According to the U.S. Senate Committee on Small Business & Entrepreneurship, “over the last 1o years, minority business enterprises accounted for more than 50 percent of the 2 million new businesses started in the United States and created 4.7 million jobs.”
Although there are more than 4 million minority-owned companies in the United States, the U.S. Commerce Department’s Minority Business Development Agency has released data that highlights staggering statistics that reinforce the systemic inequity for minority businesses:
- Minority-owned businesses, especially those with less than $500,000 in annual receipts, are less likely to be approved for financing than white owners.
- Minority-owned businesses receive smaller loan amounts, higher interest rates, and shorter pay-back durations.
- Non-whites have a lower net worth, meaning less reliance on savings and less collateral to put towards a loan.
In 2020, many businesses, including Facebook, Microsoft, Google, and others made a public commitment to support Black businesses in various ways. While all are eager to shift the equity narrative for marginalized communities, some expressed very clear requirements to gain access. One of the most significant requirements mentioned was that the business must be certified as a minority business enterprise, also known as an MBE.Have you heard of an MBE certification? If not, we’re breaking down the meaning, how to apply, and your available options. #Diversity | #MinorityBusinesses | via @Altimesenichole Click To Tweet
What is a certified minority business enterprise?
A certified minority business enterprise refers to a company that’s at least 51 percent owned, managed, and operated by at least one of the following groups:
- African Americans
- Hispanic Americans, although not of the Iberian peninsula
- Asian Americans, including West Asian and East Asian Americans
- Native Americans, including Aleuts
Additionally, you must meet the following requirements:
- You must operate for profit.
- A minority group member must be in charge of business management and daily operations.
- The business owner must be a U.S. citizen.
Minority business enterprises are typically certified by a city, state, or federal agency, with the main certifier being the National Minority Supplier Development Council (NMSDC). MBEs can self-identify, but this will not lead to official certification. The official certification offers you various benefits, including access to key stakeholders in procurement for all industries.
Now that you’re familiar with what defines a certified minority business enterprise, here are five things to consider as you begin your process.
1. Begin your MBE journey after discovering your intention.
As a Black woman, I can attest and stand behind the immense value and impact an MBE certification can have on your business. An MBE slashes your time and effort through access for Black and Brown people who struggle to get in the rooms with stakeholders or critical decision-makers. You can gain access to portals, directories, and events that can help you introduce your company and its offerings to potential partners who can change the revenue trajectory for your business.
All of this is fantastic. However, there is a big disclaimer. If you’re reading this, I would assume that you’re already aware of what I am preparing to share, but assumptions are dangerous. So, instead of guessing, I will let you know that you must begin your journey with an honest internal conversation regarding your why.
If you’re a freelance professional or entrepreneur who enjoys working with small, agile companies or other solopreneurs, this certification will not retain its impact or return on the investment. You will find yourself spending months to attain certification, spending hundreds of dollars, and realizing that your core clients do not reap the benefits (or recognize the value) of utilizing an MBE-certified diversity supplier or company. They may congratulate you on the achievement, but they will see little to no value in how your certification can help their business.
On the other hand, if you desire to work with enterprise, fortune 500 companies, this certification is a gem for their diversity and procurement departments. For business enterprises or government entities, many are required to commit a portion of spending to diverse suppliers. They’re also tax credits for partnering with diverse suppliers who are MBE Certified. From a financial perspective. These factors create a mutually beneficial relationship between the client and the supplier. From an angle of impact, it affords opportunities, access, and diverse perspectives to minority businesses, large and small.
2. Consider hiring support.
The consideration of hiring a third-party consultant or company to help you through the process of attaining your MBE is a preference, but it is one I would highly recommend. The process is quite extensive, and you will need to present a great deal of documentation.
The type of documentation depends on the organization you decided to attain your certified minority business enterprise with, but core documents would include (but not be limited to):
- Business history
- Certificate and articles of incorporation (if applicable)
- Copies of resumes, driver’s licenses, and proof of U.S. citizenship for all principals
- Business cards listing corporate titles of principals
- Ownership, operation, and control agreements
- Proof of general liability insurance
- Lease agreements or security deeds
- Canceled business checks
If you choose to complete the process without additional support, create a checklist of all the documents needed, along with your deadlines for submission, and make it happen! It can become overwhelming without organizing all of the requests in a streamlined way. Beyond that, you will need to keep yourself committed to seeing the process through, which leads me to my next point.If you’re considering the process for attaining your MBE certification, check out these tips by @Altimesenichole to help you along the way. #Diversity | #MBECertification | #MinorityBusinesses Click To Tweet
3. Have patience during the certified minority business enterprise application process.
I started my process in May 2021, and my company was officially certified by October 2021. You read that correctly. Additionally, we consistently worked on gathering all documentation during that time frame. There was no gap of time in not working on the process. According to the National Minority Supplier Development Center, it can take approximately 90 days to complete the process. This timeline would align with how long it took us, considering we started the process at the end of May 2021 and received certification in October 2021.
Patience will be your friend during this journey, so be sure to keep it close.
4. MBEs require a fee and renew periodically.
The National Business Capital states that MBEs cost begins at $350 for businesses with less than 1 million in annual revenue, and most have a yearly renewal fee after that. If your company’s revenue is over 1 million annually, your certification fees may be higher. The fee assessed for the certification will depend on the organization that awards your company with the certificate.
When planning to attain your MBE, incorporate this in your standard operating costs for your business so you’re prepared and your active status is not interrupted.
5. Carefully consider the type of MBE you would like to attain for your business.
For minority business owners, you have options. As mentioned above, you can attain an MBE at the local, state, or federal level.
Here are a few options:
- Minority-owned businesses (MBE): Minority business enterprise certification with the National Minority Supplier Development Council (NMSDC), a private third-party that certifies minority-owned businesses on behalf of U.S. corporations or MBE certification through city, county, or state programs.
- Women-owned business (WBE): Women business enterprise certification with the Women’s Business Enterprise National Council (WBENC), a private third-party that certifies women-owned businesses on behalf of U.S. corporations or WBE certification through city, county, or state programs.
- Disadvantaged business enterprise (DBE): Disadvantaged business enterprise certification by U.S. Department of Transportation through state transportation authorities for minorities or women-owned businesses, or other socially and economically disadvantaged individuals, such as people living with disabilities.
- 8(a) Minority or women-owned business (WOSB): 8(a) business development program administered by the Small Business Administration (SBA) for small businesses owned by minorities or women who are socially and economically disadvantaged individuals or women-owned small business – WOSB certification.
There is no easy pathway to attaining your MBE certification. However, if you have a clear plan and strategy for your business, it’s 100 percent worth the investment of your time and efforts. Attaining your MBE certification contributes to making a difference with diversity and equity in business while opening doors for you and the content marketers you contract with within your teamlancing structure.
It would be advantageous to get all MBE certifications that apply to you, but it will also be time-consuming and a costly goal to achieve (and let us not forget the annual upkeep to maintain them.) Take your time in researching the ones that are best for your business goals, and make it a priority to make it happen!There are many types of MBEs that are available to minority businesses. We’ve compiled a list to help you decide the one that is right for your business goals. #MBECertification | #DiverseSuppliers | compiled by @Altimesenichole Click To Tweet