Overcoming Stereotypes

Being an MWBE certified business does not automatically lead to wining contracts. And certification certainly doesn’t guarantee success. You might actually face unexpected stereotype thinking when you approach some members of the business community.

A supplier diversity task force reviewed how changes in the supply chain processes impact diverse suppliers. The review noted that diverse suppliers “… are often operating on slim margins in the 2% to 10% range and tend to be under capitalized and cash poor. Careful financial management is a vital factor for these entrepreneurs”. Next Level Purchasing notes that “Because diverse suppliers are often new and small in size, they are susceptible to failure.” And, have you heard? Most new small businesses fail within five years? Sam Frentzel-Beyme may have some bah humbug to spout on business failure myths. There’s actually a fascinating collection of business failure post mortems that shed light on some pitfalls of start up operations.

News of various frauds reflect on diverse suppliers in: New York; Chicago; Massachusetts; or Pennsylvania . And, then there are the unfortunate failures. In April, Sheena Moore documented an MWBE failure where a Walmart supplier ended up bankrupt.

How does this affect the MWBE business? It is hard to tell, but there are ways to nip some of these stereotypes in the bud.

• If you’re a more mature business, make sure your clients are aware of your successful track record — or how many years you’ve been in business. People are often surprised to learn about the age of some certified businesses, and this longevity implies you will be there for long term customer support.
• Thin margins? That is a definite position to avoid! I remember telling a client there were not enough hours available in a year to make a particular engagement profitable for us at the rate they wished to pay. Any business’s goal has to be profitability, because we can’t support any clients if we don’t get paid enough to supply a part or provide a service. At what point does volume make up for thin margins? This is an individual business’s decision, but there are helpful formulas for calculating the answer.
• As for under-capitalization, insufficient funds to operate the business and pay your suppliers or other creditors, Dun & Bradstreet offers five tips to avoid it.
• Spend some time with Tonya Crew’s blog and believe her when she says: “The success of MWBE contractors hinges upon two very important things. First, is not letting the use of the minority label convince you that your business is “minor or less than” any other contractor on the site. And second, be honest with yourself. Know what your strengths and weaknesses are. If you can’t figure out the paperwork, then find someone who can.”
• Practice transparency. Maybe I’ve already said too much on this topic, but it does work.
• Practice diversity yourself – in your work force and supplier base and publicize your commitment to diversity.