Women entrepreneurs provide jobs to more than 9 million people in the U.S. This doesn't include subcontractors and vendors who make money by doing businesses with women-owned businesses.
What does it mean to be a woman-owned business? The Women’s Business Enterprise National Council (WBENC) provides certification to companies that can prove they are owned by women.
Why is this certification needed? Take a look at this overview of what it means to be a WBENC-certified business.
What Does It Mean to Be a Woman-Owned Business?
Becoming a woman-owned business lets companies know who's in charge at your company. Businesses with a majority of female owners are considered women-owned.
This doesn't mean men can't be joint owners, but there are limits.
Organizations like WBENC investigate the day to day operations of your company to decide whether the business is truly run by women. The certification process is rigorous to make sure that women are represented in companies that claim to have a diverse leadership team.
Why does diverse leadership matter? Corporations set aside billions of dollars per year to spend with diverse suppliers.
It's a way to level the playing field for underrepresented groups like women and people of color. If an organization can prove it's ownership is mostly women, then it has a better chance of becoming WBENC certified.
What Is Supplier Diversity?
Supplier diversity programs make it possible for women to be more competitive in an unlevel playing field. But supplier diversity programs do more than give women entrepreneurs a helping hand.
Having diverse suppliers gives private companies wider access to talent and innovation. Around 99 percent of all businesses in the U.S. are small businesses.
Of these small businesses, around half are owned by a woman or person of color. Yet, 60 percent of all business revenue in the U.S. goes to companies that don't have diverse leadership.
This shows that diverse businesses are underrepresented financially. It's a smart move for corporations to open up their talent pool by designating a portion of its spending on women and minority-owned businesses.
Keep in mind that simply being a woman-owned or minority-owned business won't automatically mean you can sacrifice quality service or products. Corporations vet diverse suppliers just as they would any other large business.
Having a business certification just means you have access to specific funding with potentially less competition. Make sure your company meets corporate quality standards before marketing yourself to large clients.
What Are the Criteria for Being a Woman-Owned Business?
If you add a woman to your leadership team, does that give you access to contracts set aside for women-owned businesses? It depends.
You have a shot at bidding on corporate contracts set aside for women as long as the person you add has majority ownership. The WBENC rule is that at least 51 percent of a business must be owned and controlled by one or more women.
All women business owners must be U.S. citizens or legal alien residents. The business must be based in the United States for consideration.
The day to day management of the business also has to be handled by a woman who has experience in the company's expertise. This prevents abuse of the concept of a woman-owned business by keeping spouses from staking a claim in a company to help a husband get access to more contracts.
Women owners must also be compensated in a way that makes sense for her amount of ownership. For example, if a woman owns 75 percent of a firm, she shouldn't get only 10 percent of the profits.
Disproportionate pay for the owner's level of experience is a red flag for organizations like WBENC.
Becoming a Certified Woman-Owned Business
Businesses have to meet a strict set of standards in order to get certified by WBENC. To qualify, you'll need up to date financial statements for at least one year.
WBENC also reviews tax returns for the past three years and all your debt information. The organization looks into your management structure, payroll setup, and reviews a list of your employees.
The process is very detailed to ensure all businesses are well-run organizations that have strong female leadership. WBENC partners with more than 1,000 corporations who recognize the woman-owned certification.
Corporate partners won't respect the WBENC certification if the organization doesn't take time to vet each business that applies. Expect a site visit to your business by a WBENC staff member.
You'll also need to recertify once your initial certification period expires after one year. The recertification process is less involved but WBENC does follow up on things like financial statements and board meeting minutes to make sure your company still meets the requirements.
Certification isn't transferrable even if you sell the business to another woman. Each WBENC certification is specific to the managers who are in place when you receive certification.
The amount you pay in certification fees is based on your company's annual revenue. For example, if your company has a revenue of less than $1 million dollars, the certification fee is $350.
The fee increases from here depending on how much your company earns.
The Perks of WBENC Certification
Once a business gets its WBENC certification, it can begin using the WBENC logo on marketing materials. This is important because it lets potential clients know they are supporting a diverse supplier.
What does it mean to be a woman-owned business to customers? First, it means that a third party has examined the company to make sure the owners have a strong code of business ethics.
WBENC makes sure certified companies are keeping the best quality standards in place so that they can maintain good relationships with their partners. For more information on Turbie Twist and our company values, visit our blog for updates.