How Minority-Owned Small Businesses Can Gain a Competitive Edge with a Diversity Certification

by Edgar R. Olivo

If you own a small business and are part of a certain demographic group, your business could qualify for a diversity certification, which will grant you access to special grants, supplier programs and large contracts. This is a great way to grow your business when you plan to sell to other businesses or the government. As diversity becomes an ever-increasingly important topic in the corporate arena, planning ahead for economic recovery programs could put you on the road to big opportunities for growth.

A diversity certification comes in many forms, the most common of which is Minority Owned Enterprise or MBE. This certification is designed to give you a special designation as a diverse supplier. Take the National Minority Supplier Development Council (NMSDC), for example. It was established in 1972 to advance certified minority businesses by mitigating systemic racial barriers faced by minority business owners through the MBE certification. The MBE certification has been adopted by nearly every municipality, state and federal agency as well as many companies as part of broader supplier diversity initiatives. It currently has chapters throughout the country to help minority-owned businesses with the process of applying and submitting verification documents.

These special certifications help you prove that your company meets inclusion program requirements and opens doors to opportunities that may not be available to non-certified suppliers — thus giving you a competitive edge. Many of the programs offered to certified minority-owned businesses are required by law and must source a certain percentage of diverse-owned businesses. It is estimated the federal government spends more than $400 billion each year on products and services, of which 23% is set aside for small businesses and another 16% to diverse small businesses. This is expected to grow as the Biden Administration pushes for more inclusivity in government spending to help boost minority-owned small businesses and advance racial equity. There are many types of diversity certifications beyond ethnicity-based; there are women-owned, LGBTQ-owned, Veteran-Owned, disadvantaged-owned and Historically Underutilized Business Zone certifications as well.

If you are a minority-owned business, take these five tips to get started on your MBE certification. Other diversity certifications may have similar steps and their own requirements to qualify.

  1. Review the criteria. To qualify, the business owners must be U.S. citizens, the business must be located in the U.S., and the business must be at least 51% minority-owned operated and controlled.
  2. Gather required documents. You will need to organize several key documents, such as your articles of incorporation, bylaws, partnership agreements and tax returns for two years. This is a partial list; there are more documents required in general to prove your ownership and financial integrity.
  3. Complete the application. The application information and documents will need to be submitted online to the website that covers the region where you are located. In Arizona, it is the Pacific Southwest Minority Supplier Development Council.
  4. Pay the application fee. The fees can range from $150 to $350 for businesses generating less than $1 million and $610 to $1,100 for those generating more than $50 million. The payment will be processed online.
  5. Send application for your interview and wait for your approval. Once everything is submitted and paid, you will have to schedule a site visit to be interviewed by an NMSDC Certification Specialist. Yes, they come to your home if you are a home-based business.

The MBE certification process can take up to 90 days to complete. Once a business has sent in all application materials, it will be reviewed by the NMSDC Certification Committee. If the Committee approves the application, it will be submitted to the NMSDC Board for final approval. If the Board rejects the application, a business can submit a letter appealing the ruling that addresses concerns. If it approves the application, you will receive a notice via email.

Beyond the contracting opportunities, diversity certified businesses enjoy the benefits of networking with other certified businesses. Taking advantage of these key certifications as a minority-owned small business will definitely give you a competitive edge in an inclusive economy that is unfolding.

EDGAR RAFAEL OLIVO is a bilingual business educator, economic advisor and contributor for several media outlets. He’s a nonprofit executive who is passionate about education. He is certified in finance and data analytics and holds a business degree from Arizona State University.

Para la versión en español de este artículo, haga clic aquí.

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