If you belong to certain demographic groups, your business could qualify for supplier diversity and inclusion programs — provided you have certification. Your certified diverse business will gain you easier access to business opportunities in both the public and private sectors.
What is supplier diversity?
Supplier diversity is a business practice of including a variety of companies in an organization’s supply chain. Enterprise supply chain diversity programs ensure this variety by providing opportunities to businesses that have historically been excluded. These include small businesses and those that are owned and operated by members of diverse groups such as people of color, women, LGBTQ, and veterans.
A growing number of corporations and government agencies at all levels are implementing and updating supplier diversity programs to reach specific inclusion targets. This usually means awarding a set annual dollar amount or percentage of total procurement spend to diverse-owned businesses. A growing number of organizations also offer programs to help diverse suppliers develop and grow so they can better serve their customers.
Leading organizations recognize that the value of supplier diversity goes beyond meeting compliance requirements or corporate social responsibility targets; it enables them to:
- Tap into the growing strength of diverse groups to create a robust, competitive supplier base
- Build public image, brand awareness, and customer loyalty
- Benefit from diversity-driven innovation
Why diversity certification is important for your business
Supplier diversity certifications serve as proof that your company meets inclusion program requirements, thereby opening the door to business opportunities that may not be available to non-certified suppliers. Many of these opportunities are offered by government agencies, some of which are required by law to source a certain percentage of their supply needs from certified diverse-owned businesses and small businesses.
For example, the federal government spends more than $400 billion each year on products and services, of which 23% is set aside for small businesses, and another 16% to diverse small businesses. The Small Business Administration (SBA) works with government agencies to make sure these federal supplier diversity requirements are met. Large prime vendors to federal government agencies are also required to subcontract a certain amount of their work to diverse suppliers.
Many private enterprises dedicate spend to certified diverse companies, which means that uncertified businesses are missing out on lucrative contracts and growth opportunities.
Diverse-certified businesses can use certification as a marketing tool that increases their visibility to organizations looking to diversify their supply chains, confers legitimacy, and helps differentiate diverse-owned businesses from the competition.
Another benefit of diversity certification for companies is that certifying agencies often offer development resources, including networking, support, education, and mentoring programs aimed at helping diverse and small businesses succeed.
Types of supplier diversity certification
Certifications are also issued by diversity-focused third parties that have developed their own eligibility criteria, including the National Minority Supplier Development Council (NMSDC), Women’s Business Enterprise National Council (WBENC), and National Gay & Lesbian Chamber of Commerce (NGLCC).
Both government and third-party certifying agencies offer many different types of certifications, such as:
- Disadvantaged Business Enterprise (DBE)
- Historically Underutilized Business (HUB)
- HubZone (Historically Underutilized Business Zone)
- LGBT Business Enterprise (LGBTBE)
- Minority Business Enterprise (MBE)
- Service Disabled Veteran Owned Small Business (SDVOSB)
- Small Business Enterprise (SBE)
- Small Disadvantaged Business (SDB)
- Woman Owned Small Business (WOSB)
- Women’s Business Enterprise (WBE)
- Veteran Owned Small Business (VOSB)
How to certify your business
Each type of diversity certification has its own requirements; check with the issuing organization for details. Typically, certification agencies require owners to provide proof that they belong to a diverse group — in most cases, at least 51% of a company must be owned by a member of the designated group. Owners may also be required to be U.S. citizens or permanent residents, and the business must operate within the U.S. Other possible criteria include business location, net worth, or company size, and some certifications require agency visits to the business site.
Certification can take some paperwork and time — anywhere from four to six months — and it can be costly. It helps to understand the requirements before you begin so that the process can go as smoothly as possible.
The rigor of the process ensures high standards and trust, and following all the required steps will result in a designation that holds real value in the eyes of future business partners.
Hire Ground can help you get the most out of your diversity certification
Hire Ground’s mission is to enable diverse businesses like yours to grow and succeed — before and after you get your diversity certification. Benefits of joining Hire Ground include:
- Tools and services to streamline the certification process
- Learning resources to help you at all stages of your business journey
- Connection to a strong community of other diverse businesses
- An intuitive, state-of-the-art platform that matches you with customers
Sign up for a free Hire Ground trial to connect with Fortune 1000 companies that want your products and services in their supply chains.