE in the state of Illinois, which made our client agency very happy and, combined with good performance, led to more work. That’s when we began to understand the true impact certification had on our business.

Based on that experience, we applied for certification in our home state of Pennsylvania.  At the time, there were several agencies that certified MWBEs — Department of General Services (DGS), Department of Transportation (DOT) and the major counties like Allegheny.  And all three had different certification criteria, application forms and required documentation. Today, Allegheny County is apart of Pennsylvania’s Unified Certification Process (UCP) which ties into the DOT’s Disadvantaged Business Enterprise (DBE) program – the County still sends an additional letter to confirm WBE, MBE, or MWBE status – and DGS no longer certifies business’s but rather verifies them. DGS grants SBE verification with submission of business taxes for size standard proof and for MWBE status a business must submit proof of their DBE or 3rd party SDMWVLGBTBE certification.

But we digress, because what’s changed most is the progressively detailed information  and amount of supporting documentation necessary to prove that your business is actually 51% owned, controlled and operated by diverse citizens (or permanent residents) of the United States. In 2002 when we first applied for DBE status as a corporation our certifier required that we provide: a financial statement from our CPA, preferably audited; three years corporate tax returns; three years personal tax returns; resumes of the owners and officers; proof of our ability to perform work in Pennsylvania (basically a good standing certificate); copies of any 3rd party rental agreements (leases) and management services agreements; articles of incorporation; by-laws; record of our first corporate organization meeting; issued stock certificates (front and back); and a stock ledger. If there were any stipulations on stock/ownership options, restrictions on disposal of stock loans or voting, or stockholder or buy-rights agreements that information also had to be provided. This list of paperwork seems pretty short by today’s standards, but it was significantly more than our initial one page survey in 1989.

In 2014 the United State’s Department of Transportation made changes to the DBE program which filtered down to all 53 states or territory programs. Some of the changes were minor, formatting corrections made to the application.  For example, before the older DBE application asked about “Immediate Family Member” relationships between owners on page one before asking who actually owned the business on page three. Additional questions about the owner and business were also added, such as “Does this owner work for any other firm, non-profit organization, or is engaged in any other activity more than 10 hours per week?” and “At present, or at any time in the past, has your firm: Served as a subcontractor with another firm constituting more than 25% of your firm’s receipts?” Supporting documentation also changed.  Before late 2014:

  • Resumes only needed submitted for owners and officers of the business, but now all owners, officers, and key personnel resumes must be included;
  • Business tax returns for the previous three years now include any requests for extensions filed as well as three years worth of affiliated business’s tax returns with related schedules;
  • If a business owns or leases a vehicle they now also have to include VIN numbers, copy of titles, proof of ownership/lease, and insurance cards for each vehicle; and
  • Corporations used to only need to provide minutes for the first and most recent stockholders and board of directors meetings, but now must provide ALL meeting minutes.

The amount of supporting documentation can feel intimidating, but there is a valid purpose behind it.  The certifier must be sure that the business has  provided proof that both the business and the owner(s) meet the eligibility requirements set forth by the rules or legislation of its governing body (federal and/or state laws and procurement regulations); and ensure that the business is capable of performing the services or producing the products it says it does. It is incumbent upon you and your business to prove that you’re  certifiable.

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Into the Breach

Every year, we write at least one post about networking for the SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) business owner. And, it would seem to be that time of year, as we gear up for the 20th annual national conference for WBENC, the Women’s Business Enterprise National Council. We’ve been involved with this, the largest third party certifier of WBEs (Women Business Enterprises), for just over 18 years and are looking forward to attending our 7th time. Each year the number of sponsors and attendees grows, so for us it is a perfect use of our networking and conference budget funds.

We have had several recent conversations about why a small organization should have a budget for and/or bother to attend networking events. We were honestly surprised by the push back from some of the participants. It has been our experience that people like to do business with people and organizations that they know. Sure, you can hope that potential clients will first, find you through an internet search, and then be so blown away by your business’s web presence that they will buy from you right this minute. And, that could very well be the scenario if you sell a particular product (do people still make widgets?) that has little or no competition. If, on the other hand, your business is like that of the majority of us, this could be wishful thinking.

Each business has to target the networking events that will achieve its own goals and objectives, but for us, this is one of largest gatherings of supplier diversity and procurement managers that we know are absolutely committed to buying goods and services from certified WBEs. (And, many of these corporations are also sponsors or members of National Minority Supplier Diversity Council, the National Gay & Lesbian Changer of Commerce, and the US Business Leadership Network who certifies business owned by people with disabilities.) Plus, because we also subcontract to other primes, many of our customers will be in Las Vegas later this month.

So how do we prepare for large networking event? First, we look at the list of sponsors and make a prioritized plan: at least 15 new companies that we want to meet; existing contacts we may have had difficulty maintaining communication with; and, people we want to see again in person. Email and phone calls are great, but there’s nothing like a quick face to face chat to remind a potential client of who you are. Given there will be so many of them in one place for five days, it really makes good use of our time.

We practice our elevator speeches for introductions to new contacts. We make note of new services and projects that we can talk about since last year. We have our new business cards, plenty of them, packed into every spare pocket. And, we divvy up the tasks between the two of us who will be attending. We remind each other to pack comfortable shoes (and clothing) — there’s nothing more annoying than sore feet when traipsing around a huge conference center. Last fall, Alyssa Gregory wrote tips to prepare for a small business conference that definitely apply here.

At an event like this national conference, we’re likely all there for the same reasons – to expand our business’s reach. So, one thing that works best for us, striking up those random conversations, particularly with people waiting in lines, hanging out at the pool, at the breakfast buffet or next to you at the bar. You’re only strangers until you start to communicate. We have established good working relationships with business people we happened to sit next to for breakfast or on the shuttle bus or while waiting for a speaker to arrive. Speaking of speakers, we’re so exited that Octavia Spencer is the keynote speaker at the tribute dinner on June 22nd.

We’ll likely have even more to say after the conference! In fact, we thought we’d do an informal survey to see if others share our belief that conferences and conventions are absolutely the greatest place for SDMWVLGBTBEs to network with corporate sponsors, potential clients and each other.

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For the Veterans Among Us

Not just thank you for your service, although we certainly do! Fourteen states do more than say thank you. They have specifically included VOSBs (Veteran Owned Small Business) and SDVOSBs (Service Disabled Veteran Small Business) in their procurement opportunities and SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) certification programs. This generally translates into specific goals for all contracts issued at the state level, and many more opportunities for a veteran owned business to bid as either prime or sub-contractor.

Virginia has the highest percentage goal for contract participation at 40% for SDMWVLGBTBEs certified in their SWaM (Small, Minority and Women) program, while New York’s overall MWBE (Minority and Women Business Enterprise) goal is 30% and SDVOSB is currently at 6%. Pennsylvania’s governor recently announced his desire for 30% SDMWVLGBTBE participation. Next up, Minnesota with 6% VOSB/SDVOSB goals, followed by Michigan’s SDVOSB bidders may receive up to 10% preference in bidding while Michigan’s SDVOSB spend goal is 5%. In Maryland, the goal is 2% for VOSB, 3% SDVOSB and another 5% for small. (Note: while Maryland may permit combining 10% into a single set aside goal, our experience has been that a certified prime is often restricted on how much of the goal it can self-fulfill on a specific procurement.) Arkansas pulls SDVOSBs into its MWBE program with a 5% goal. California, Illinois, Indiana and Massachusetts have 3% VBE goals. Wisconsin offers a 5% preference in bidding to SDVOSBs, while Washington encourages its agencies to award 5% of contracts to VOSB/SDVOSBs.

Unfortunately, there is not a standard process for state certification of VOSB/SDVOSB enterprises. Each is a little bit different:

  • States that certify VOSBs (no disability required) and SDVOSBs: Florida, Illinois, Indiana (must be VA verified to be eligible), Maryland (must be VA verified to be eligible), Massachusetts (must be VA verified or USBLN certified to be eligible), Minnesota (must be VA verified to be eligible) and New Jersey
  • States that certify SDVOSBs: Arkansas, California, Michigan, Washington and Wisconsin

As noted, a number of states require the business to hold a verification from the VA (Veterans Administration) program, so we’ll talk about navigating that program. Verification (certification by another name) by the VA is a multi-step process, and it does take some time. The first step, make sure all your information is up-to-date in BIRLS (the Beneficiary Identification Record Locator System aka the Beneficiary Identification and Records Locator Subsystem). If you have never claimed benefits, you will need to work with the VA to create your initial record. BIRLS will be cross-referenced when you get to step two … create a vendor profile in the VA’s VIP portal.  When creating your account, you’ll be asked to provide your business’s Dun & Bradstreet – DUNS – Number. If you don’t have one,  get it before you start your profile.  By the way, there is no cost to get a DUNS so shy away if asked for money.  You can apply for a DUNS via this web form. The VIP portal will confirm information in the BIRLS system, of particular interest: date of birth and social security number. You will also have to complete and electronically sign a VA Form 0877 before you begin providing information about your business.

We recently supported a client through the entire VOSB verification process. First thing you should know, the VA has a pretty large backlog of veterans seeking VOSB verification, so be prepared to spend some time waiting. For example, the initial application was completed in January, then a generic list of pre-qualification questions were sent to us. We had the answers prepared well in advance of the verification analyst’s early March request. Once the actual process began there were a couple of stumbling blocks, mostly in interpretation and differences in document names. For example, the client’s home state issues a certificate of formation for all business types. Three times we had to explain that this LLC didn’t have any articles of incorporation (the term the VA used though traditionally LLCs have articles of organization).  This state’s certificate of formation does not include any articles. Once this outstanding document request was  considered resolved the VA issued confirmation of VOSB status at the end of April. The entire verification process took a little over four months.

The states that do not require VA verification have their own certification process to seek  VOSB or SDVOSB status. We’ve found that in those cases most states require that both the business and veteran owner be domiciled within the state. Another fairly standard requirement for SDVOSBs is that the veteran owner must have a service-connected disability of at least 10% or more to be eligible. Always research the certifier’s eligibility requirements before starting the certification process.

Our colleague John Scifers (from SCIGON Solutions) shared that VOSB/SDVOSB certification “can also be helpful at the municipal level. For example, the City of Chicago has a 5% price preference for VOSB/SDVOSB firms on contracts over $100K. Cook County has a similar program.” He also points out that other benefits may be available to veteran owned businesses, such as California’s waiver of business license fees.

Check with your state’s Department of Veterans Affairs or similar agencies and non-profits offering veteran services.  These organizations should be able to provide information on any regional or local procurement benefits that might be available. We also recommend giving John’s article, Tips for Emerging Veteran Entrepreneurs, a read.

We expect this trend of state procurement goals for veteran and service disabled veteran participation to continue as various legislatures work toward increasing opportunities for their returning veteran constituents. You can use this tracker developed by the National Veteran Owned Business Association  to keep up-to-date on what states are doing to increase their engagement with veteran owned businesses.

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Handling Documentation Gaps

So, you want to get certified as a SDMWVLGBTBE (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise) but the list of documents is overwhelming. And, in some instances, the business might not even have everything the certifying agency requires. We know many people who have decided not to pursue certification because they just don’t have the paperwork.

There are legitimate reasons why a business might be missing required documentation.  In our case, the business has moved several times, and we have actually scanned everything to our servers (and, of course backed these materials up in multiple locations!).  During a recent WBENC re-certification visit we were asked to show all of our original stock certificates … and discovered we couldn’t. Somewhere along the way (between 1984 and 2016), one or two got misplaced. We demonstrated that we could print the scanned copies and that seemed to suffice. Fortunately, we found the missing certificates when we finished unpacking (whew!) but even if we had not, we had accurate records in our stock ledger and scanned copies of the originals. Older paperwork can get lost, not just in a move, but a fire or a flood or just because it accidentally got thrown away. Before you apply for certification, make sure you have the business’s organizing documents and if some are missing, talk with your attorney about how to replace them.

Some documents can be retrieved from your state government, if you registered your business as a corporation, partnership, sole proprietorship or LLC.  Most Secretary of State Offices maintain a Bureau of Corporations (or similar name), where you can order copies of your original paperwork.

If you don’t have a required document, you can opt to write an explanation as to why; and sign and date the statement for each missing document. For example, if you have only been in business two years you won’t be able to provide three years of financial statements — common sense, right? Well, in many cases it is just easier to provide an explanation.  You could write — on business letterhead:  “XYZ Company was formed on DATE, and we only have two years of financial records.” The primary business owner should be the one to sign this statement (though if it takes two or more owners to make up the 51% ownership seeking certification, those owners should sign, too). Then scan the document into a Portable Document Format for submission and your records. If you consistently follow a process like this, you can easily offer an explanation as to why you legitimately can’t comply with providing a requested document.

When it comes to business tax returns, the certifiers require three years’ worth.  If your business hasn’t filed in multiple years, most certifiers will accept the owner’s personal tax return instead.  If you are certifying with a state program as a disadvantaged business, they’ll want three years of personal tax returns anyway.

Another often required document is a bank signature card, and sometimes proof of an opening deposit.  If your business is a little older, you might not have everything close at hand. Generally, your bank can provide you with a copy of the signature card — the document that says who can withdraw funds or sign checks. Often, they can provide a report on their letterhead which will detail when you opened the business account and verify its opening deposit. Depending on the structure of your business, the bank may have had you complete a resolution or other legal documents. If you can’t find yours, they are likely able to get you copies.

The best approach, take the list of documents from the certifying agency and just go through the checklist. If you get them all together, in one place, it will make it easier for you to complete the application. And if you’re going to do the work, we highly recommend scanning copies of what you’ve gathered and put them on a CD or flash drive in multiple locations.

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What Your Lawyer Doesn’t Realize Could Hurt Your Business

Lawyers are busy, harried folks who often rely on state sanctioned boilerplates when it comes to the agreements used by many of us SDMWVLGBTBEs (Small Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprises) owners. Not all lawyers specialize in business law, and even those that do may not be familiar with regulations on state or federal certifications.  Sometimes, we even think we’ll save time and money by going through a legal advice web site to quickly form a Limited Liability Company (LLC) or partnership. Unfortunately, using standard forms can be the cause of significant problems when an SDMWVLGBT business enterprise applies for certification or submits revised agreements during an annual review.

Certification of SDMWVLGBT business enterprises generally requires that the business:

  • Be 51% owned and operated by U.S. citizens or permanent legal residents who are minority group members; (individuals who are at least one quarter or 25 percent: Asian-Indian, Asian-Pacific, Black, Hispanic or Native American; and/or are women; and/or members of the veteran, LGBT or PWD [Person With Disabilities] communities);
  • The minority owner or owners must be responsible for management of and control the daily operations of the business;
  • Be physically located in the United States or one of its territories;
  • Be for-profit

Long ago we talked about the issues of control and governance. Essentially, governance refers to the language in a business’s organizing documents that regulates its organizational management. Control, on the other hand, means that the diverse owner(s) has the authority and power to direct, determine or influence what happens in the business today and in the future.

So how can boilerplate language interfere with a business’s ability to get certified?

  • If you have a one person sole proprietorship, LLC or corporation there’s nothing wrong  with using the word unanimous to define a voting agreement’s terms. But, if you have 51%  diverse ownership in an LLC or partnership then this language would effectively restrict your ability to govern your company. In fact, if the business involves a 51/49 split between diverse and non-diverse owner(s), a simple majority of 51% is all that should be required.
  • If you’ve been in business for awhile and want to expand your business by bringing a new member into your existing LLC or partnership, be sure to review the new partnership or operating agreement carefully.  Make certain that the new agreement doesn’t accidentally change the diverse owner(s): position in terms of the most senior, or highest title; right to make final decisions (or manage those who might make other binding decisions); right to approve or accept new members/shareholders; or, right to determine the direction of the business. An inadvertent change could cause concerns with certifying agencies.  If you are a C-corporation selling stock, you’ll want your accountant and attorney to make sure that a sale of additional stock will not dilute the percentage of diverse business ownership.
  • Many businesses have bylaws, typical in Corporations and LLCs, and its definition of a quorum can be critical.  When we were applying for an out-of-state certification, we were asked to clarify our voting procedures, because one certifying agency believed our majority stock owner could be out-voted. So, our bylaws were re-written in 2015 to clearly define a quorum as a majority of shareholders, and that each share of stock is equal to a single vote.  We are a WBE,  82% owned and operated by women  — since our primary owner holds the most stock, she can’t be out-voted.
  • LLCs and Corporations have formal stock or share certificates issued to the share owners, and a ledger that tracks ownership of the shares.  Some companies have written shareholder agreements, and these agreements should reflect control by the diverse owner(s).  Simple majority – one share equals one vote – agreements might be the best option to discuss with legal representation.  And, your attorney can help you acquire the ledger materials and advise you how to keep them current.
  • If there’s a buy/sell agreement between the owners of the business, the language in that agreement should be clear about the diverse owner(s) rights to authorize the sale of any portion of the company. S/he or they, should retain the exclusive right to approve new owners.
  • It may seem odd that single owner LLCs require an operating agreement, but all certifiers require a copy of the operating agreement no matter how many LLC owners  or members there might be.
  • If the company has loans from its owners, make sure your attorney drafts a loan agreement that details repayment terms and interest charges.  If the loan is from a non-diverse owner, ask your lawyer to include language that the person making the loan does not garner any additional control that is already established by the organizing documents or shareholder agreements.
  • When there are multiple owners, your attorney should be cognizant of how any board of directors, managing partners or executive management positions are described in organizing documents. It is generally expected that the diverse owner will hold the highest titles, such as: Chief Executive Officer (CEO); Managing Partner; Chairperson; etc. If multiple diverse owners are involved, talk with your attorney about which owner should have the higher title … taking into consideration the skills and experience of the individuals and the responsibilities of the role being filled.
  • Contributions in starting a business can be very important if there is more than one owner. If it is a 51/49% situation, the 51% owner’s contribution should be at least 51%. Not all start-up contributions have to be cash. An owner can contribute physical assets (e.g. equipment, vehicles, software, etc.), experience or expert knowledge or real estate.

Larger or older business entities may have changed how they operate, without changing their documentation.  Before applying for certification, it is a good idea to review all of these documents to make sure they adequately reflect the diverse ownership.  Part of the review should include verifying that there are no random clauses that infringe on the diverse owner’s rights to govern and control the business.

Don’t think that single owner LLCs and sole proprietorships are the only way to go.  They might be easiest to structure, but multiple owner LLCs, joint ventures, partnerships or C-corporations can be certified.  Choose an attorney familiar with a knowledge of business law and clearly communicate your certification goals. Then make sure s/he is aware of the governance and control issues that influence whether you and your business can become SDMWVLGBTBE certified.

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Small Business Supplier Diversity

Certified small DMWVLGBTBEs (Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprises) reap the benefits of the diversity spend goals set by government agencies and large corporations. These organizations understand the compelling business case for diversity and inclusion.  A couple years ago, we wrote several posts based on the book The Inclusion Dividend: Why Investing in Diversity and Inclusion Pays Off by Mark Kaplan and Mason Donovan.  It is a well written commentary about the history and contemporary aspects of diversity and inclusion (DI) from a human resources and organizational perspective; and, it details how diversity inclusion can impact a large organization’s bottom line.

But why just large organizations?  We think SDMWVLGBTEs should seriously consider establishing our own supplier diversity plans.  We have one because we believe that supplier diversity gives our organization an excellent foundation for providing support to our clients.  We are proud to be a certified small, women-owned and operated company and of our strategic alliances with other SDMWVLGBTBEs.  Our plan defines strategies and tactics to increase our base of diverse suppliers.  It establishes key metrics to be measured and reported semi-annually to our Board of Directors and includes guidelines for both traditional and irregular purchases for goods and services in excess of $1500.

We do mostly state contracting (and sub-contracting, too).  For every proposal we write, we enlist at least one SDMWVLGBTBE partner, usually from the state in which we’re bidding — whether the requesting agency has diversity spend goals or not.  It’s another way we “practice what we preach”.

What can you do?

You can start by creating your own supplier diversity plan. Not ready to take that step yet?  Make links on your web site for potential diverse suppliers, describing the goods and services that you routinely acquire and give them an opportunity to learn how to sell to you. Think about publishing news items about the diverse suppliers you’re currently doing business with.

There are four 3rd party certifying organizations that you could consider sponsoring at some level.  Each of these groups has a slightly different missions, certifying businesses and their owners based upon certain criteria.  You can find out more about them at their websites: www.WBENC.org (women); www.NMSDC.org (minority and/or minority women); www.USBLN.org (people with disabilities); and www.NGLCC.org (LGBT).

Looking for diverse supplier to fill a particular need? If you’re certified by or a sponsor of one of these organizations you have access to their directory where you can search for suppliers based on your need. If you’re not, go to your state’s DBE Directory listing — there you’ll find both minority and women owned businesses who meet the eligibility criteria for the Disadvantaged Business Enterprise certification.

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You Should Get Certified!

If you’re a DMWVLGBTBE (Disadvantaged or Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprise), particularly if you’re a small business, you’ve probably heard that advice. We’ve talked about having a strategy when it comes to selecting the certifications that are right for your business, but just jumping right into filling out a certification application can lead to delays in the process if you haven’t carefully looked at the certifier’s eligibility requirements and your supporting documentation.

Say you’re a Connecticut based business interested in getting certified by the State of New York because you’ve heard about their 30% MWBE (minority-and-women-owned enterprises) state contracting utilization goal. Before being eligible to apply for certification in New York as an out-of-state firm there are a few steps you’ll need to take:

  1. Your firm must be Home-State certified; in this case a business would need to hold either an S/MBE certification from Connecticut’s Administrative Services Office of Supplier Diversity or a DBE certification from Connecticut’s DOT Unified Certification Program (UCP).
  2. You must go to the New York Department of State’s web site and apply for the Authority to do Business within New York.
    1. If you do not have someone to act as your agent within the state you’ll need to engage a registered agent service to perform this function.
    2. You’ll also need to provide the New York Department of State with one of the following: Certificate of Existence, Certificate of Good Standing or Certificate of Status from your Home-State.

If you have not taken these steps before applying for certification with the State of New York they will deem you ineligible for certification.

Note: Almost all states require out-of-state firms to be Home-State certified to be eligible for certification, while there are a limited number of states that require out-of-state firms to register for the authority to transact business within them as an eligibility requirement. Registering your business with a state may make you responsible for yearly filings or paying taxes to that state.

In terms of the SBA’s HUBZone certification we’ve known a number of businesses who thought they were eligible because their business was located in a HUBZone only to go through the application process and discover that they did not factor in the 35% employee residency requirement. While 35% of business’s workforce does not need to reside in the same HUBZone area in which the business is located, they must live in another HUBZone area. With the inclusion of qualified census tracts, there is now a street by street determination for HUBZone status. Before diving headlong into the HUBZone application go to the SBA’s HUBZone Map website and enter your business’s addresses, as well as, all of your employees’ addresses – you’ll need provide copies of this with your application anyhow – to determine if you meet the 35% requirement.  If you do not meet the 35% requirement your business is not eligible for HUBZone status.

If you’re a veteran owned business seeking the VA’s Vets First Verification you’ll want to make sure your information is correct and up-to-date in BIRLS (Beneficiary Identification and Records Locator Subsystem). The VA uses this system to validate a veteran’s status and if there are any discrepancies between the system and the information provided during the application process the verification process will be delayed and the business could possibly be found ineligible.

If you’re a minority-owned business seeking certification with NMSDC (National Minority Supplier Development Council) providing proof of ethnicity can be complicated if your birth certificate does not list it. The individual(s) on whom the certification is based must be of at least 25% of their stated ethnicity (e.g. an African American candidate must have at least one grandparent who is also African American).  NMSDC has a list of acceptable supporting documentation that includes: marriage records; death record of parents or grandparents; military record; baptismal certificate; hospital record; or other legal documents from a recognized institution (school, social service agency, church, adoption records, etc.). In extremely rare cases when documentation cannot be provided because none of the official documents available list ethnicity, DNA testing results have been allowed to be submitted.

Note: We always recommend to begin by collecting the required supporting documents.  This way you will know in advance if anything is missing and can address that issue before completing the application.

Remember, before you take someone’s advice to get certified make sure you know and understand the certifier’s eligibility requirements so you haven’t wasted your time.

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Thankful Thoughts

Around Thanksgiving, we began thinking what a strange fall this has been. Between 70 degree weather this close to December and the crazy election cycle we just experienced,   2016 should certainly be a year marked by multiple paragraphs in future history books.

Though many SDMWVLGBTBE (Small, Disadvantaged, Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprises) entrepreneurs have faced obstacles, this is our time of year for reflecting on gratitude for those who have gone before.

We’re particularly grateful to be in a country rich in diversity traditions.  Current diversity programs are rooted in Martin Luther King’s Civil Rights movement. With President John Kennedy’s 1961 championship of affirmative action, federal contractors were urged to take “affirmative action to ensure that applicants are treated equally without regard to race, color, religion or national origin” by Executive Order (E.O.) 10925. The 1964 legislation, signed by President Lyndon Johnson, added sex/gender to the affirmative action agenda.  This was the birth of Affirmative Action and the Equal Employment Opportunity Commission (EEOC) that has trickled down into all facets of employment law.

Ten years later, President Richard Nixon issued E.O. 11625 which directed federal agencies to develop comprehensive plans and specific program goals for a national Minority Business Enterprise (MBE) contracting program. Then President Ronald Reagan issued E.O. 12432 in 1983 requiring each federal agency that has significant procurement or grant making authority to create a Minority Business Enterprise (MBE) development plan.  Supplier Diversity programs at government agencies and large corporations would not exist without the vision and hard work of many activists and politicians.

Given the recent hotly contested election we just experienced, we’re grateful for the United States.  It took us 240 years to get here, and diversity traditions that have become an integral part of the behemoth that is the US government will not be undone by a single election. In every presidential race since 1980, the divisive rhetoric has escalated (on both sides) to this absolute furor of chicken little proportions … the sky is not falling. We will survive.

We’re grateful for other organizations that offer opportunities to SDMWVLGBTBE businesses like this $50,000 business grant contest from Lending Tree.

And, finally, we’re grateful for the vast SDMWVLGBTBE family. We look forward to the community’s success as we lift each other up by sharing opportunities and partnering.

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Working ON Your Business

Work ON your business, not in it. As SDMWVLGBTBE (Small, Disadvantaged, Disabled, Minority, Women, Veteran, Lesbian, Gay, Bisexual or Transgendered Business Enterprises) entrepreneurs, we frequently hear that phrase.  Sometimes, many of us aren’t even sure what it means because the phrase can encompass many activities … training or education, networking, volunteerism, public speaking, memberships, conferences or mentoring just to list a few.  For us, the definition is anything that takes us outside our daily work while enabling fresh perspective(s).  And, over the last twelve months we’ve taken advantage of each of the suggestions we’re about to make.

Training/Education can come in many forms.  The Small Business Administration (SBA) offers some of the best free programs. Many regions have a variety of entrepreneur support centers, we work with Chatham University’s Center for Women’s Entrepreneurship. If you belong to one of the 3rd party certifying organizations, such as WBENC or NMSDC, then you have access to many on-line/webinar training opportunities. We also get invited to business growth related webinars by various diversity organizations at the state, county and municipal levels — you can generally find such opportunities through your state or county DBE program. Formal education, through your local educational institutions or on-line programs, is always beneficial. One of the best investments we’ve made is in college level business law and financial management classes for our staff.

Mentoring comes in many forms.  Back at the SBA, there’s the Emerging Leaders program which helps you gain a 10,000 foot view of your business in relationship with your staff, your customers, your community and world at large. Through PowerLink and its partnerships, you can get your very own Advisory Board — a team of outside experts focused on helping you drive the growth of your business. In Western Pennsylvania, the Mansmann Foundation is piloting programs to assist small and diverse businesses begin or grow in distressed communities. In the old days, we might have said check your Yellow Pages, but today you can find all sorts of meaningful programs just a search button away. Mentoring goes both ways, too!  We mentor, or host, students from local high schools and educational institutions. Teaching someone always gives us a chance to think about how and why we do things, offering us a chance to embrace change.

Networking is working on your business, or so we said a while ago.  Networking gives you the opportunity to expand your business’s profile in specific communities.  We have a small networking group we refer to as “ladies who lunch”, which while social in nature is how our group has cemented personal relationships that lead to referrals between each other.  Formal networking events, for us the Pittsburgh Social Exchange or the Pittsburgh Technology Council is often a great way to meet other business people and establish long term relationships. Another good resource is your local or regional Chamber of Commerce.

Volunteerism was not something we considered as working on our business until this year’s WBENC national conference.  Our focus had been on giving back to organizations, in our case WBENC’s regional partner WBEC PA, DE, sNJ, Chatham University, and PowerLink, etc.  Becky Davis, Chief Bosspreneur reminded us that “Service is an amazing way for you to make a difference in your community, impact lives and change your business while changing the world.”  We didn’t think about how that volunteerism was likely to have a positive impact on our business.  If you don’t have a cause close to your heart, why not check out the Kiwanis, local women and children’s shelters, Boys & Girls Clubs of America, Boy or Girl Scouts … or anything that moves you to help your community.

Conferences/Trade Shows often offer the best of all worlds, combining educational and networking (and even volunteerism) components while many include marketplaces or trade shows.  If industry specific, there’s exposure to new products, services, trends and resources … hot topics, what’s in, what’s on the way out … and, perhaps determining what might be the best next steps for your company.  This might be a good opportunity to learn about competition in your customer space so you can evaluate your business’s comparative strengths and weaknesses — or find a potential partner for bidding on large contracts.  Most trade shows have an educational component that could help you learn techniques or tools to provide better support to your customers.  And,  you can visit booths to gather information on industry suppliers.  On the other hand, if you are the potential customer, the trade show is an environment where you can immediately research many supplier’s products, prices, and services, all in a single place.

Memberships can often go handed in with the opportunity to network. When we moved our business back to into the community we joined the Wilkinsburg Chamber Commerce, you can find such organizations at local, state, and even national levels. Beyond the traditional options of your local chamber or industry specific professional and trade associations more personal memberships – say to your college alumni association – can also garner opportunities to connect for you and your business.

Public speaking on behalf of charitable or professional organizations ties back nicely to volunteerism, conferences and networking.  If you have expertise to share, speaking about it is a good way for others to learn about you and your business.  And if public speaking makes you nervous, you can always become a member of Toastmasters and learn to engage an audience comfortably.

There’s lots of ways to work on your business, you just have to stick your toe in and test the waters to find out what works for you.

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