For minority entrepreneurs, the opportunities are out there to start and build businesses that can thrive.
As seen in the recent post, Exploring Challenges and Opportunities for Minority Business Owners in 2019, there are a growing number of minority-owned businesses across the United States.
However, with the growth comes challenges, discrimination and lack of access to funding being two of the most critical. That is why many businesses choose to become formally certified as minority-owned.
Should you be certified as a minority-owned business? Most experts suggest the answer is an emphatic “yes.”
Types of Certifications
For companies working mostly in the private sector, many business leaders choose to become certified via the National Minority Supplier Council, which seeks to connect minority-owned businesses with corporate opportunities.
To be certified as a minority business enterprise, a company must:
- Be at least 51 percent owned and controlled by minorities for at least 6 months
- Have a minority serving as president and CEO (if both positions exist) for at least 6 months
- Have minority owners actively involved in daily management
- Have minority owners who are U.S. citizens or legal residents
Certified businesses have access to corporate contracts from hundreds of the council’s partners.
If your business works with government entities, the U.S. Small Business Administration offers its own certification, known as the 8(a) program, which is more rigorous than the private certification.
Criteria include:
- 51 percent or more of the business must be minority-owned
- Owners must be citizens by birth or naturalization
- Business must be controlled or managed by individuals who are socially or economically disadvantaged
- Business must demonstrate the potential for success
- Principals must show good character
For businesses that become certified, there are decided advantages, including:
- Access to single-source contracts up to $4 million (goods and services) and $6.5 million (manufacturing)
- Ability to form joint ventures or teams to bid on contracts
- Access to a mentoring program to help newer 8(a) companies learn from experienced business leaders
Advantages to Certification
Having a minority-business certification has decided advantages, including:
- Access to private and government contracts that previously may have been difficult to attain. With more possibilities available, your company will become competitive for better contracts and new business.
- A sense of community with other certified businesses. A lack of networks is often seen as a drawback for minority-owned businesses. Having a built-in network of owners with similar backgrounds strengthens your ability to connect and partner.
- Leveraging the certification in marketing your business. While many larger businesses have specific programs for minority-owned business, you can also use your certification to attract other business from companies that believe in diversity in their business strategy.
- Visibility and success with larger corporations. Gaining access to large companies helps with your exposure and name recognition. Imagine being able to list the names of major corporations on your client list.
At Benetrends, we help entrepreneurs with minority-owned startup funding and support services. Benetrends helps business owners leverage existing 401(k) funds to finance entrepreneurial ventures, credit card processing, retirement plan servicing, and insurance products. To learn more about how Benetrends can help with your entrepreneurial growth, watch the webinar: How To Use Your Retirement Funds To Buy A Franchise Or Business.