Is Certification Right for Your Business?

This is Part 2 of our Certification Process blog series.

 

Whether your business is currently 51% or more owned by minorities or you are considering leaving your business to your daughter, or there’s another opportunity to make your business eligible for certification, it’s time to consider whether certification will help take your business to the next level. So let’s walk through what you need to know.

 

How Do You Qualify For Certification?

There are a number of different certifications out there and many have different requirements, but there are two general rules that apply:

First, 51% or more of the ownership of the company needs to be held by one or more individuals that qualify for the certification you are applying for: the main categories being women, minorities, veterans or LGBT individuals.

Second, management of the company has to be controlled by an individual in the same category you are applying for certification (women, minorities, veterans or LGBT individuals).

What do I do with the Certification?

Many business owners are unsure whether getting certified will actually benefit their business.  The application process is intense and many give up on the process, deciding it is not worth the time and expense.  For many businesses, this is a short-sighted perspective.

Hundreds of major U.S. corporations and federal, state and local government entities recognize certifications.  When businesses think of how to use their certification, they typically think about large corporations with supplier diversity programs.  Corporate supplier diversity programs encourage the use of minority-owned, women owned, veteran owned, LGBT -owned, and other certification categories. The programs are generally self-imposed, not imposed by law, and therefore are closer to goals the company wants to (but doesn’t have to) meet.  However, businesses in some industries, for example hospitals, utilities, and aviation, do have certification goals that are mandated by either law or their own government contract obligations.  Another commonly considered area is federal, state and municipal contracts.

Our biggest tip for determining whether certification will help your business… ask your vendors and customers.  Let them know you are considering certification.  For your customers, ask them – if you were certified, would that open up new possible opportunities for you with that customer?  For your vendors, they may become customers if you are certified, or they may have discount programs for certain certified entities. The best way to start is to ask businesses where you have already established relationships. Once you start using your certification, new opportunities will develop, and you will have an established base of references to use when you apply for those new business opportunities.  With a well thought out plan, certification can be beneficial to most businesses.

Once you decide ertification is for you, the next step is to start the application process. Preparing an application for any type of certification can be intimidating. The initial application usually requires the submission of a detailed information and supporting documentation that can be time consuming to collect.  So it can take time before you are ready to submit your application.

Preparing for the Application Process.

When you are looking to start collecting information, many agencies have checklists you can use to help gather the required documents.

While specific certification requirements vary, typically the required documentation may include copies of: your initial capital investment, proof of ownership, leases, contracts, and agreements; financial documents, key employee resumes (yes, that is resumes, not bios), business structure documents, history of the business, and so on.

Before you submit any documents, be sure to review them carefully for compliance with your certification requirements.  Many business owners are surprised during the certification process when they learn that while they thought they had control over their company, in fact, their corporate documents actually limit their control. Perhaps the company drafted its corporate documents itself, used a template they found online, or used an attorney that wasn’t familiar with certification requirements. It’s a good idea to have an attorney who has significant experience with the certification process review through your by-laws, governance documents and buy/sell agreements to confirm there are no provisions that would be considered to take control away from the diverse owners.

What comes after the application?

After the application is submitted, most certification agencies will conduct an interview – typically in person.  A member of the agency will come to your office and run through a standardized list of questions intended to confirm the information in your application and confirm you meet the criteria for the certification.

After that, the agency may have some follow-up questions or ask for additional documents. Or they may have everything they need and you simply wait for their decision.  Waiting times vary depending on the agency.  It could be 1 week or many weeks. It all depends on the agency.  It’s a good idea to ask during the interview what you can expect from the agencies post-interview timeline.

So you are certified… is that it? Nope! The recertification process.

While timelines vary, each certification lasts only so long.  Your certification will need to be renewed, sometimes annually, sometimes bi-annually or even longer periods. For example Chicago’s Minority and Women-Owned Business (M/WBE) Certification is good for 5 years before it needs to be renewed. The recertification process generally includes a shorter application and, sometimes, even another site visit / in person interview.  While the process is shorter and not as complex as the initial application, you will need to reestablish that you meet your certification criteria (51% ownership, control, etc).  If anything has changed with the ownership or leadership of your business since your initial certification or your last re-certification, you will need to disclose this during the recertification process.

Should you have any questions about certification for your business or would like to schedule an initial consultation, please contact Navigant Law Group, LLC at (847) 253-8800 or email us at info@navigantlaw.com.

At Navigant Law Group we know the ropes of the legal system. Business services include: Contract Law, Employment Law, Intellectual Property, WBE / MBE / VBE / LGBT / DBE certification, Commercial Real Estate, and other general Business Law services. Individual services include Estate Planning, Wills and Trusts, Administration, Probate, and Guardianship.

Our attorneys’ unparalleled focus on goal-oriented, detailed planning and advice will have you ship shape in no time. Come chart your course with Navigant Law Group, LLC!

This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.

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