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A diversity certification is a denotation awarded to businesses that are at least 51 percent owned by a disadvantaged groups of the population, such women, minorities, veterans and people with disabilities. A women-owned business, for instance, must be 51 percent owned, managed and operated by women. In addition to government contracting, diversity classification can open your business to newfound streams of funding, from banks to venture capital dollars.
In March 2019, the Small Business Administration (SBA) announced that the federal government presently awards $22.9 billion in federal small business contracts to women-owned small businesses. It achieved its small business procurement goal for the sixth year in a row, awarding 25.05 percent ($120 billion) of federal contracts to small businesses.
Service-Disabled Veteran-Owned Small Businesses (SDVOSBs) received 4.27 percent ($20.6 billion) of federal small business eligible contracts. Small Disadvantaged Businesses (SDB) were awarded 9.65 percent ($46.5 billion) of small business eligible contracts.
As with the SBA, there are government contracting opportunities for women entrepreneurs with diverse agencies: In FY 2018, the Federal Housing Finance Agency (FHFA) “obligated” about $44.9 million of its total contracting dollars to minority- and women-owned businesses, an approximate $1.2 million increase from FY 2017.
The Federal Deposit Insurance Corporation (FDIC) awarded $212.9 million in contracts in 2018, of which $38.4 million went to women-owned businesses (WOB) and $56.7 million to minority women-owned businesses (MWOB). In FY 2017, the Consumer Financial Protection Bureau’s (CFPB) total spend was $169,441,229, of which $51,995,823 (30.7 percent) was spent with minority-owned and women-owned businesses.
From public utility companies to Federal agencies, the entities searching for diverse firms are extensive, and business certification can help bring you to the forefront. Here’s the most important part: agencies and entities cannot utilize you based on your diversity if they do not know you exist. The importance and value of certifying your business cannot be overstated.
A pivotal benefit of leveraging your business’s diversity classification is the network you will create. As you solidify yourself in a community of diverse entrepreneurs, you can benefit from referring and being referred for business opportunities and government contracting. With their potential to fuel business sustainability, the prospects that come from diversity classification cannot be ignored.
Knowing that you’re a women-owned business can represent significant appeal to buyers wanting to work with women. According to Bloomberg, women make 85 percent of all purchasing decisions—and 91 percent of new home purchasing decisions—in the U.S. If you leverage your women-owned business certification, you are giving yourself a leg up on the competition before even shaking hands with your client.
The National American Industry Classification System (NAICS) Codes are the standard used by Federal statistical agencies when classifying business establishments for the purpose of collecting, analyzing and publishing statistical data related to the U.S. business economy. The SBA sets the Small Business Size Standards in accordance with these NAICS codes. Visit the following link to find your NAICS code and corresponding Women-Owned Small Business (WOSB) ceiling: https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf
Join the discussion at the upcoming 2019 NAWRB Conference on Aug 4th-6th in Pasadena, CA, as industry experts address this issue and more affecting the economic ecosystem. We want to hear your thoughts in the comments below!