When it comes to running a small business, experts say that nothing replaces hard work, dedication and a smart idea at the core of things. But for business owners in a minority demographic, there's some extra leverage that can come with certification.
The advantage, according to certificate-supplying organizations such as the National Minority Supplier Development Council, is that Asian, black, Hispanic and Native American business owners can be matched with services, programs, and sources of work and revenue.
"Certification can provide entrée to the corporate supply chain that MBEs otherwise would not have," said Joset B. Wright, the Council's president. "For example, last year we introduced the Biz-Fit Challenge, a free online assessment tool to help certified MBEs diagnose the financial health of their companies."
She added, "Other programs like Corporate Plus and Centers of Excellence focus on helping certified MBEs build capacity so they can meet the supply chain needs of our corporate members."
What certification means however, and what goes into getting it, differs depending on where and how owners apply. What follows is a breakdown of the basics.
Certificate qualification: a quick guide
Applying for certification at a federal, regional, or local level can come with specific documentation requirements. The shortlist below covers the most commonly requested materials.
- Citizenship: All business owners seekinga certification must be U.S. citizens.
- Ownership: Certification is available to owners who hold a 51 percent take in their business, whether that's private ownership or, in the case of a public company, stocks.
- Origins: Minority-status owner means a documented origin that is 25 percent of the individual's makeup. For example, one-fourth of a Hispanic owner's heritage must be traceable to a Spanish-speaking region of Mexico, Central America, South America or the Caribbean. A complete breakdown of what countires and conditions apply in the process of qualification can be found at the NMSDC website.
The process: how to get certified
One example of what it takes to get certified is the process at the NMSDC. Its application includes screenings, interviews, and a site visit.
That's a bit more rigid than what some organizations require—sometimes it's only an online form and some supplementary paperwork—but Wright says the Council's process helps to guarantee that good businesses connect with well-vetted resources. Every regional office has a recipe, however. Links to the Council's individual chapters can be found at its website.
On the federal level, the Small Business Association's 8(a) Business Development Program works specifically to certify businesses that can be considered "socially and economically disadvantaged," some of those being minority-owned business that might be overlooked because of prejudice or other social pressures.
The SBA then connects those businesses with counseling, workshops, and access to government contracts.
"In fiscal year 2010, small businesses received more than $18.4 billion in 8(a) contract dollars," said Tiffani Shea Clements, a spokeswoman for the SBA.
SBA applicants must supply two years of federal tax returns and personal history statements. Required documentation is outlined at their website.
Some cities also offer minority-owned business certification, including Washington D.C., Los Angeles, Detroit and Austin, Texas. For a list with links, visit this page at EthnicMajority.com.
Price and time: what can owners expect?
Some applications are free, and some are not. The SBA, for example, doesn't charge for its service, but owners can expect to pay an application fee to privately run organizations. According Inc. Magazine, in a 2010 article, that can run from hundreds of dollars into the thousand-dollar range.
Time is another factor. Wright advises business owners to expect the certification process to take some 30–90 days, depending on how completely they prepare their application and how quickly they can respond to any follow-up
"I encourage business owners seeking certification to gather their legal documentation, tax records, incorporation documents and other paperwork required for certification prior to making the certification appointment," Wright said, noting that list is available at all 37 of their affiliate offices.
James O'Brien is a correspondent for The Boston Globe, The Consumer Chronicle, and Boston University's Research magazine. James blogs via Contently.com.
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