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Understanding Certification: The Basics
Small businesses looking to expand might investigate specific certifications that can help them level the playing field and become eligible for certain government contracts that otherwise may be beyond their reach. Those certifications include the MBE (minority business enterprise), WBE (women business enterprise), DBE (disabled business enterprise) 8(a) and SBE (small business enterprise). The process can be confusing and time-consuming. However, it can pay off for those companies with the tenacity to see it through.
"The SBA has done an incredible amount of work to help small, disadvantaged businesses gain entry into the government market," said Min Cho, CEO of Nova Datacom, a minority woman-owned 8(a) provider of information assurance and security services. "Small businesses still need to prove their mettle, but the SBA certification program helps open those government doors that had previously been tough to crack." With revenue of $35 million, Nova Datacom ranked No. 416 on our 2010 VAR500 list.
The following is a breakdown of some popular certifications and what each entails. In every case, the company must be 50 percent owned by a member or members of a certain classification who is/are U.S. citizens.
Minority Business Enterprise
Companies can receive local, state or national certification and can apply to multiple states or cities for certification. Companies with federal certification may find it easier to receive state or local credentials. The National Minority Supplier Development Council provides a widely recognized, rigorous certification process through its local affiliates. Interested companies can find a regional group at www.nmsdc.org.
Eligible groups for MBE certification include: African-American; Latin American; Native American; and Asian, Asian Indian and Pacific Islander American. The fees for MBE certification are based on the revenue of the applicant.
Woman [-owned] Business Enterprise (WBE)
The Women's Business Enterprise National Council (WBENC) is the nation's leading third-party certifier of women's business enterprises. In partnership with women's business organizations throughout the U.S., WBENC provides access to a national standard of certification and provides information on certified women's businesses to purchasing managers through its Internet database, WBENCLink. WBENC certification is recognized and accepted by a majority of major U.S. corporations.
According to the WBENC, a business submits an application, along with the necessary supporting documentation and nonrefundable processing fee.' Once the applicant's file is complete, it goes to a committee for review. Required documentation includes P&L statements and balance sheets. The entire process takes roughly 90 days.
In addition, the SBA has 110 outreach centers specifically for women-owned enterprises and provides information at www.sba.gov/services.
This program is run by the Small Business Administration and offers assistance to firms that are owned and controlled at least 51 percent by socially and economically disadvantaged individuals. It is different from the above certifications because it is a business development program and has a required mentoring program. It is separate from the Small Disadvantaged Business certification, which does not require the mentoring component. Note that solution providers that obtain 8(a) certification are automatically granted SDB certification and can bid on federal contracts for Small Disadvantaged Businesses.
The U.S. Small Business Association (SBA) provides 8(a) information at www.sba.gov.
The goal of the 8(a) program is to instruct eligible companies on how to compete in the federal-contracting arena through public-private partnerships.
Regardless of whether your solution provider business qualifies as an MBE, WBE or 8(a) firm, the SBA has 900 Small Business Development Centers, offering free services to any small business, including providing help with writing a formal business plan, locating sources of funding, and finding opportunities to sell products or services to the government.
For many, certification has opened doors that otherwise would be closed. Take TechnoDyne: It is certified as a WBE by several state and local agencies and also by several large private corporations. Those agencies have certain projects specifically set aside for WBE-certified companies.
"This helps companies like TechnoDyne compete for IT services projects in open bidding along with the large competitors. We have been fortunate in recent years and have been awarded some good projects based on our past performance, qualifications and the WBE certification" said Padma Allen, president and CFO of TechnoDyne, who is also featured in a recent women-executive-centered group on our community site (go to community.crn.com).
Allen is a member of the Women Presidents' Organization, a group that supports women-owned businesses, and which recently ranked TechnoDyne as one of the 50 fastest growing women-owned/led companies in the U.S.
"[Certification] certainly provides the motivation and fosters an environment for women to start their own businesses in areas typically dominated by men," Allen said.