Women-Owned Business Certification
-- by Molly Tranbaugh
Our clients often ask us what it means to get certified as a women-owned business, what that process is like, and whether certification is worth it—particularly when applying takes time and energy away from your business. We’ve put together a brief overview below to help you weigh your options.
Why would I want to get certified as a women-owned business? First, some quick background: the Women’s Business Enterprise National Council (“WBENC”) is a non-profit that was founded to create a nationwide standard for women-owned business certification. They’ve been around for almost 30 years and have become the largest and most widely recognized organization certifying women-owned businesses in the US. Note that many states and cities also offer their own certifications—some companies will apply for these as needed for a specific partnership or contract or because states and cities often have less stringent diligence standards than the WBENC (more on that below), but most businesses operating across the country choose the WBENC because of its national reach.
Most of our clients apply for certification because they want to be considered for contracts and partnerships with organizations in the private and public sectors for which certification is a prerequisite. For example, our fund clients often seek out certification to qualify for certain diverse and emerging fund manager programs, while our startup clients may be targeting a corporate partnership with a similar initiative. Certification also brings access to events, programs, mentoring, and executive education offered by the WBENC; you can use the WBE seal on your website, deck, and marketing materials; and for CPG companies, the women-owned logo can be featured on labeling on packaged goods.
Am I eligible? To qualify as WBENC certified, you’ll have to demonstrate that your business is owned, controlled, and operated by one or more women, including at least 51% women-owned, managed by women who have unrestricted control of the business (including over the day-to-day operations of the company), your CEO or other most senior officer must be a woman, the majority owner of the business must be a US citizen, and women must have contributed to the business through either capital or expertise in your industry. Some of these benchmarks can be confusing and vague—we often talk our clients through what it means to have “unrestricted control” or industry expertise, for example, helping them demystify these requirements. Also note that these requirements can become draconian and prohibitive for businesses taking in outside capital that dilutes a female founder’s ownership, or for companies with a male co-founder with 50/50 interests. You can expect the WBENC to review your documents carefully and look closely at these issues to ensure that at least one woman is majority owner and has ultimate decision-making authority over the business.
How do I get certified? The WBENC certification process will include an application, vetting of the business, review of your documents, and a site visit. Many applicants find that the most time-consuming part of this process is gathering all of the documents and records that you’ll need to submit along with your application, such as financial statements, tax returns, proof of capital by a female owner or owners, information about the founders and your employees, and your governing documents. The full list of documents you’ll need to submit can be found here. You’ll also be asked to prepare an overview of your business, including how you got started, any co-founders or partners, a general description of your business, and the names and details of your full and part-time employees. Overall, the process is very detailed and some businesses will opt for state or local certification to avoid these more invasive document requests.
The WBENC generally reviews applications within 90 days, and you should generally allow a year for the entire process from application to certification. If approved, certification lasts for one year and you’ll start the recertification process a few months before each year is up. The good news is that the initial application is the heaviest lift, and our clients often find that, although tedious, the application can be a good opportunity to organize your books and make sure your governing documents are complete and in order.
