The path to certification will take time and effort, but its benefits can give you a competitive edge.
For women business owners, getting certified as a “Woman Owned Small Business” (WOSB) can be beneficial in growing the business in both the private and public sectors. A certified WOSB can be valuable to large, private companies striving to diversify their supplier and service network and large companies performing on a government contract that requires WOSB participation.
The government also seeks and promotes greater diversity in the types of businesses with which it works and with those that participate in government contracts. Both the state and federal levels of government set aspirational goals for WOSB participation; these levels are monitored and reported on at the end of each year. If your business has potential to be certified as a WOSB, perhaps it’s time to consider learning more about the process and what it means to be a certified Woman Owned Small Business.
Certification with the State of Illinois
Looking at the State of Illinois first, it sets an aspirational goal that at least 20 percent of all goods and services purchased by state agencies are to be sourced from certified WOSBs, meaning that at least 51 percent of the business is owned and controlled by a woman. A WOSB illustrates ownership and control through the application process with the Business Enterprise Program (BEP).
The application process starts with a visit to the Illinois Business Enterprise Program website at www2.illinois.gov/cms/business/sell2/bep, where the business will be registered to receive procurement bulletins and with the Illinois Procurement Gateway. Next, the Vendor Registration Form is completed, before moving on to the BEP application, where the business will demonstrate to the state that it is at least 51-percent owned and controlled by a woman.
The process sounds simple enough, but there are many potential pitfalls along the way. Two challenges seem straightforward, but can be difficult to prove. The first challenge is demonstrating “real” ownership. Ownership is not illustrated by filing papers with the state that claim you are a wosb, nor does it come through a transfer of property and assets or assignment of stock shares. There must be evidence of either an investment of cash or an exchange of money to acquire ownership.
The woman owner must be able to demonstrate she purchased the business from the previous owner with funds that belonged to her. There must be a transfer of funds, whether cash or a loan, to obtain a minimum of 51-percent ownership. This does not include an agreement to purchase the business through monthly installments.
The second challenge is demonstrating control. The woman owner must be able to show that she has the authority to run every aspect of the business, including hiring, firing, purchasing equipment and materials, and writing and signing checks. She must hold the highest position in the company or illustrate why she does not, and she must also receive the highest percentage of profit. The articles of formation, bylaws and other pertinent documents must support her position within the company as the highest-ranking and highest-paid, without there being a mechanism for her decisions to be overturned.
Getting certified as a Woman Owned Small Business with the state is a process. Some advice for those seeking certification would be to take the necessary time to read everything, follow the protocol, complete the entire application, and if something is left blank, state why. Review of the application will take a minimum of six weeks and encompass a site visit from state personnel with the BEP program. Don’t be alarmed if the state follows up with a request for clarification or additional supporting documentation. This is typical. Be patient and work with the process, not against it. Seek assistance if needed through a local Procurement Technical Assistance Center or through the state’s BEP office. There are resources available to help you.
Certification with the Federal Government
Just like the state, the federal government has an aspirational goal that five percent of all its prime and subcontract awards go to Woman Owned Small Businesses—that is, five percent of $550 billion in goods and services the federal government purchases every year. To help achieve this goal, the Small Business Administration (SBA) has identified 83 industry codes in which WOSBs are underrepresented. Federal government contracting officers use these classifications to establish set-aside contracts for WOSBs to encourage their participation. WOSBs can compete in all areas, but the federal government also seeks out opportunities where they are underrepresented to improve diversification.
To start the certification process with the federal government, a woman-owned business should review the Woman Owned Small Business Compliance Guide at the SBA website (sba.gov), which summarizes what is in the Federal Register on the WOSB program. Next, the WOSB may self-certify through the System for Award Management (SAM) registration process at sam.gov. SAM is the starting point for any business seeking to work with the federal government. Once the WOSB has completed the SAM registration, it must acquire login credentials for the SBA’s General Login System (https://eweb.sba.gov/gls) to upload required documents to illustrate that it is a woman-owned and controlled business.
Like the state, the federal government will evaluate the documents submitted to verify that the business is at least 51-percent woman-owned and controlled. It will review issued stock certificates, stock ledger, articles of formation, bylaws and other pertinent documents to verify that the business is indeed woman-owned. One way a business can ensure its successful passage through the federal review process and be prepared to work with private companies as a certified WOSB is to be certified through an approved third party prior to certifying in SAM.
The SBA accepts third-party certification from the National Women Business Owners Corporation, the U.S. Women’s Chamber of Commerce, Women’s Business Enterprise National Council and the El Paso Hispanic Chamber of Commerce. For a fee, these agencies will review all the required documentation in accordance with federal regulations to ensure the woman-owned business is eligible to be considered as a Woman Owned Small Business. In addition, these agencies are recognized by private businesses as certifying boards for WOSBs. So if government contracting doesn’t align with your business, certification through any of these agencies will still benefit your business in the private sector.
The path to certification will take time and effort, and may not always make perfect sense. However, the benefit provided by certification is a competitive edge over many of your competitors, depending on your industry. A business may not realize the value of certification until it’s awarded its first set-aside contract through the government or receives the opportunity to work with a large company whose door may not have been open were it not for the certification.
Review the different programs for certification, and if it makes sense, decide which is best for your business and go for it. Don’t forget: there is help available within each program to navigate the process. iBi
Greg Faulkner is director of the Illinois Procurement Technical Assistance Center at Bradley University. For more information, call (309) 677-3297 or email [email protected].