It’s (almost) a certainty that you have seen window stickers, email signatures, or other public-facing material from businesses stating a certification of some kind. Business certification comes in several shapes and sizes and can be recognized at several different, exclusive levels. There are several reasons, as well, that you and your small business could be eligible for a certification, so it is essential that small business owners understand the benefits of certification as well as the steps to getting your business the recognition it deserves.
Who Certifies Businesses?
The SBA: The Small Business Administration grants certifications to businesses on a national level. The certain types of certifications given out by the SBA are specified in the “Types of Certifications” category of this article. Certifications by the SBA, however, are largely based on granting businesses the opportunity to work on certain government contracts.
Municipal and State Governments: All 50 states and several major U.S. cities offer their own level of certification to businesses. To find out if your city or municipality has certification programs that may fit your business, start by speaking with your local Chamber of Commerce or your local SCORE office.
Minority-Directed Organizations: Nationally recognized organizations geared to empower minorities like the National Minority Supplier Development Council and the Minority & Women-Owned Business Enterprise (MWBE) offer certifications for relevant businesses which largely assist those businesses in networking and acquiring private sector contracts.
Types of Certifications:
8(a) Small Business Certification
American small businesses who are at least 51% owned by U.S. citizens (or a Community Development Corporation, an agricultural cooperative, an Alaska Native corporation, a Native Hawaiian organization, or an Indian tribe) and who have a personal net worth less than $750,000 and adjusted gross income of $350,000 or less may be eligible for 8(a) Small Business Certification by the SBA. Business owners who fall under 8(a) certification are considered “socially or economically disadvantaged individuals” according to the SBA.
If a business earns this certification, they can then receive training from the SBA and partner associations “designed to strengthen their ability to compete effectively in the American economy.” Certified businesses may also seek out mentorship through the SBA Mentor-Protégé Program which connects business owners with experienced mentors at no charge. 8(a) businesses are also eligible to compete for specific government contracts set aside by the SBA. According to the SBA, “The government authorizes sole-source contracts to 8(a) participants for up to $7.5 million for acquisitions assigned manufacturing North American Industry Classification System (NAICS) codes and $4.5 million for all other acquisitions.” There are, however, exceptions to those limits for specifically approved contracts by the Department of Defense.
American small businesses can seek out HUBZone (Historically Underutilized Business Zone) business certification from the SBA if they are at least 51% owned by U.S. citizens (or a Community Development Corporation, an agricultural cooperative, an Alaska Native corporation, a Native Hawaiian organization, or an Indian tribe) and have a principal office in an officially determined HUBZone. Lastly, at least 35% of your employees must also live in a HUBZone. To see if your business is within a HUBZone, refer to the SBA’s dynamic HUBZone map which is regularly updated.
HUBZone certified businesses are given preferential treatment to non-HUB businesses when seeking government contracts and are eligible to apply for SBA set-aside contracts. HUBZone businesses also get a 10% price evaluation preference when in full or open government contract competition.
B Corp certification
B Corp certification is a status given out by the B Corporation specifically for for-profit businesses which meet the company’s standards for social, environmental, and ethical performance. If your small business “generates less than $5M USD in annual revenue and employs less than 50 full-time employees,” you may then seek out Small Enterprise B Corp status. Being that B Corp certification is centrally concerned with your small business’s footprint and impact, you will need to supply the corporation with an incredibly full picture of your small business in the form of several assessments and reviews, all of which are explained on the corporation’s website.
Being certified as a B-Corp doesn’t come with the same contract preferences as the above SBA-related certifications but what B Corp certification omits in contract preferences, it makes up in multitudes in its outward social value. B Corps are certified forces for social responsibility which is likely to make your business preferable for both employment candidates and customers. Also, B Corp itself is a helpful mentor corporation as they give certified businesses access to their community data pool and can assist certified businesses in becoming more sustainable.
Women-Owned business certifications
The most robust and universally recognized organization which certifies Women-Owned Businesses is the Women’s Business Enterprise National Council (WBENC). The WBENC will consider businesses for Women-Owned status if at least 51% of the business is owned by a woman or women. According to the WBENC: “This means one or more women must have unrestricted control of the business, a demonstrated management of day-to-day operations, and a proportionate investment of capital or expertise.”
Businesses with WBENC Women-Owned certification have access to the association’s supplier diversity and procurement executives at “hundreds” of U.S. corporations as well as WBENC contacts in government from federal to municipal levels. The WBENC also runs several events throughout the year for member businesses which are likely helpful marketing and networking opportunities. The WBENC also regularly awards and recognizes superb member businesses at regional and national levels.
Minority-owned business certification
Minority-Owned Business certification is most often awarded and determined by the National Minority Supplier Development Council (NMSDC). In order to be considered a minority-owned business by the NMSDC, the council explains, “For the purposes of NMSDC’s program, a minority group member is an individual who is at least 25% Asian-Indian, Asian-Pacific, Black, Hispanic or Native American. Minority eligibility is established via a combination of document reviews, screenings, interviews and site visits. Ownership, in the case of a publicly owned business, means that at least 51% of the stock is owned by one or more minority group members.”
Member businesses are automatically added to the national minority supplier database which is a helpful means of visibility and preference for future contracts. The NMSDC also offers a variety of national and regional networking events for the purpose of expanding member business opportunities.
Veteran-owned Business Certification
All United States business owners who were on active duty with the Army, Air Force, Marines, Navy, or Coast Guard and are actively involved with managing their business are encouraged to apply for Veteran-Owned Business Certification. There are further certifications for disabled veterans (Service-Disabled Veteran-Owned Small Businesses [SDVOSB]) which will need additional verification from the Department of Veterans’ Affairs and Department of Defense. Depending on which types of contracts your small business is seeking preference for, there are multiple routes for securing veteran-owned status.
Via the SBA or VA: Small businesses who benefit the most from federal contracts should seek out veteran-owned status with either the SBA or VA directly. The SBA, however, only offers certification for disabled veterans (SDVOSB certification) while the VA offers both SDVOSB and VOSB certification.
National Veteran Business Development Council & National Veteran-Owned Business Association: Veteran-owned businesses seeking certification who deal largely in private contracts are more likely to benefit from veteran-owned status from organizations like the National Veteran Business Development Council (NVBDC) or the National Veteran-Owned Business Association (NaVOBA). Both organizations operate in similar circles and offer their own networking events as well as unique partner organization opportunities, so each business considering certification should investigate their needs versus each organization’s benefits, as neither is inherently superior for all businesses.
LGBT Business Certification
Business owners who identify as gay, lesbian, bisexual, or transgendered may seek out certification as an LGBT Business Enterprise from the National LGBT Chamber of Commerce (NGLCC). In addition to being majority-owned by an openly identifying LGBT community member, member businesses must operate independently from any non-LGBT business enterprise in order to be considered for certification. Businesses must also have a physical headquarters and a for-profit entity.
Like any other Chamber of Commerce level of certification in this guide, LGBT certification means that member businesses can take advantage of the chamber’s resources, contacts, and community. The NGLCC runs monthly webinars from expert LGBT business owners and runs an independent mentorship program. The NGLCC also offers an exclusive annual scholarship to the Tuck School of Business Executive Education Program at Dartmouth University.
When is Certification Worth It?
Certifying your small business is often worth much more than the material benefits listed on chamber, council, and administration websites. Business owners who represent underprivileged or underrepresented groups have beaten the odds simply by existing. There is a pride in perseverance itself, but official certification in a cause or effort that you truly support can be massively gratifying and even open the door to genuine contacts through exclusive supplier lists and other networking events.
Where certification gets dicey, however, is when applications cost money upfront. All types of certifications that extend from the government are free but certification statuses from chambers of commerce and other private organizations can sometimes come with hefty application fees. In those cases, it is essential that businesses deeply consider what business certification means to them and if that official status is worth the price of admission.