This article was supplied by Danielle Dietrich, Esq. of Tucker Arensberg. Danielle is the April, 2020 Singles Steps Strategies Spotlight.
Many people have heard of diversity certifications for their business, but most haven’t explored the option. Now is a great time to work on an application for certification if your business is a candidate: 51% owned and controlled by one or more women or minorities. Certifications as a WBE and/or MBE generally do not have size requirements. However, in order to qualify as a DBE (through the government), your business must be below the threshold set by the Small Business Administration rules for your industry. For DBE certification, the owner may have a maximum personal net worth of less than $1.32 million (certain assets, such as ownership in your business and your residence are excluded).
Not only can a certification help your business in the long run, but the documentation required is much of the same information that your business may be pulling together for loans and other relief due to the COVID-19 crisis.
WHAT CAN WBE/MBE/DBE STATUS DO FOR YOUR BUSINESS?
State and federal agencies, as well as corporations, often have diversity spend requirements or goals.
Many state and federal contracts have requirements that a certain amount of the contract spend must be with diverse suppliers. It is not enough to be a diverse supplier- you will need to show that you are certified. Having a certification can give you access to those opportunities that you would not have without your certification.
Even if your business does not do government work, many corporations now have similar goals and/or requirements for diversity spends. There are also additional opportunities for diverse businesses to network with these corporations and learn about opportunities for work. There are incredible networking opportunities, both formal and informal, with other diversely owned businesses. For example, I am part of a local group of women-owned businesses that gets together monthly for lunch or breakfast. The amount of connections made through this informal group is tremendous. It is rare to leave that meeting without a connection having been made to help your business.
WHAT IS THE APPLICATION PROCESS?
The process involves gathering a lot of information about your business and your finances (both personal and business) and filling out a detailed application. Some business owner are intimidated by this process- perhaps your business records aren’t in the best shape. However, I suggest that you view this as an opportunity to get this part of your business “cleaned up” – your business will be the better for it.
After the application is submitted, it will be reviewed by one of the certifying agencies. They may ask for additional documentation or clarification on certain issues. Next, the agency will schedule a site visit. They will visit you at your place of business (or your home, if you do not have a separate office) to interview the owner(s). During this visit, they are looking to make sure that the purported woman or minority owner is really the one controlling and operating the business. Please note that during the COVID-19 crisis, I have heard of some of these site visits taking place via video conference.
After the site visit is completed, the certifying agency will issue a decision. If you are approved, congratulations! If you are denied, you may have the opportunity to file a formal appeal. I strongly suggest that you do not appeal without legal assistance.
HOW I CAN HELP YOU WITH THE PROCESS
I have helped many clients through all levels of the certification process- as much or as little as needed. Some clients want me involved throughout the entire process- helping them gather and organize documents, drafting the application, etc. Other clients put together their entire application, and have me do a final review to spot potential issues prior to submission. Some clients only call me once there is an issue- requests for more information, or to appeal denials.
The best time to involve me in the process is prior to submitting your application. Through my experience with the different certifying agencies and knowledge of the factors they consider, I can spot potential issues and trouble spots prior to submission. For example – I often see language in Operating Agreements in multimember LLCs that requires “supermajority” votes for certain actions. These can potentially tank your application! By having me review the application, I can help you correct any issues prior to submission, saving you time and money. Once you submit the application, you cannot go back and change the information that you submitted. If you are denied, you cannot apply again for another year.
– Danielle Dietrich, Esq., Tucker Arensberg
Special Offer for Single Steps Readers
As a thank you to Single Steps Strategies for including me in this feature, I am pleased to offer readers a complimentary 15-minute consultation regarding whether any of these certifications are right for your business- please email me to schedule (all consultations subject to a conflicts check). – Danielle