The ranks of women business owners are growing. There are 12.3 million women business owners in the U.S., according to the National Association of Women Business Owners (NAWBO), who employ nearly 9.4 million people and generate $1.8 trillion in annual revenue. And women of color are launching 64% of women-owned startups.
However, most of these women haven’t had their companies certified as women-owned businesses. In fact, less than 1% are certified as owners of women-owned businesses.
Official certification brings opportunities for women business owners to work with and compete with larger businesses for contracts. To create more opportunities, federal government agencies (plus numerous state and local governments) offer “set-aside” programs that designate a certain percentage of contracts be earmarked for small businesses—including women-owned companies.
Types of Women-Owned Business Certifications
There are two categories of women-owned business certifications: Women’s Business Enterprise (WBE) and Women-Owned Small Business (WOSB).
1—Women’s Business Enterprise (WBE) is a designation used by many private sector businesses and organizations, and some state and local governments committed to offering contracting opportunities to women-owned companies. In the past, women could self-certify their businesses; however, now, you must go through one of the SBA’s approved third-party organizations:
WBE certification is also available through one of the State Offices for Minority and Women Business Enterprises or local government offices. Be sure to ask where the certification is applicable, as some state offices are only certified to do business in their own states.
Each organization maintains its own procedures, requirements, and eligibility standards. In general, to achieve WBE certification, applicants must be:
- Located in the United States
- A for-profit company
- U.S. citizens or legal residents
In addition, the company must have 51% of ownership by a woman (or group of women), have a woman-controlled governing board, and be woman-run, meaning a woman must be responsible for daily operations.
2—Women-Owned Small Business (WOSB) is a designation used by federal government agencies committed to offering a percentage of contracts to women-owned companies. The federal government has established its goal to award 5% of federal contracts specifically to female business owners and at least 25% to small businesses. Qualified business owners can also apply to have an Economically Disadvantaged Women-Owned Small Business (EDWOSB) designation, a subcategory of the WOSB.
Eligibility for the WOSB Federal Contracting program requires:
- The business be small according to SBA size standards
- The company be at least 51% owned and controlled by women who are U.S. citizens
- The daily operations and long-term decisions are managed by a woman or women
To qualify as an EDWOSB, a business must:
- Meet all the requirements of the WOSB Federal Contracting program
- Be owned and controlled by one or more women (each woman must have a personal net worth of less than $750,000)
- Be owned and managed by one or more women (each with $350,000 or less in adjusted gross income averaged over the previous three years)
- Be owned and controlled by one or more women (each with $6 million or less in personal assets)
The SBA has approved the same four organizations mentioned above to provide third-party certification for WOSB. Each has a different process and costs.
How to Apply for Certification
All companies wanting to do business directly with the federal government must now register their businesses at SAM.gov. (SAM stands for System Award Management.)
If your goal is to be a subcontractor, you may not need to register with SAM, but you will need to get a Unique Entity Identifier (UEI) number (which is free) there. The Unique Entity ID number replaces the old DUNS numbers, which have been removed from SAM.gov.
Being registered on SAM is the first step in the certification process. Once you’re registered, you can indicate which contracting program your small business is eligible to compete for.
When you register your small business on SAM.gov, the SBA uses that information to populate the Dynamic Small Business Search (DSBS) database, which it maintains. Government agencies use the DSBS to find small business contractors. And small businesses use the DSBS to find other small businesses to work with.
Government agencies are required to use SAM to advertise all contracts over $25,000.
Before moving on to the next step, make sure your SAM account is active.
Expect the application to require some or all of the following information and documents:
- Company name and fictitious business name (“Doing Business As” DBA)
- Owners’ names, addresses, and company website
- The company’s legal structure
- Incorporation date
- A list of each proprietor, partner, shareholder, or member within the 12 months preceding the date of the application
- Any affiliate relationships
- Contact information for regular clients
- Business and personal loans
- Employee information
- Birth certificate, current passport, or naturalization papers
- Driver’s licenses of all owners
- EIN (Federal Tax ID)
- Resumes of all owners, directors, partners, officers, and key personnel
- Current bank statements for all deposit accounts and loan statements
- Financial institution signature cards
- Documentation of how the company was capitalized
- Financial statements for three years, including balance sheet, profit & loss statement
- Tax returns for the past three years
- Assumed/fictitious name certificate
- Authority to conduct business in the state and certificate of good standing issued by Secretary of State
- Articles of incorporation and articles of amendments filed with the Secretary of State
- Bylaws and amendments
- Statement of information filed with Secretary of State listing officers, directors, managers, members, or general partners
- For LLCs, articles of organization and operating agreements
- Copies of all corporate stock certificates
- Minutes of corporate shareholders and directors’ meetings
- Shareholder agreements
- Partnership agreements
- Professional, industry, and business licenses
- Copy of lease or deed for business location
Businesses must update their information annually through the Dynamic Small Business Search database and beta.certify.sba.gov.
The application process for WBE certification is similar, although each agency may have its own specific guidelines to follow.
Getting certified as a woman-owned business can open a whole new world of potential profits, but only if you make the most of the designation. Include the certification logo in all your marketing materials and on your website. Stay active on government contracting websites and attend as many contracting/networking events as possible, so government agencies and companies are aware of your company. Although procurement opportunities involve a lot of hard work, getting a contract is a huge win and can lead to more contracts and boost sales in your growing business.