Women business owners make substantial contributions to the economy, yet they often encounter unique challenges such as limited access to resources and systemic bias. One option to mitigate these challenges is obtaining a woman-owned business certification. This certification can unlock a range of benefits, including access to special funding options, government contracts, networking and educational opportunities, and sometimes even tax benefits. However, the certification process can be demanding and may not be beneficial for every industry.
Types of Certifications
There are several certifications available for women-owned businesses, each with specific requirements and benefits:
- SBA Women-Owned Small Business (WOSB) Eligibility Requirements
- 8(a) Business Development Program Certification
- HUBZone Program Certification
- Minority Business Enterprise Certification
- Veterans Business Enterprise Certification
- Certified LGBTQ-Owned Business
- Leader in Energy and Environmental Design (LEED) Certification
Eligibility Requirements
To qualify for these certifications, businesses typically need to meet stringent criteria. For example, the Women’s Business Enterprise (WBE) certification requires that at least 51% of the business is owned and controlled by women who are U.S. citizens or legal residents. The Women-Owned Small Business (WOSB) certification has similar requirements, with additional financial criteria for the Economically Disadvantaged Women-Owned Small Business (EDWOSB) subset.
Pros and Cons of Certification
Pros:
Access to Contracts: certification can provide increased access to contracts from government agencies (national, state, and local) along with large corporations that have initiatives to support certified women-owned businesses
Networking Opportunities: certification opens up valuable networking opportunities with other women business owners and potential clients
Increased Visibility: being certified can make your business stand out from the competition, potentially leading to more business opportunities
Funding and Grants: certified businesses can access federal, state, and local grants, as well as special funding programs designed for women entrepreneurs
Tax Benefits: some certifications may offer tax incentives or reduced tax liabilities for projects funded by federal or state grants
Cons:
Time-Consuming: The certification process normally requires extensive documentation, including financial records, business plans, and tax returns, which can be time-consuming. If you're paying someone to organize the required documentation for you, it can also be expensive.
Cost: while some certifications are free, others can be costly, potentially posing a significant expense for small businesses
Increased Competition: certification can increase competition as you will be vying for the same contracts and opportunities with other certified companies
Conclusion
While obtaining a woman-owned business certification can provide valuable opportunities and increase visibility, it also requires a fairly significant investment of time and money. The decision to pursue certification should be based on a careful consideration of these pros and cons, as well as your specific needs and business goals. (And don't hesitate to ask for direction from your table of advisors.) By weighing these factors, you can make an informed decision about whether becoming a certified woman-owned business is the right step for you.
The views, information, or opinions expressed in this article are solely those of the author and do not necessarily represent the views of Citizens State Bank and its affiliates, and Citizens State Bank is not responsible for and does not verify the accuracy of any information contained in this article or items hyperlinked within. This is for informational purposes and is no way intended to provide legal advice.